Supreme Court Leaves Standing Decisions On Foreign Antitrust Conduct

On Monday, June 15, the Supreme Court of the United States refused to hear appeals concerning the Foreign Trade Antitrust Improvements Act (FTAIA), 15 U.S.C. § 6a, that could have clarified the reach of U.S. antitrust law to anticompetitive conduct outside the United States. In doing so, the Supreme Court let stand a ruling that significantly narrows the ability of private plaintiffs to claim civil damages under federal antitrust law based on component sales transactions consummated abroad.

Both AU Optronics Corp., a criminal and civil defendant, and Motorola Mobility LLC, a civil plaintiff, asked the Supreme Court to hear the appeals. Those requests arose from two separate decisions by the U.S. Courts of Appeals for the Seventh and Nine Circuits involving similar facts, the same defendant and the application of the FTAIA.

Both decisions focused on whether U.S. antitrust law applied to AU Optronics' and its co-conspirators' agreement to fix prices of liquid crystal display panels, a component part of many finished electronics products (e.g., cellphones). AU Optronics sold some components directly in the United States, conduct to which the Sherman Act clearly applies. AU Optronics also sold some components to foreign entities outside the United States, and those other entities incorporated the components into finished products sold in the United States. The FTAIA provides that federal antitrust laws apply to anticompetitive conduct outside the United States only if that conduct (a) affects import commerce or (b) has a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce and such effect gives rise to a Sherman Act claim. 15 U.S.C. § 6a.

The Criminal Case

The Ninth Circuit decision, United States v. Hsiung, affirmed federal price‑fixing convictions of AU Optronics and two of its executives based on the company's direct sales of price-fixed products to purchasers in the United States. In the Ninth Circuit's amended opinion, the court concluded that AU Optronics' sales of components affected by price-fixing, although consummated outside the United States, also supported those convictions. United States v. Hsiung, 778 F.3d 738, 758-60 (9th Cir. 2015).

The court noted that the components were a substantial cost of the finished products purchased by U.S. consumers. Depending on the particular, finished product, components comprised between 30 and 40 percent or 70 and 80 percent of the finished product's total price. The...