Antitrust Update: Second Circuit Adopts Rule Making it Easier to Find Liability for Foreign Anticompetitive Conduct

June 2014

On June 4, 2014, the Second Circuit issued its decision in Lotes Co., Ltd. v. Hon Hai Precision Industry Co., an important ruling on the reach of the U.S. antitrust laws to foreign conduct.

The Foreign Trade Antitrust Improvements Act ("FTAIA") limits the reach of U.S. antitrust liability to foreign conduct that has a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce. In Lotes, the Second Circuit construed this language to require plaintiffs to show only a "reasonably proximate causal nexus" between the conduct and the effect on U.S. domestic commerce or import commerce, a view recently endorsed by the Seventh Circuit in Minn-Chem. This view contrasts with the Ninth Circuit’s more stringent standard that the effect on U.S. commerce be an "immediate consequence" of the anticompetitive conduct.

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