Practical Implications Of 7th Circuit's Recent 'Minn-Chem' Decision

Ruling narrows the Foreign Trade Antitrust Improvements Act.

In its en banc decision issued June 27, 2012 in Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, the Seventh Circuit substantially narrowed the limits the Foreign Trade Antitrust Improvements Act ("FTAIA") places on the application of U.S. antitrust law to foreign conduct that has an impact in the United States. For trade or commerce with foreign nations (other than import trade or commerce), the FTAIA precludes the application of U.S. antitrust law, unless (1) the foreign conduct has a "direct, substantial, and reasonably foreseeable effect" on domestic commerce or on export commerce of a U.S. exporter; and (2) the effect "gives rise to" the antitrust claim. Initially, the Seventh Circuit held that "the FTAIA sets forth an element of an antitrust claim, not a jurisdictional limit on the power of federal courts." The court also construed the statutory carve out for "import commerce" and the FTAIA requirement that the foreign conduct has a "direct, substantial, and reasonably foreseeable effect" on U.S. domestic commerce. This decision broadens the reach of U.S. antitrust laws as to foreign companies and makes it more difficult for defendants to dismiss claims under the FTAIA.

The Seventh Circuit's decision was reached in a private action by U.S. companies that purchased potash against certain foreign suppliers. The complaint alleged the defendants — foreign suppliers and their distributors — formed a cartel to reduce output and increase prices. Defendants allegedly reached agreements on prices for Brazil, India and China, and then applied those agreed prices as benchmarks for sales to U.S. purchasers. The U.S. District Court denied the defendants' motion to dismiss the complaint, rejecting arguments that the FTAIA barred the claims. In re Potash Antitrust Litig ., 667 F. Supp. 2d 907 (N.D. Ill. 2009). Recognizing that this issue was close, the district court certified its decision to a three-judge court of appeals panel.

The panel decision noted that 2003 Seventh Circuit en banc precedent treated the FTAIA as a jurisdictional provision, but concluded that dismissal of the complaint was required even if the FTAIA was considered to be an element of a claim rather than a jurisdictional limitation. See Minn-Chem, Inc. v. Agrium Inc., 657 F.3d 650, 659 (7th Cir. 2011) (citing United Phosphorus, Ltd. v. Angus Chemical Corp., 322 F.3d 942 (7th Cir. 2003) (en banc)). The panel decision first...