Extraterritoriality of Antitrust Law: Applying the Supreme Court's Analysis in Rjr Nabisco to Foreign Component Cartels

By Masingill, Megan L. | American University Law Review, January 1, 2018 | Go to article overview

Extraterritoriality of Antitrust Law: Applying the Supreme Court's Analysis in Rjr Nabisco to Foreign Component Cartels


Masingill, Megan L., American University Law Review


INTRODUCTION

Consider a product owned by ninety-five percent of American adults today: the cellphone.1 Now consider all the small, technological parts that go into making that cellphone work. In a globalized market, where supply chains grow longer and technology capabilities grow larger, many products, or components of those products, are manufactured around the globe and all come together through layers of distribution to create the final product that ends up in the consumer's hand.2 As a result, production and sale of many of those components often do not adhere to the strict regulations of the U.S. antitrust laws. Some of those parts may have been subject to a foreign cartel's anticompetitive conduct, such as price-fixed costs. The anticompetitive conduct did not occur in the United States, but the cellphone and all its pieces make its way to the consumer here in the United States. Should these foreign actions be subject to U.S. antitrust laws?

This question was scrutinized in cases surrounding the recent conspiracy by foreign manufacturers to price-fix liquid-crystal-display panels (LCDs) incorporated into cell phones, computers, and televisions.3 Foreign manufacturers sold LCD panels to foreign incorporators of the final products, and those incorporators eventually sold the panels to companies in the United States, including the wellknown company, Motorola Mobility.4 Does U.S. antitrust law allow a domestic company to bring an antitrust claim against a foreign conspirator for foreign anticompetitive conduct that affected a product now being sold in domestic commerce? Such questions regarding the scope of U.S. antitrust law have created considerable confusion among the circuit courts.5 This uncertainty stems from courts' differing interpretations of the application of the Foreign Trade Antitrust Improvements Act6 (FTAIA) in the context of foreign component cartel activity.7 The courts' conclusions have been "mixed, unclear, and do not apply a consistent approach" to factually similar issues.8

when the Supreme Court had the opportunity to clear up the ambiguities surrounding the FTAIA, it denied certiorari, surprising the legal community and leaving many questions unanswered.9 However, in a separate decision, the Supreme Court shed light on its current thinking about the extraterritorial application of federal laws.10 This Comment argues that the recent decision in RJR Nabisco, Inc. v. European Community11 and the Supreme Court's analysis of the extraterritorial application of the Racketeer influenced and Corrupt Organizations Act12 (RICO) are instructive on the extraterritoriality of the FTAIA. Further, this Comment suggests that the Seventh Circuit's interpretation of the FTAIA, as it relates to component cartels, is most consistent with the Court's analysis in RJR Nabisco. Though the precedent does not bind antitrust cases, the Court analogizes to antitrust law in its decision, expressing a narrowing trend in the extraterritorial application and general reach of U.S. law.

Part I of this Comment explains the relevant background information, including a brief overview of the development and purpose of antitrust law. Part I continues with a discussion of the history and enactment of the FTAIA in 1982, along with the early jurisprudence that helped shape the law as it currently stands. Finally, Part i outlines the issues component cartels present. Part ii follows, providing an overview of the confusions that have emerged among the courts, particularly between the Seventh and Ninth Circuits. Part III describes the recent developments in the law and how the Supreme Court's denial of certiorari in two recent antitrust cases failed to meet the legal community's expectations. Further, Part III highlights the recent case, RJR Nabisco, and the Court's analysis of the extraterritorial application of the federal RICO statute. Part IV argues that the Court's decision and analysis in RJR Nabisco is instructive on the issue of extraterritoriality of the FTAIA, as it concerns foreign component cartels, by drawing an analogy to RICo and looking to the statutory construction and legislative history of the statute. …

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