District Court Concludes that US Purchaser of Refrigerators from its Minority-Owned Subsidiary could not Sue for Injury Allegedly Suffered by Subsidiary that was the Victim of Price-Fixing

The World in U.S. Courts: Winter 2016 - Antitrust/Competition/Foreign Trade Antitrust Improvements Act (FTAIA)

In re: Refrigerant Compressors Antitrust Litigation, US District Court for the Eastern District of Michigan, October 21, 2016

This large multi-district class-action originally involved claims that manufacturers of refrigerator compressors conspired to inflate the prices of the products.  After settlements and a series of rulings, all that remained were individual claims by General Electric.  GE bought some compressors directly in the US but also asserted claims with respect to finished refrigerators it imported into the US from a Mexican joint venture, MABE, in which it had a 48% interest.  MABE in turn had bought the allegedly price-inflated compressors in Mexico, from non-US defendants.

Purporting to follow the Seventh Circuit’s decision in Motorola Mobility, the Court concluded that the FTAIA’s exception for “import commerce” did not apply because the compressors had not been sold into the US by the defendants themselves (rather, the compressors were imported by GE when it imported the finished refrigerators).  The Court also concluded that GE could not satisfy the statutory requirement that the illegal conduct have a “direct, substantial, and reasonably foreseeable effect” on US commerce, and that such right “give rise” to a claim under US law.  In the case at bar, the Court concluded, the injury had been suffered by the direct purchaser of the compressors (MABE) in Mexico, and it was to Mexican law that MABE was required to look for a remedy.  The Court also found, in the alternative, that the Illinois Brick rule precluded GE—an indirect purchaser of the compressors—from bringing a claim.  GE argued that the so-called “control” exception to Illinois Brick applied, citing its large minority ownership in MABE, its related minority representation on MABE’s Board, its right to veto certain unidentified classes of decisions by MABE, and its participation in certain of MABE’s negotiations with the defendants.  The Court disagreed, finding GE’s showing insufficient to meet the exception’s requirement that there be “such functional economic or other unity between the direct purchaser and either the defendant or the indirect purchaser that there effectively has been only one sale.”

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