Academic journal article Energy Law Journal

Report of the Competition & Antitrust Committee

Academic journal article Energy Law Journal

Report of the Competition & Antitrust Committee

Article excerpt

This report summarizes antitrust and competition developments of particular interest to energy law practitioners that occurred during 2014.*


A. Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd.

In Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd., a Michigan federal court dismissed a plaintiff's complaint that several Chinese solar panel manufacturers had conspired to fix the price of their products sold in the United States below competitive levels in violation of section 1 of the Sherman Antitrust Act.1 In dismissing the complaint, the court reasoned that the plaintiff had failed to allege that the defendants had a dangerous probability of recouping their profits after capturing a large share of the market.2

Plaintiff Energy Conversion Devices Liquidation Trust (ECD) produced flexible, thin-film photovoltaic solar panels from 2003 until 2012.3 ECD's annual solar panel revenues dropped by over $100 million between 2009 and 2011 and, in 2011, it filed for bankruptcy.4

In October 2013, ECD filed a complaint in federal court against several Chinese solar panel manufacturers and their American subsidiaries, Trina Solar Limited, Yingli Green Energy Holding Company Limited, and Suntech Power Holdings Company, alleging claims under section 1 of the Sherman Antitrust Act and the Michigan Antitrust Reform Act, which mirrors federal antitrust law.5

ECD alleged that since 2008, the defendants, through the China New Energy Chamber of Commerce, a trade association for alternative energy, had conspired to sell solar panels at artificially low or below-cost prices, simultaneously reducing their prices by approximately 75%, thereby forcing American companies out of the market and increasing the defendants' collective market share to above 80%.6 According to ECD, following the annual China New Energy International Forum in 2007, 2008, and 2010, the defendants "uniformly" reduced the price of imported solar panels by 40%, 18%, and 20%.7

ECD claimed the defendants' alleged price-fixing conduct was unlawful under Sherman Act section 1 as a per se unreasonable restraint of trade, or alternatively, an unreasonable restraint under the rule of reason (an analysis that weighs a restraint's potential anticompetitive effects against any procompetitive justifications).8

The district court noted that, to withstand the defendants' motion to dismiss, ECD had to properly allege it had antitrust standing, which "ensures that a plaintiff can recover only if the loss stems from a competition-reducing aspect or effect of the defendant's behavior."9 In other words, to establish a cognizable section 1 claim, ECD must have suffered "antitrust injury," that is, injury that the antitrust laws were designed to prevent.10

The defendants alleged that ECD had not suffered antitrust injury because its alleged harm resulted from below-cost pricing, which did not, by itself, confer antitrust standing to bring a Sherman Act claim.11 According to the defendants, below-cost pricing is only harmful when it is predatory, which would require ECD to show that the defendants priced their products below an appropriate measure of cost, and that the defendants had a dangerous probability of recouping their investment in below-cost pricing by later raising prices above competitive levels.12 ECD responded that this "recoupment" element only applies to monopolization claims made under section 2 of the Sherman Act and not concerted action alleged under section 1.13 Pointing to American Needle, Inc. v. National Football League, a Supreme Court decision discussing the distinction between section 1 and section 2 claims, ECD argued that Congress decided to treat conduct covered under section 1 more strictly, because "[c]oncerted activity inherently is fraught with anticompetitive risk insofar as it deprives the marketplace of independent centers of decisionmaking that competition assumes and demands. …

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