“Import Commerce” and Effect on US Competition Exceptions to FTAIA Satisfied Where US was a Significant Direct and Indirect Target for Sales of Price-Fixed Components

The World in U.S. Courts: Summer 2017 - Antitrust/Competition/Foreign Trade Antitrust Improvements Act (FTAIA)

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In re Lithium Ion Batteries Antitrust Litigation, US District Court for the Northern District of California, May 12, 2017

The defendants in this multi-party class action moved to dismiss an amended complaint on multiple grounds, including that the plaintiffs’ failure to allege the “location” of their purchases required dismissal under the FTAIA. In assessing the importance of this location to an FTAIA analysis, the Court first rejected the contention that a per se rule removed from US antitrust jurisdiction all claims arising from purchases made outside the US. Rather, it said that courts must look directly to the relevant exceptions to the FTAIA’s general bar against claims involving conduct outside the US: whether claims involve “import commerce” or transactions having a “direct, substantial, and reasonably foreseeable” effect on US commerce that gave rise to the plaintiff’s claims.

The Court first found that a “plausible” claim of an effect on “import commerce” had been made, principally because of the complaint’s allegations that (i) the defendants understood it was “reasonably foreseeable” that their alleged scheme would “artificially increase” prices for batteries sold in the US, one of the world’s largest markets, (ii) a “substantial portion” of the batteries purchased by the plaintiff were shipped to the US, purchased by US-based customers, incorporated into finished goods sold to US customers, and purchased for the purpose of manufacturing goods for its US customers, and (iii) the defendants “knew or should have known” that a “substantial portion” of the products they sold to the plaintiff’s affiliates “targeted the plaintiff’s imports,” and would be manufactured into goods sold to US customers.

The Court also found that these allegations established a “plausible claim” that the alleged conduct had the requisite “direct, substantial, and reasonably foreseeable” effect on US commerce. It focused on the claim that battery pricing was either negotiated in the US or referenced pricing negotiated in the US, and that the pricing was set or approved by the defendants’ US managements. In so ruling the Court distinguished a prior decision in which the same “global pricing theory” had been rejected, noting that the other case was decided after discovery in the context of a motion for summary judgment, based on a finding that no evidence supported the claim that increased US pricing caused any injury to non-US purchasers.

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