Extraterritoriality and Input Cartels: Life in the Global Value Lane—The Collision Course with Empagran and How to Avert It

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Eleanor Fox, Jan 29, 2015

There is a looming danger that judge-made exceptions from U.S. antitrust law for foreign conduct are swallowing the proscriptions of the Sherman Act against modern-style international cartels. The danger has raised its head in the context of input cartels and, in particular, in the case of Motorola Mobility v. AU Optronics in the Seventh Circuit and its sister cases in other circuits. The danger stems from a wrong move of the Supreme Court in Empagran, which has laid a path that misframes analysis of the Sherman Act’s reach. The danger is not laid to rest by Judge Posner’s revised opinion in Motorola Mobility, for Judge Posner repeats the error by finding that the very same conduct that is within the subject matter jurisdiction of U.S. courts when the federal government is the plaintiff may be dismissible as beyond the reach of the Sherman Act when a private party is the plaintiff.

To explain the Supreme Court’s error, I revert to pre-Empagran analysis of both the Motorola facts and the Empagran facts. I then show that the governing statute—the FTAIA—was meant to be a subject-matter-jurisdiction statute and one favoring suits by injured Americans, not a standing statute and one cramping the options of American victims of foreign acts. Finally, I highlight the Supreme Court’s error and suggest how to correct it short of statutory revision.