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International Comity: Supreme Court Considers Vitamin C Price Fixing Lawsuit

On Monday, just a few days after the Justices of the Supreme Court conferred on the cert petition in the Vitamin C price fixing antitrust case, the Court asked the Acting Solicitor General to file a brief “expressing the views of the United States.”  The cert petition comes after a Second Circuit decision reversing a $147 million jury award to vitamin C importers who successfully argued in the court below that two Chinese companies fixed the prices of vitamin C exported to the United States in violation of the Sherman Act.

The Chinese companies argued in defense that Chinese law required them to engage in activities in China that constituted antitrust violations in the United States.  In other words, they were required by the laws of their own country to collude, set prices, and reduce the amount of vitamin C exported to the United States.  The defendants’ position was supported by China’s Ministry of Commerce (MOFCOM) who proffered official statements to the court that Chinese law required the defendants to fix prices.

The issue before the Second Circuit was the standard of deference to give to MOFCOM’s statements.  The court below refused to treat MOFCOM’s views as conclusive.  In reversing, the Second Circuit held that:

[W]hen a foreign government, acting through counsel or otherwise, directly participates in U.S. court proceedings by providing a sworn evidentiary proffer regarding the construction and effect of its laws and regulations, which is reasonable under the circumstances presented, a U.S. court is bound to defer to those statements.

In so holding, the Second Circuit applied that standard of deference to MOFCOM’s official statements, found there was a true conflict between U.S. and Chinese law, and so dismissed the suit on international comity grounds.

The vitamin C importers then petitioned the Supreme Court to hear their case, arguing a circuit split, and the Court now seeks input from the Acting Solicitor General.  In the recent past, the Acting Solicitor General’s brief has significantly influenced the Supreme Court’s decision on whether to grant cert.  For example, in the “Dancing Baby” copyright case, once the Acting Solicitor General recommended the case not be granted review, a month later, the Court denied cert.  We shall await the brief from the government here.

If the Second Circuit’s decision stands, domestic antitrust plaintiffs contemplating suits against foreign defendants may need to consult with experts on that foreign nation’s laws first before filing.  But even if an antitrust lawsuit cannot be brought due to a conflict between two nations’ laws, the court noted that “Plaintiffs are not without recourse to the executive branch, which is best suited to deal with foreign policy, sanctions, treaties, and bi-lateral negotiations.”