Antitrust/Competition/Foreign Trade Antitrust Improvements Act (FTAIA) - The World in US Courts: Spring 2018

May.01.2018

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FTAIA Precludes Claim Based Allegedly Anticompetitive Conduct in Canada Despite Argument That Conduct Weakened Competition in the US

Roxul USA, Inc. v. Armstrong World Industries, Inc., US District Court for the District of Delaware, February 9, 2018

Plaintiff Roxul and Defendant Armstrong compete for sales of acoustical ceiling tiles in the US and Canada; with Armstrong allegedly possessing a 55 percent share in the US. Both companies sell through distributors, which in turn make most of their tile sales to building contractors. Roxul alleged that, in an effort to choke off Roxul’s access to the market in both countries, Armstrong entered into exclusive distribution agreements with a substantial number of distributors prohibiting them from carrying competing products.

As relevant here, Armstrong argued that Roxul could not base any of its claims on alleged anticompetitive conduct in Canada. It argued that this conduct failed to satisfy the FTAIA requirement that the conduct have a “direct, substantial, and reasonably foreseeable effect” on US commerce because Armstrong’s agreements with Canadian distributors only affected Canadian consumers. The Court agreed. It noted that, where alleged conduct affects customers both within and outside the US, the FTAIA prohibits a US antitrust claim for adverse effects outside the US that are “independent of” such effects in the US. “The [FTAIA] requires a plaintiff to allege that its claims were directly caused by the domestic effects of the conduct and not the foreign effects.”

Further, the Court stated that claims could only be brought where conduct occurring outside the US affected US commerce as an “immediate consequence . . . with no intervening developments,” as opposed to consequences that were merely a “ripple effect” of injuries sustained elsewhere. The Court concluded that this standard also had not been met, rejecting as “speculative” and “insufficient” Roxul’s argument that injuries to its business in Canada reduced its profits and prohibited it from competing as vigorously as it otherwise would have in the US.

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