Antitrust, UCL and Privacy

Competition: Fall 2015, Vol 24, No. 2

THE NORTHERN DISTRICT OF CALIFORNIA OPENS ITS DOORS TO THE WORLD’S CIVIL ANTITRUST DISPUTES

By Lee F. Berger and Sophie J. Sung1

I. INTRODUCTION

Policy choices dominate antitrust law. The U.S. Supreme Court made a policy choice, enshrined in its Illinois Brick decision, that under federal antitrust law, only direct purchasers have standing to bring claims, and that under Hanover Shoe, those direct purchasers may recover for 100% of the overcharge—empowering the direct purchasers to enforce the antitrust laws and avoid the complexities of pass-on calculations. The U.S. Congress made another policy choice, enshrined in the Foreign Trade Antitrust Improvements Act ("FTAIA"), that U.S. antitrust law would be applied within the United States, and only reach outside the United States when activity in foreign commerce had a direct effect on U.S. commerce.

Each of these two doctrines is meant to be read narrowly, with few and strict exceptions. Yet in the last two years, these two doctrines have been expanded beyond their intended ranges under Northern District of California precedent. As to the bar on indirect purchasers, the Ninth Circuit recognized an exception permitting indirect purchasers to sue when they purchased their product from an innocent direct purchaser which is owned or controlled by a conspirator. The Northern District of California recently doubled that exception, extending it to instances in which the ownership or control relationship exists in the opposite direction, that is, the innocent direct purchaser owns or controls the conspirator. As to the bar on extraterritorial application, the Northern District of California has improperly expanded the "import commerce" exception to the FTAIA to include instances in which the conspiracy occurred in some part in import commerce, even if the plaintiff did not purchase the product in import commerce.

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