South-Western Legal Studies in Business

Actions by Sellers that Injure Foreign Consumers, Not Domestic Consumers, Not Subject to U.S. Jurisdiction
Description Supreme Court held that the Sherman Act or Foreign Trade Antitrust Improvements Act do not create jurisdiction for U.S. courts over price fixing by U.S. sellers that occurs in foreign countries that does not directly injure the domestic market in the U.S.
Topic Antitrust
Key Words Price Fixing; International Trade; Foreign Injury
C A S E   S U M M A R Y
Facts Five vitamin distributors in Ukraine, Australia, Ecuador and Panama sued several U.S. vitamin makers for price fixing in those countries in violation of the Sherman Act. The district court dismissed their suit, holding that the transactions occurred entirely outside U.S. commerce so were not subject to U.S. court jurisdiction. The appeals court reversed, finding that under the Foreign Trade Antitrust Improvements Act (FTAIA) the actions had a direct effect on domestic commerce. That is, the price fixing in foreign countries caused prices to be higher in the U.S., injuring parties in the U.S., so U.S. courts had jurisdiction over the matter. Defendants appealed.
Decision

Reversed. A unanimous Court held that when price-fixing significantly and adversely affects customers both outside and within the U.S., but the adverse foreign effect is independent of any adverse domestic effect, the Sherman Act and FTAIA do not apply and there is no cause of action in U.S. courts by the foreign parties. The FTAIA intended to limit, not expand, the Sherman Act's scope as applied to foreign commerce. There is no indication that Congress intended for the Sherman Act to apply in foreign transactions that did not have an adverse effect on the domestic market.

Citation F. Hoffman-LaRoche Ltd. v. Empagran S.A., 124 S.Ct. 2359 (2004)

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