Business group, econ profs urge SCOTUS to hear foreign antitrust case

April 17, 2015

Some members of the National Association of Manufacturers would like to see the U.S. Supreme Court reverse the 7th U.S. Circuit Court of Appeals’ opinion in Motorola v. AU Optronics, which limited the reach of U.S. antitrust laws over foreign transactions, even if the deals involved products eventually sold in the U.S. Other NAM members might like to see the 7th Circuit’s narrow interpretation prevail. But the entire U.S. manufacturing industry, according to an amicus brief NAM filed at the Supreme Court on Thursday, needs the justices to resolve the uncertainty created by a split between the 7th and 9th Circuit interpretations of how American antitrust laws apply to global supply chains.

“Whatever the rule turns out to be, businesses must know such rule in advance,” wrote NAM counsel Erik Jaffe. “The transaction costs of such uncertainty (and the consequences of error) are so high that they could put a meaningful damper on trade and increase the price of goods for U.S. manufacturers and consumers alike.”

NAM chose to file its amicus brief in the Motorola case and not in a parallel petition for certiorari by two former AU Optronics executives, who have asked the Supreme Court to review a 9th Circuit decision affirming their price-fixing conspiracy convictions. As I told you last month, the two cert petitions, filed on the very same day at the Supreme Court, involve the same set of facts – an alleged price-fixing cartel among foreign liquid crystal screen makers whose products ended up in devices sold in the U.S. – and the same imprecise statutory language in the Foreign Trade Antitrust Improvements Act. Both cert petitions highlighted the difference between the 7th and 9th Circuit readings of the law and called on the justices to resolve the split.

NAM counsel Jaffe told me he’s sure the Supreme Court will look at the petitions together, so his filing in the Motorola case will be considered in the AU Optronics case as well. “Both petitions will be handed to the same clerk,” he said. “For all practical purposes, it’s an amicus brief in both cases.”

Two other amicus briefs supporting Motorola, one by the American Antitrust Institute and the other by a dozen economics and law professors, argue that the 7th Circuit was wrong to hold that U.S. companies cannot bring antitrust claims on behalf of foreign subsidiaries engaged in overseas transactions. NAM’s brief explicitly said that the trade association is not taking a position on the merits of Motorola’s case but just wants clarity. In fact, Jaffe said, because NAM members have all sorts of different interests in the scope of U.S. antitrust laws, the group may not end up filing an amicus brief on the merits if the justices decide to take either the Motorola or AU Optronics case – or both cases.

No amici filed briefs backing the former AU Optronics executives’ bid for Supreme Court review. On the other hand, the opposing party in their case is the Justice Department because the underlying case was a criminal proceeding, not a civil suit. Clearly, the Supreme Court is going to want the government to have a say in its consideration of the reach of U.S. antitrust laws. The Justice Department was deeply involved as an amicus in the Motorola case when it was before the 7th Circuit but did not volunteer its view of the Motorola cert petition. (It would have been remarkable if the solicitor general had filed an uninvited brief addressing the Motorola cert petition, and the justices may still ask the SG to outline the government’s view of the scope of civil antitrust remedies over foreign transactions.)

The last time in my memory that the Supreme Court had to pick between two simultaneous cert petitions raising the same business issue, when one case involved the government and the other did not, was in the debate over the legality of pay-for-delay deals between brand and generic-drug manufacturers. In that instance, the justices opted not to take both cases but to hear only the Federal Trade Commission’s appeal. The foreign antitrust controversy is a bit different, though, because (as the 7th Circuit took pains to point out in its Motorola decision), application of the FTAIA has both civil and criminal consequences.

Cert opposition briefs in both the Motorola and AU Optronics cases are due mid-May. Motorola is represented by Tom Goldstein of Goldstein & Russell. The former AU Optronics executives are represented by Neal Katyal of Hogan Lovells. AU Optronics is represented in the Motorola case by Robert Wick of Covington & Burling.

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