Stutz Article in CPI Antitrust Chronicle: The FTAIA in Flux: Foreign Component-Goods Cases Have Tripped, But Have They Fallen?

In an article for Competition Policy International, AAI Associate General Counsel Randy Stutz analyzed the status of claims against international component-goods cartels after the Seventh Circuit’s decision in Motorola Mobility v. AU Optronics Corp.

In Motorola, a three-judge panel dismissed Motorola’s damages claim against the international LCD cartel, which fixed the price of LCD panels that were sold to Motorola’s foreign subsidiaries and assembled into smartphones overseas before Motorola imported them into the United States.  Under the Foreign Trade Antitrust Improvements Act (FTAIA), foreign commerce is beyond the extraterritorial reach of the Sherman Act unless it involves import commerce or satisfies the FTAIA’s “domestic effects” exception, which allows Sherman Act suits where foreign conduct has a direct, substantial and reasonably foreseeable domestic effect, and that effect gives rise to a claim under the antitrust laws.  The panel held that the defendants’ conduct did not involve import commerce, and it concluded that Motorola could not satisfy the “gives-rise-to” prong of the domestic effects exception. Stutz argues that the panel’s reasoning is flawed and strikes a highly improper balance between domestic deterrence concerns and international comity considerations.  The article also explores the opinion’s precedential value and discusses different factual scenarios that may be the subject of future component-goods cases.

This is Stutz’s second article on component-goods cartels and Motorola.  The first article, “Comity, Domestic Injury, and the Metaphysics of the FTAIA,” is available here.
The issues discussed in the articles also feature prominently in three amicus briefs AAI submitted in the case.  To read the briefs, visit the Amicus Program section of our website.