District Court Finds that Claims by Non-U.S. Class Members Arising From Alleged Manipulation of Global Foreign Exchange Markets Are Barred by the FTAIA

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

In re Foreign Exchange Benchmark Rates Antitrust Litigation, U.S. District Court for the Southern District of New York, January 28, 2015

This large and multiple-class action antitrust case involves allegations of manipulation of the global foreign exchange market by a dozen dealers and competitors in that market. Two putative classes included certain non-U.S. residents that traded foreign currencies. One excluded U.S. persons and U.S. transactions. The second applied only to transactions in Korea.

The District Court in New York dismissed these classes under the FTAIA, finding that they impermissibly sought to apply American antitrust laws (Section 1 of the Sherman Act) to conduct and injuries that occurred elsewhere. The plaintiffs argued that their purchases of currency were subsequently moved to U.S. accounts, and that this movement fell within the FTAIA's exception for U.S. "import" commerce. The District Court disagreed, noting that the exception was only available where defendants' conduct was "directed" at the U.S. market, which was not the case with respect to an allegedly worldwide conspiracy. The District Court also found that the plaintiffs' allegation of a worldwide conspiracy failed to satisfy the requirement that, for conduct and injuries outside the U.S. to support an antitrust claim, there must be a "direct, substantial and reasonably foreseeable effect" on U.S. markets, and that such effect caused their injuries.

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