Vitamin C Ruling May Trigger Comity Defense Resurgence

• Published date: 11 January 2022
• Subject Matter: nti-trust/Competition Law, Compliance, Antitrust, EU Competition
• Law Firm: Winston & Strawn LLP
• Author: Molly M. Donovan, Sofia Arguello and Thomas J. Neuner

In an August 2021 decision in the long-running In re: Vitamin C Antitrust Litigation, the U.S. Court of Appeals for the Second Circuit dismissed price-fixing claims against several Chinese pharmaceutical companies on international comity grounds, holding that Chinese law essentially required the defendants to engage in the conduct alleged.¹

The implications of the case go beyond antitrust, and beyond even merits-based defenses.

This article explores a possible resurgence of comity-based defenses in discovery disputes-which have been asserted in the past with mixed success-but which could gain traction now post-Vitamin C.²

In Vitamin C, the Second Circuit twice reversed a judgment against defendants for coordinating supply and prices of Vitamin C in China that was later exported to the United States.³

In the first instance, the Second Circuit held that the district court was bound to defer to the explanation of Chinese law that was submitted by China's Ministry of Commerce, which said that the defendant companies were bound by Chinese law to engage in the alleged anti-competitive conduct.⁴

The U.S. Supreme Court reversed because, it said, the Second Circuit afforded too much deference to the MOC and should have tested its statements against additional objective sources.⁵

On remand, the Second Circuit once again reversed and dismissed the action. In reaching that decision, the court looked beyond the statement from the MOC and examined the regulations in the Vitamin C industry in China and various other pieces of evidence, including industry records and other administrative materials, all of which corroborated the MOC's position that the defendant companies were required to coordinate on supply and price in accordance with the China Chamber of Commerce for Import and Export of Medicines and Health Products.

The court ultimately concluded that it was impossible for the defendant companies to comply with U.S. antitrust law and Chinese law, and it was required to defer to Chinese law under the principles of international comity.

While Vitamin C is interesting enough on the merits, it also calls for fresh eyes on the role comity ought to play in discovery disputes of international scope.

The Supreme Court first examined international comity in relation to discovery in the 1987 Société Nationale Industrielle Aérospatiale v. U.S. District Court for the Southern District of Iowa decision, in which the U.S. Supreme Court held that a particularized analysis of the interests of each respective sovereign is required to resolve a comity-based defense to...