District Court Finds Allegation of “Import Commerce” Adequate to Avoid Application of FTAIA Limitations on Sherman Act

The World in U.S. Courts: Winter 2015 - Antitrust/Sherman Act/Foreign Trade Antitrust Improvements Act (FTAIA)

Fenerjian v. Nongshim Company, Ltd., U.S. District Court for the Northern District of California, November 4, 2014

In 2012, the Korean Fair Trade Commission found that four Korean companies had conspired to fix the prices of noodles in Korea. U.S. litigation followed, in which the same companies and their U.S. subsidiaries were alleged to have conspired to fix the price of Korean noodles sold in the U.S. Putative class action complaints were filed on behalf of direct purchasers (food retailers and distributors who purchased directly from the defendants) and indirect purchasers (individuals who purchased Korean noodles from food retailers). Claims were brought under the Sherman Act as well as under numerous state antitrust laws.

After finding that the complaint generally stated a claim under the Sherman Act, the Court found that the alleged conspiracy affected U.S. “import commerce,” and therefore that the Sherman Act applied without any limitation from the FTAIA. The Court’s conclusion was based on allegations that the allegedly conspiring Korean and U.S. defendants manufactured noodles in Korea that were imported into the U.S., whereupon they were sold in the U.S. to the various retailer, distributor, and consumer plaintiffs. In so ruling, the Court considered the defendants’ argument that the FTAIA should apply unless U.S. imports were “adversely affected” by the alleged conduct, rather than unless the conduct merely have had any effect on import commerce. The Court questioned whether the statute required such a stricter showing but concluded that it had been made, whether necessary or not, and that as a consequence the lawfulness of the defendant’s conduct should be judged under the Sherman Act, without FTAIA limitation.

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