Court Dismisses U.S. Antitrust Claims for Failure to Allege Underlying Contracts Were Negotiated or Entered into in the U.S.

The World in U.S. Courts: Spring 2013 - Antitrust/Competition

In re TFT-LCD (Flat Panel) Antitrust Litigation, (U.S. District Court, N.D. Cal. (Multi-District Consolidation), Mar. 20, 2013) [order relates to Proview Technology Inc. v. AU Optronics (N.D. Cal.)]

A U.S. district court in San Francisco dismissed antitrust conspiracy claims brought by foreign original equipment manufacturers (“OEMs”) because they did not adequately allege that the contracts governing their purchases of price-fixed LCD panels were negotiated or entered into in the United States.


Plaintiffs include Proview Technology Inc. (“PTI”), a California corporation, and three of its affiliated OEMS in Taiwan and China. PTI alleged that it would instruct its three OEM affiliates to purchase LCD panels (which allegedly bore inflated prices due to a price-fixing conspiracy) for delivery in Asia, and that the OEMs then manufactured finished products incorporating the LCD panels that PTI imported into the United States.


Defendants asserted that the Foreign Trade Antitrust Improvement Act (“FTAIA”) barred the OEM’s claims under the U.S. antitrust laws because all of the relevant acts occurred outside the U.S. The plaintiff OEMs argued that the FTAIA does not bar their Sherman Act claims because the alleged conspiracy “deliberately targeted the U.S. Market and involved both domestic and international conduct” and because the purchases were “based on contract terms and pricing negotiated by PTI specifically for U.S. bound LCD products.” The court had previously issued a number of orders in related actions to the effect that FTAIA did not bar antitrust claims for purchases by foreign affiliates of Dell and Motorola, because the plaintiffs had alleged that a global price for all LCD panels purchased from defendants had been negotiated in the United States at Dell’s and Motorola’s U.S. offices. Thus, the court had found in those cases that the plaintiffs had alleged the requisite “domestic effects“—effect on competition or markets in the U.S.—necessary to confer jurisdiction. According to the court, the PTI plaintiffs’ complaint, by contrast, did not make allegations of an effect on U.S. markets to confer jurisdiction under the antitrust laws. Rather, plaintiffs’ complaint alleged only that “[t]he prices Plaintiffs used in purchase orders placed with Defendants were based on price and quantity determinations based on U.S. Negotiations.” The court found this insufficient to “allege a domestic effect to qualify for an exception to the FTAIA.” In addition, the complaint alleged that the OEM’s representatives met with defendants in Asia to negotiate contract terms and pricing, and the complaint did not identify whether any “price and quantity determinations based on U.S. Negotiations” were binding on the OEMs. Accordingly, the court dismissed the OEM’s antitrust claims with leave to amend.

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