Clarity Put On Hold As FTAIA Conflict/Confusion Continues

The Foreign Trade Antitrust Improvements Act (FTAIA) was enacted in 1982 to help achieve clarity in the application of U.S antitrust laws to international trade. More than 30 years since that effort, the FTAIA has not achieved clarity, and has been a source of confusion due in large part to its tortured language and the difficulties that the courts have had in interpreting the meaning and purpose of the statute. In the last several years alone, there were several federal circuit courts of appeal decisions that compounded the confusion and conflicts about how and under what circumstances the FTAIA is to be applied.

Nevertheless, on June 15, 2015, the U.S. Supreme Court denied petitions for writs of certiorari from the Seventh and Ninth Circuits which involved the same price-fixing conspiracy. One can speculate on the reasons why the Court declined the invitations to resolve the conflicts surrounding the FTAIA. Ironically, the losing party in the Ninth Circuit decision (an individual whose criminal price-fixing conviction was affirmed) was an officer of the foreign company, which was the winning party in the Seventh Circuit decision.

Suffice to say, with the Supreme Court's decision not to accept certiorari, confusion and conflict will continue. If there is any glimmer of increased clarity, the latest round of cases suggests that the FTAIA reduces the chances for plaintiffs to prevail in international trade antitrust disputes (unless the plaintiff is the U.S. Department of Justice) but, paradoxically, increases the pressures on defendants to settle treble damages cases before incurring years of costly discovery and motion practice due to the fact that some courts have interpreted the FTAIA as establishing substantive elements of a Sherman Antitrust Act (Sherman Act) violation rather than as a question of subject matter jurisdiction.

This article discusses the current muddled state of the law focusing on: 1) the substantive or jurisdictional underpinnings of the FTAIA; 2) what constitutes "import commerce;" 3) how are "direct domestic effects" to be measured; and 4) when does challenged conduct in international trade "give rise to a claim" under the FTAIA.

One thing is certain, however. Given the ever-increasing "internationalization" of antitrust claims and proceedings, whether reflected in global cartel criminal prosecutions or massive civil treble damage litigation, clarification of the applicable contours of the FTAIA is long overdue. The Court's decision not to hear the cases puts off for another day needed clarification of the FTAIA.

Historical Context

During the late 1970s, United States export trade was perceived as withering in the face of challenges from seemingly stronger and more-efficient Asian and European competitors. In some quarters, this phenomenon was viewed as a part of a perceived U.S. economic malaise. Pro-U.S. export trade constituencies saw the application of U.S. antitrust laws in U.S. export trade as creating confusion and economic risk that only further compounded the problem. Indeed, several treble damage actions focused on alleged antitrust violations occurring in international trade and were blamed for exacerbating this crisis and inhibiting U.S. export trade.

Congress was told that there was no consensus on how far the U.S. antitrust laws could reach into export trade activities. Critics of the U.S. antitrust law sought to solve this problem by clarifying what aspects of the law were applicable to export trade and by limiting the antitrust law's exterritorial reach so that more export trade would be encouraged. Proponents sought to reduce the...