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WASHINGTON — A multibillion-dollar price-fixing case pitting foreign vitamin buyers against vitamin sellers has been winding through U.S. courts for years. At arguments Monday, the U.S. Supreme Court will be asked to decide whether buyers who purchased products overseas had the right to bring suit in the United States in the first place. If it answers yes to that question, the high court could clear the way for massive private claims by foreign plaintiffs in U.S. courts. And business advocates and government officials are raising flags. The prospect of opening American courtrooms — with their liberal rules on damages, jury trials, discovery and class actions — to plaintiffs from around the world frightens many foreign governments, as well as the Department of Justice and the Federal Trade Commission. “Although it is about a small question of antitrust remedies, the dollar stakes are very large,” says Stephen Calkins, a professor at Wayne State University Law School and a former Federal Trade Commission general counsel. The question of U.S. jurisdiction over antitrust cases has split the federal appeals courts, with the D.C. Circuit U.S. Court of Appeals and the Second Circuit allowing foreign complaints to proceed, and the Fifth Circuit putting on the brakes. In a flurry of amicus curiae briefs, more than a half-dozen foreign governments argue that the D.C. Circuit erred when it upheld the right of plaintiffs to sue in F. Hoffmann-LaRoche Ltd. v. Empagran S.A. They say allowing U.S. courts to decide such cases will thwart their prosecution of cartels and threaten international cooperation among antitrust authorities. Both sides have brought in Supreme Court veterans to argue the case. Appearing for the vitamin sellers is Stephen Shapiro, a Chicago partner at Mayer, Brown, Rowe & Maw. He founded the Supreme Court and appellate litigation group at Mayer, Brown, which represents defendant BASF Corp. On the other side is Thomas Goldstein of D.C.’s Goldstein & Howe, a boutique specializing in Supreme Court advocacy. Goldstein says the case could answer important outstanding questions about the international application of antitrust laws, noting as well the potentially mammoth economic implications. “There is a lot of money at stake, the conspiracy was really, really big, and the business community is very interested,” Goldstein says. Shapiro declined to comment about the case, citing the pending arguments. Hoffmann-LaRoche is a class action filed by lawyers at D.C.’s Cohen, Milstein, Hausfeld & Toll on behalf of vitamin buyers. The class action was one of 75 private civil cases filed in the wake of a Department of Justice criminal investigation from the mid-1990s into the vitamin companies’ practices. The DOJ found that for nearly a decade, a cartel of vitamin companies conspired to inflate the price for vitamins used in everything from breakfast cereal to animal feed. The investigation culminated in the conviction of more than a dozen companies, including Hoffmann-LaRoche, BASF, Takeda Chemical Industries Ltd. and Eisai Inc. A handful of top executives went to jail, and, in 1999 alone, the DOJ imposed more than $850 million in fines on cartel members. Cartel members paid another nearly $1 billion in fines levied by foreign governments, including the European Union, Canada and Australia, and face private suits in a half-dozen countries. And the civil suits in U.S. courts have yielded billions more in awards. RARE DECISIONS The vitamin suit is one of four antitrust cases on the Supreme Court calendar this term. Wayne State’s Calkins says few antitrust questions have been answered by justices in the past decade — in part because many antitrust actions are settled out of court. “In the old days, the court used to hear a lot [of antitrust cases],” says Calkins, who is also of counsel at Covington & Burling. “But it largely abandoned doing antitrust jurisprudence. This is only the second term with four antitrust decisions since 1984.” Of the antitrust cases currently before the high court, two deal with the international jurisdiction of U.S. antitrust law. The vitamin case to be heard Monday is one. The other jurisdictional case, Intel Corp. v. Advanced Micro Devices Inc., was heard by the high court on Tuesday. In the Intel case, AMD is seeking discovery in U.S. courts over an antitrust matter before the Directorate-General of the Commission of the European Communities. In July, the Ninth Circuit U.S. Court of Appeals held that discovery is available in the United States in certain antitrust matters before the commission. “In each case European governments are complaining about the purported expansive reach of U.S. law, and in each case there is the appearance of plaintiffs seeking out an arguably inappropriate U.S. forum to advance interests elsewhere,” says Roy Englert Jr., a founding partner at D.C.’s Robbins, Russell, Englert, Orseck & Untereiner. Englert has argued more than a dozen cases before the Supreme Court. At the root of circuit splits are questions about the interpretation of the Foreign Trade Antitrust Improvement Act of 1982. The act was passed in response to concerns about the international jurisdiction of U.S. antitrust law. It amended the Sherman Antitrust Act — a baseline competition law passed in the 19th century — and was used to aid U.S. companies that compete in foreign markets by exempting some exports from antitrust laws. Twenty-two years later, it is unclear whether the foreign trade statute gives foreign plaintiffs the green light to sue in U.S. courts, even if the transactions didn’t occur here. And the statute’s murky intent hasn’t been clarified by recent appeals court decisions. In Kruman v. Christie’s International PLC, the New York-based Second Circuit found that foreign buyers and sellers had the right to sue in the United States over an alleged price-fixing conspiracy at overseas auctions conducted by the Christie’s and Sotheby’s auction houses. A petition for Supreme Court review was withdrawn in the case after it settled in 2002 for nearly $500 million. Kruman marked a dramatic departure from a 2001 decision by the New Orleans-based Fifth Circuit. In its decision, the Fifth Circuit held that it didn’t have jurisdiction over a Norwegian company’s price-fixing claim. FOREIGN TRANSACTIONS In Hoffmann-LaRoche, the vitamin companies and foreign and U.S. governments argue buyers didn’t transact business in the United States. Therefore, the actions at issue didn’t affect commerce here and, the argument goes, fall outside U.S. antitrust jurisdiction. But John Connor, a Purdue University economics professor who crafted an amicus curiae brief in support of the buyers, suggests taking a closer look at the nuts and bolts of global cartels. The market for bulk vitamins is global, with buyers and sellers seeking the best prices regardless of the location of the other party in the transaction, Connor says. That means the vitamin price fixing affects all market participants, including those in the United States, Connor says. His argument is echoed in the vitamin buyers’ brief. “This is what justifies the extraterritoriality of the Sherman Act,” Connor says. The vitamin buyers also assert that the foreign trade antitrust statute defines conduct that the Sherman Act prohibits, rather than the standing of private parties to sue. This means it does not restrict the application of U.S. antitrust law to global cartels. The statute limits antitrust application only with respect to exports from the United States, not global cartels, the buyers argue. In their briefs, the foreign governments say that the threat of exposure to treble damages in the United States will scare companies away from blowing the whistle on co-conspirators in exchange for amnesty from criminal prosecution. In the Hoffmann-LaRoche case, French company Rhone-Poulenc SA, now Aventis, received amnesty for providing evidence against vitamin price-fixers. Imposing U.S. antitrust law internationally is insulting to many countries with their own antitrust regimes and can undermine the antitrust and economic laws and policies of the foreign nations involved, says Douglas Rosenthal, a Sonnenschein Nath & Rosenthal partner in D.C. who wrote a brief for Japan. “Why should Japan have imposed on its citizens the burdens of automatic treble damage liability and the enormous costs of U.S. litigation, such as intrusive pre-trial discovery, which are not compatible with Japanese legal standards?” Rosenthal asks. “That is deeply offensive to virtually everybody else in the world. You will have private attorneys moving very directly into public international law and public regulation of antitrust. Mixing public and private international antitrust enforcement in this way is for legislatures and diplomats, not U.S. courts.” Englert, who submitted an amicus brief for the U.S. Chamber of Commerce, concurs: “Nobody is saying that there can’t be civil remedies against these cartels in various countries around the world. They’re only saying that the U.S. shouldn’t be the consolidated forum for everyone in the world.” D.C. firms including Kellogg, Huber, Hansen, Todd & Evans (for Germany) and Miller & Chevalier (for Canada) have also filed briefs. Attention to jurisdictional issues in antitrust has become more urgent, thanks in large part to economic globalization and the emergence of more sophisticated antitrust regimes in many countries. And since the foreign trade antitrust statute became law in 1982, cooperation among antitrust authorities worldwide has increased dramatically. More than 100 countries worldwide now have some form of anti-cartel laws, says William Kolasky, co-chair of Wilmer Cutler Pickering’s competition group. Kolasky, a former deputy assistant attorney general for international enforcement in the Antitrust Division of DOJ, is one of the architects of a network of more than 80 competition authorities worldwide. He cites agreements to combat antitrust violations between the United States and Australia, Brazil, Britain, Canada and the European Union as a sign of growing cooperation. But the Justice Department asserts that if the D.C. Circuit’s decision is upheld, cooperation would be threatened. It submitted a brief supporting the vitamin companies signed by Assistant Attorney General R. Hewitt Pate, who heads the department’s Antitrust Division. However, Connor, the Purdue economics professor, says that antitrust enforcers both here and abroad take a backward approach to the deterrence of international cartels. “It’s a common error in much of the legal discussion to look at deterrence in terms of what happens afterward,” says Connor. “But deterrence is intended to nip collusion in the bud, to stop the decision to join a new cartel.” He urges an examination of deterrence from the point at which companies weigh the benefits and costs of forming or joining a cartel, asserting that the possibility of having to pay treble damages is an enormous disincentive to would-be cartels. Similarly, vitamin buyers and their attorneys argue that allowing foreign plaintiffs to file in U.S. courts will provide more efficient deterrence than civil or criminal penalties here or in foreign countries. “Imposing liability for all of a worldwide cartel’s activities prevents the participants from using their illegal overseas profits to subsidize the risk of liability in this country,” lawyers for the vitamin buyers wrote in the brief for the court. “Deterring cartel activity abroad prevents cartels from emerging and accelerates their collapse, both to the benefits of U.S. consumers.” Lily Henning is a reporter with Legal Times, a Recorder affiliate based in Washington, D.C.

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