by Timothy Kawira*
The Ranis Company, Inc. is a food company based in Elizabeth, New Jersey. In 2005, The Ranis Company, Inc. et al. sued several Chinese manufacturers. They alleged that the defendant Chinese companies formed a cartel that allowed them to import their products anti-competitively (via horizontal price fixing), and cost the Plaintiffs income and employees their jobs. On September 28, 2016, ten years after the alleged infringement, the U.S Court of Appeals for the Second Circuit reversed the U.S. District Court for the Eastern District of New York’s order denying Defendants’ motion to dismiss, on “comity” grounds. With international trade deals at the forefront of the 2016 presidential election, the Second Circuit’s decision raises troubling questions. If the Second Circuit’s reasoning is duplicated, how can New Jersey and other American workers and businesses expect to remain competitive when international exporters are permitted to cheat by forming cartels and importing their products (albeit indirectly) into the United States?
In The Wealth of Nations, Adam Smith famously wrote that businessmen seldom meet for any reason other than to conspire against the public. This reasoning helped promulgate the Sherman Antitrust Act (1890), as well as Articles 101 and 102 of the Treaty on the Functioning of the European Union (2007), which both seek to prevent anti-competitive behavior in the world’s two largest markets. While the optimum model for competition laws remains debatable, there is widespread recognition of their importance for advancing public policy objectives. Even the Chinese government, which wrote an amicus curiae brief in support of the Defendants’ Motion to Dismiss in In re Vitamin C Antitrust Litigation, has implemented a robust competition law regime.
The Foreign Trade Antitrust Improvements Act (“FTAIA”) was enacted in 1982, however instead of clarifying the international reach of U.S. anti-trust law, uncertainty prevails over thirty years later. This uncertainty is evident in one case where a defendant company prevailed in the Seventh Circuit, while a defendant officer of the same company lost his case on the same underlying claims in the Ninth Circuit. In F. Hoffman-LaRoche v. Empagran S.A, Ltd., 542 U.S. 155 (2004), the Supreme Court muddied the waters by finding that “application of … [the Sherman Act] to foreign anticompetitive conduct is … reasonable and hence consistent with principles of prescriptive comity, insofar as they reflect a legislative effort to redress domestic antitrust injury that foreign anticompetitive conduct has caused.” On the other hand, the Court found “that Congress designed the FTAIA to clarify, perhaps to limit, but not to expand in any significant way, the Sherman Act’s scope as applied to foreign commerce.” The Court went on to assume that Congress did not assume to impose “legal imperialism” upon other countries with its competition law.
As noted, the FTAIA and subsequent interpretations, like the one in Empagran, have done little to clarify the ability of plaintiffs (such as our New Jersey based The Ranis Company, Inc.) to seek redress against cartels based in China and elsewhere. Recent circuit court decisions have reached disparate outcomes differing analyses on subject matter jurisdiction, scope of the “import commerce” exclusion, interpretations of “direct effect,” and interpretations of “domestic effect.” To add to the confusion, some commentators have advocated for an expanded deference to comity considerations, in essence barring plaintiffs from even obtaining a hearing [per the previous analysis] on their claims. The Second Circuit’s decision in In re Vitamin C Antitrust Litigation appears to echo this line of reasoning, precluding American businesses and (indirectly) their workers from relief.
IV. Vitamin C:
What price do you pay for vitamin C? Do you pay too much? Do you pay too much for products with vitamin C in them? Suppose you are an unemployed worker who was fired from a company like The Ranis Company, Inc., because Chinese companies such as the defendant manufacturers in In Re: Vitamin C Antitrust Litigation formed a price fixing cartel and imported their price fixed products into the U.S. market, inevitably lowering the profit margin of the company you worked for. If the Second Circuit has anything to say about it, you, as a harmed business (and indirectly as an employee or consumer) will not be able to seek redress, at least not under competition law.
As previously mentioned, on September 20, 2016, the U.S Court of Appeals for the Second Circuit handed down its decision in In Re: Vitamin C Antitrust Litigation, reversing the Eastern District Court of New York jury verdict, that held the defendant Chinese companies liable for violating U.S. anti-trust law. In reversing the District Court’s judgment, the Second Circuit cited comity as the main justification for its reversal. As commentators have noted, however, “[i]n re Vitamin C Antitrust Litigation was unique in that, unlike other comity cases which have turned on circumstantial evidence and expert opinion regarding the true scope and meaning of a particular foreign law, this case involved legal opinions from the foreign government itself.”
Though the true scope and application of this decision remains to be seen, it is not unreasonable to believe that with this decision in hand, foreign companies will engage in anti-competitive behavior knowing they can rely on the amicus curiae briefs of their home countries to shield them from liability in the U.S., where the harm of their illegal behavior is actually being felt. Only time will tell.http://www.reuters.com/article/us-vitaminc-decision-idUSKCN11Q2IJ.
 In re Vitamin C Antitrust Litigation, 2nd Circuit, Argued January 29, 2015, Decided Sept. 20, 2016, —- F.3d —- 2016, WL 5017312, Docket No. 13?4791?cv.
 “Horizontal price fixing is still considered a breach of the Sherman Act.” Tsui Tat Chee, Interstate Comparison – Use of Contribution Margin in Determination of Price Fixing, 2 NO. 9 Pace Int’l L. Rev. Online Companion 1 (2011).
 Id. at 44; Comity is defined as “the informal and voluntary recognition by courts of one jurisdiction of the laws and judicial decisions of another.” (Comity, Merriam-Webster, http://www.merriam-webster.com/dictionary/comity (last visited Oct. 3, 2016).
 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith (1776), Available at http://www.econlib.org/library/Smith/smWN4.html#B.I,%20Ch.10,%20Of%20Wages%20and%20Profit%20in%20the%20Different%20Employments%20of%20Labour%20and%20Stock.
 Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 448, 113 S. Ct. 884, 886, 122 L. Ed. 2d 247 (1993) (“The law [the Sherman Antitrust Act] directs itself only against conduct that unfairly tends to destroy competition…”).
 Antitrust Overview, Eur. Comm’n (Aug. 16, 2012), http:// ec.europa.eu/competition/antitrust/overview_en.html; Application of Articles 101 and 102 TFEU (formerly Articles 81 and 82 of the EC Treaty), Eur. Comm’n (Mar. 3, 2011), http://europa.eu/legislation_ summaries/competition/firms/l26092_en.htm.
 Tom Ottervanger, Corporate Social Responsibility in Competition: competition in a changing world, Leiden University Inaugural Address (Mar. 19, 2010), https://openaccess.leidenuniv.nl/handle/1887/17780 (postulating that competition law ought to incorporate notions of social responsibility).
 “In an historic act, the Ministry [acting on behalf of the Chinese government] filed an amicus curiae brief in support of Defendants’ motion to dismiss.” In re Vitamin C Antitrust Litig., No. 13-4791-CV, 2016 WL 5017312, at *2 (2d Cir. Sept. 20, 2016); New Chinese Anti-Monopoly Law, Jones Day (October 2007), http://www.jonesday.com/new_chinese_anti-monopoly_law/.
 15 U.S.C. § 6a (2012); Howard W. Fogt at al., Clarity Put on Hold as FTAIA Conflict/Confusion Continues- Foreign Trade Antitrust Improvements Act, The National Law Review (June 22, 2015), http://www.natlawreview.com/article/clarity-put-hold-ftaia-conflictconfusion-continues-foreign-trade-antitrust-improveme.
 Id. “[T]he FTAIA has not achieved clarity, and has been a source of confusion due in large part to its tortured language and the difficulties that the courts have had in interpreting the meaning and purpose of the statute.”
 F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 165 (2004).
 Id.at 169.
 “Cartel[s are an] association of independent firms or individuals for the purpose of exerting some form of restrictive or monopolistic influence on the production or sale of a commodity.” Cartel, Britannica.com, https://www.britannica.com/topic/cartel (last visited Oct. 2, 2016).
 “[S]ubject-matter jurisdiction must be secure at all times.” Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 853 (7th Cir. 2012).
 Howard W. Fogt at al. at, supra note 9. A circuit split remains regarding the liability of non-importers whose anti-competitive actions nevertheless affect the commerce of importers.
 Id. A circuit split remains regarding interpretations of the requirement that conduct under the act be “direct”, an immediate consequence or alternatively creating a “‘reasonably proximate causal nexus’” (citing Lotes v. Hon Hai Indus., 753 F.3d 395 (2nd Cir. 2014)).
 Id. Affects must be “domestic” in nature rather than “foreign.”
 “An overzealous extraterritorial application of U.S. antitrust laws, and failure to heed comity concerns, risks [giving proper deference to foreign government’s laws].” J. Frank Hogue, Recalling First Principles: The Importance of Comity in Avoiding Antitrust Imperialism, 73 Wash. & Lee L. Rev. 533 (2016).
 The Second Circuit held “that the district court abused its discretion by failing to abstain on international comity grounds from asserting jurisdiction.” In re Vitamin C Antitrust Litig., No. 13-4791-CV, 2016 WL 5017312, at *13 (2d Cir. Sept. 20, 2016).
 “Although Plaintiffs may be unable to obtain a remedy for Sherman Act violations in another forum, complaints as to China’s export policies can adequately be addressed through diplomatic channels and the World Trade Organization’s processes.” In re Vitamin C Antitrust Litig., No. 13-4791-CV, 2016 WL 5017312, at *12 (2d Cir. Sept. 20, 2016)
 “[B]ecause Defendants could not simultaneously comply with Chinese law and U.S. antitrust laws, the principles of international comity required the district court to abstain from exercising jurisdiction in this case.” In re Vitamin C Antitrust Litig., No. 13-4791-CV, 2016 WL 5017312, at *1 (2d Cir. Sept. 20, 2016).
 Andrews Kurth, Foreign Law, American Injury: International Comity in U.S. Courts, National Law Review (Sept. 29, 2016), http://www.natlawreview.com/article/foreign-law-american-injury-international-comity-us-courts.