AAI Asks Supreme Court to Review Foreign Trade Decision (Motorola v. AU Optronics)

The American Antitrust Institute (AAI) filed an amicus brief urging the Supreme Court to grant certiorari to review a decision of the Seventh Circuit Court of Appeals (Posner J.) that sharply restricts the application of the Sherman Act to international cartels.

The case involves Motorola Mobility’s attempt to recover damages in connection with the LCD price-fixing cartel, which was prosecuted by the Justice Department and resulted in criminal convictions and fines of more than $1.3 billion.  Motorola sought overcharge damages on LCD screens its foreign subsidiaries purchased abroad from the cartel for incorporation into cell phones Motorola imported into the United States.

The Seventh Circuit upheld the dismissal of Motorola’s claims under the Foreign Trade Antitrust Improvements Act (FTAIA).  Although the price fixing had a direct, substantial, and reasonably foreseeable effect on U.S. commerce—raising the price of cell phones purchased by American consumers—the court held that the price fixing did not “involve” imports and that the domestic effect did not give rise to a Sherman Act claim.

The Seventh Circuit’s ruling effectively exempts foreign cartels from Sherman Act damages as to price-fixed goods sold abroad for incorporation into finished products imported directly to the United States.

AAI’s amicus brief urges review because the question presented is of exceptional importance to American consumers and businesses.  The brief argues that current levels of fines and damages are already insufficient for adequate deterrence; creating an exemption from private damages for companies operating in what is a typical global supply-chain structure would only exacerbate the problem.

AAI’s amicus brief maintains that the Seventh Circuit’s narrow reading of the import-commerce exclusion—to require that the defendant be the actual importer—is inconsistent with decisions of the Third and Ninth Circuits, as well as the language and intent of the FTAIA.   And the brief argues certiorari should be granted to correct the illogical extension of F. Hoffman-LaRoche v. Empagran to bar claims when the domestic harm is proximately caused by, or depends upon, the foreign injury.

The brief was written by AAI’s Rick Brunell and Randy Stutz, with assistance from AAI’s Geoff Kozen.  AAI’s previous amicus briefs in this case are available here [http://www.antitrustinstitute.org/work-product/aai-asks-en-banc-seventh-circuit-reject-loophole-international-cartels-harm-us-victims]