District Court Denies Motion for Judgment for Acquittal or for New Trial of Taiwanese Citizen Convicted in United States for Price-Fixing under Section 1 of the Sherman Act

The World in U.S. Courts: Summer 2013 - Antitrust/Competition | May.02.2013

United States v. Steven Leung, (U.S. District Court, N.D. Cal., May 2, 2013)

The district court for the Northern District of California denied a motion for acquittal or, in the alternative, for a new trial of a Taiwanese citizen who was convicted for his role in the international price-fixing conspiracy among manufacturers of TFT-LCD panels used in televisions, computer monitors and notebook computers.

Facts

The defendant, Stephen Leung, was an executive employed by AUO Optronics (“AUO”), a Taiwanese manufacturer of thin film transistor liquid-crystal display (“TFT-LCD”) panels. In March 2013, following an eight-week trial, AUO, its U.S. subsidiary and several employees of AUO were convicted of price-fixing under Section 1 of the Sherman Act (15 U.S.C. § 1). The jury did not reach a unanimous verdict as to Leung, so he had a new trial in late 2012 and was convicted on December 18, 2012. Leung filed a motion for acquittal, or for a new trial, on the grounds that, among other things, (1) the U.S. Government failed to establish, beyond a reasonable doubt, an exclusion under the Foreign Trade and Antitrust Improvement Act (“FTAIA”), and (2) Sherman Act violations based on foreign conduct are subject to rule-of-reason analysis rather than per se illegality as the jury was instructed.

Analysis

The FTAIA, enacted in 1982, establishes a framework for determining whether Sherman Act claims may be brought based on commerce that takes place outside the United States. It provides that the Sherman Act does not apply to foreign commerce unless one of the Act’s statutory exceptions applies. The court instructed the jury that the U.S. government had to prove, beyond a reasonable doubt, “that the members of the conspiracy engaged in one or both of the following activities: (A) fixing the price of TAFT-LCD panels targeted by the participants to be sold in the United States or for delivery to the United States; or (B) fixing the price of TAFT-LCD panels that were incorporated into finished products such as notebook computers, desktop computer monitors, and televisions, and that this conduct has a direct, substantial, and reasonably foreseeable effect to trade or commerce in those finished products in the United States or for delivery in the United States . . . .”

The court rejected Leung’s argument that the evidence presented by the U.S. government failed to establish an exception applied, finding that a reasonable jury could have found that the evidence showed the price-fixing conspiracy had a “direct, substantial, and reasonably foreseeable effect” on import commerce to the United States. The court also rejected Leung’s argument that the jury instruction regarding the applicable test for price-fixing conduct under the Sherman Act was improper. The court had instructed the jury that such conduct is per se unlawful, but Leung argued it should be subject rule of reason analysis. The court ruled that it had properly instructed the jury that such conduct is per se unlawful.

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