District Court Determines Applicability of the FTAIA’s Import Exception by Category of Transaction, and Finds the FTAIA Limits State Antitrust Laws

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

In Re Capacitors Antitrust Litigation, US District Court for the Northern District of California, September 30, 2016

The plaintiffs in this class action lawsuit are direct and indirect purchasers of certain kinds of capacitors from almost two dozen mainly Asian manufacturers, which the complaint alleges engaged in price-fixing.  The District Court in California addressed two principal issues:  (i) the meaning of “import commerce,” as to which antitrust claims may still be brought despite the FTAIA, and (ii) the extent to which the plaintiffs’ claim was “proximately caused” by an effect on US commerce—again, as required by the FTAIA for a covered claim to be viable.  The Court addressed the issues in terms of categories of transactions:

  • Capacitors billed to US customers, no matter where delivered.  These transactions reflect US “import commerce” and can support claims because they are outside the scope of the FTAIA.
  • Capacitors billed to non-US purchasers but shipped directly to the US.   These transactions also reflect “import commerce” because the defendants “knew and intended” that the capacitors would be shipped to the US, and indeed in many cases were the shippers.
  • Capacitors billed and delivered to non-US purchasers.  These cannot be the subject of a US claim because they affect foreign commerce only.  Nor can the plaintiffs avoid this ruling by arguing that there was a single inflated worldwide price for which the US market was critical.  Rather, to bring non-US sales into the case, the plaintiffs would have to show more directly that an injury to competition in the US “proximately caused” their overpayments in other countries—a task that the court equated with passing though the “eye of [a] needle.”
  • Capacitors purchased outside the US and incorporated into finished products sold to US customers.  The Court declines to characterize the test that the parties must meet to bring a claim with respect to these transactions, but suggests that the test would be difficult to meet where (as in the case at bar) the allegedly price-fixed component represented only a very small part of the cost of the finished product.

The Court also concluded that claims under the California State antitrust statute would be limited by the FTAIA to the same extent as federal law.  It noted that State laws may also have their own unique territorial limitations that would have to be addressed later in the litigation.

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