Antitrust and Unfair Competition Law

Competition: Fall 2014, Vol. 23, No. 2

APPELLATE COURTS GRAPPLE WITH THE FOREIGN TRADE ANTITRUST IMPROVEMENTS ACT—PLAINTIFFS’ PERSPECTIVE

By Craig C. Corbitt1 and Aaron M. Sheanin2

I. INTRODUCTION

Today’s consumer products — from cutting-edge electronic devices to automobiles, and the components in them — are manufactured largely outside the United States. "Nothing is more common nowadays than for products imported to the United States to include components that the producers had bought from foreign manufacturers."3 But the rise of these globalized supply chains comes with an unexpected cost for American consumers: "As a result, the prices of many products exported to the United States are elevated to some extent by price fixing or other anticompetitive acts that would be forbidden by the Sherman Act if committed in the United States."4

In industries as diverse as computer chips, display technologies (both flat-panel and tube varieties), and auto parts (from ball bearings to wire harnesses), long-running, foreign-based cartels have taken hold in recent years and reaped billions of dollars from American consumers who bought finished products containing price-fixed components.5 As these cartels have been uncovered, often as a result of a cartel member voluntarily confessing to the Antitrust Division of the U.S. Department of Justice under its leniency program, the consequences for foreign-based firms have been severe. The Antitrust Division has obtained, through plea agreements and convictions, record-breaking fines from foreign companies and has secured lengthy prison sentences for foreign nationals. In addition, civil plaintiffs (through class actions, "direct" actions by large intermediate purchasers, and state attorneys general acting pursuant to statutory and common law authority) have sued cartel members for the overcharges caused by the price-fixed component, and in many instances have obtained significant recoveries from the cartel participants.

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