No. 10-1712 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE SEVENTH CIRCUIT 

____________________ 

MINN-CHEM, INC., et al., 

Plaintiffs-Appellees, 

v. 

AGRIUM INC., et al., 

Defendants-Appellants. 

____________________ 

On Interlocutory Appeal from an Order of the 

United States District Court for the Northern District of Illinois 

MDL Docket No. 1996, Case No. 08-cv-6910 

(The Honorable Ruben Castillo) 

____________________ 

BRIEF FOR THE UNITED STATES AND THE FEDERAL TRADE 

COMMISSION AS AMICI CURIAE IN SUPPORT OF NEITHER PARTY 

ON REHEARING EN BANC 

____________________ 

WILLARD K. TOM 

General Counsel

SHARIS A. POZEN 

Acting Assistant Attorney General 

JOHN F. DALY 

Deputy General Counsel 

Federal Trade Commission

600 Pennsylvania Ave., N.W. 

Washington, D.C. 20580

CATHERINE G. O’SULLIVAN 

ROBERT B. NICHOLSON 

JAMES J. FREDRICKS 

NICKOLAI G. LEVIN 

KRISTEN C. LIMARZI 

Attorneys 

U.S. Department of Justice 

Antitrust Division 

950 Pennsylvania Ave., N.W. 

Room 3224 

Washington, D.C. 20530-0001 

(202) 514-2886 
ii 

TABLE OF CONTENTS 

TABLE OF CONTENTS ........................................................................... ii

TABLE OF AUTHORITIES ..................................................................... iii

STATEMENT OF INTEREST .................................................................. 1

STATEMENT OF ISSUES ....................................................................... 1

STATEMENT ............................................................................................ 2

SUMMARY OF ARGUMENT ................................................................... 7

ARGUMENT ............................................................................................. 9

I. Congress Crafted the FTAIA’s Exceptions To Protect 

Purchasers in the United States from Antitrust Injury. ............. 9

II. The Import Commerce Exception Is Not Limited to 

Conduct that Specifically Targets U.S. Import Commerce. ...... 14

III. The Direct Effects Exception Is Not Limited to Effects 

that Follow as an Immediate Consequence of the 

Challenged Conduct. .................................................................. 20

CONCLUSION ........................................................................................ 31

CERTIFICATE OF COMPLIANCE ....................................................... 32

CERTIFICATE OF SERVICE ................................................................ 33
iii 

TABLE OF AUTHORITIES 

CASES

Almendarez-Torres v. United States, 523 U.S. 224 (1998) .................... 20 

A.M.I. Diamonds Co. v. Hanover Insurance Co., 

 397 F.3d 528 (7th Cir. 2005) ............................................................... 21 

Anderson v. United States, 171 U.S. 604 (1898) .................................... 21 

Animal Science Products, Inc. v. China Minmetals Corp., 

654 F.3d 462 (3d Cir. 2011) ......................................................... passim 

Associated General Contractors of California, Inc. v. California 

State Council of Carpenters, 459 U.S. 519 (1983) ............................. 23 

Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982) .................... 22 

Carpet Group International v. Oriental Rug Importers Ass’n, 

227 F.3d 62 (3d Cir. 2000) .................................................................. 14 

Carter v. Carter Coal Co., 298 U.S. 238 (1936) ...................................... 22 

Empagran S.A. v. F. Hoffmann-LaRoche Ltd., 

417 F.3d 1267 (D.C. Cir. 2005) ........................................................... 23 

F. Hoffmann-La Roche Ltd. v. Empagran S.A., 

542 U.S. 155 (2004)...................................................................... passim 

Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993) ............ 12 

Hopkins v. United States, 171 U.S. 578 (1898) ...................................... 21 

In re Dynamic Random Access Memory (DRAM) Antitrust 

Litigation, 546 F.3d 981 (9th Cir. 2008) ............................................ 23 

In re Monosodium Glutamate Antitrust Litigation, 

477 F.3d 535 (8th Cir. 2007) ............................................................... 23 
iv 

In Re: TFT-LCD (Flat Panel) Antitrust Litigation, No. 07-1827, 

2011 WL 4634031 (N.D. Cal. Oct. 5, 2011) .................................. 27, 29 

Kruman v. Christie’s International PLC, 

284 F.3d 384 (2d Cir. 2002) ................................................................ 18 

Loeb Industries, Inc. v. Sumitomo Corp., 

 306 F.3d 469 (7th Cir. 2002) ............................................................... 23 

Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 

334 U.S. 219 (1948)....................................................................... 21, 24 

Metallgesellschaft AG v. Sumitomo Corp. of America, 

325 F.3d 836 (7th Cir. 2003) ............................................................... 30 

Northern Securities Co. v. United States, 193 U.S. 197 (1904) ............. 21 

Pacific Seafarers, Inc. v. Pacific Far East Line, Inc., 

404 F.2d 804 (D.C. Cir. 1968) ............................................................. 10 

Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978) ...................... 12 

Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) .......... 26, 27 

Trustees of the Chicago Truck Drivers, Helpers & Warehouse 

Workers Union (Independent) Pension Fund v. Leaseway 

Transportation Corp., 76 F.3d 824 (7th Cir. 1996) ............................ 26 

TRW Inc. v. Andrews, 534 U.S. 19 (2001) .............................................. 28 

Turicentro, S.A. v. American Airlines Inc., 

 303 F.3d 293 (3d Cir. 2002) ...................................................... 8, 16, 17 

United States v. Joint Traffic Ass’n, 171 U.S. 505 (1898) ...................... 22 

United States v. LSL Biotechnologies, 

 379 F.3d 672 (9th Cir. 2004) ........................................................ passim

United States v. Nippon Paper Industries Co., 

109 F.3d 1 (1st Cir. 1997) ................................................................... 12 
v 

United States v. South-Eastern Underwriters Ass’n, 

322 U.S. 533 (1944)............................................................................. 10 

Vainisi v. CIR, 599 F.3d 567 (7th Cir. 2010) .......................................... 17 

Wickard v. Filburn, 317 U.S. 111 (1942) ................................................ 21 

STATUTES AND RULES 

15 U.S.C.: 

 § 1 ....................................................................................................... 2 

 § 2 ..................................................................................................... 16 

 § 6a .............................................................................................. passim 

 § 45(a)(3) ............................................................................................... 1 

28 U.S.C. § 1605(a)(2) ............................................................................. 26 

Federal Rule of Appellate Procedure 29(a) ............................................... 1 

Pub. L. No. 97-290, § 102(b), 96 Stat. 1233 (1982) ................................. 10 

MISCELLANEOUS

Defendants’ Proposed Preliminary Jury Instructions on the 

Elements of the Offense, and Memorandum in Support of 

Proposed Instructions, United States v. AU Optronics Corp., 

No. Cr-09-0110 (SI) (N.D. Cal. Nov. 2, 2011) ..................................... 19 

H.R. Rep. No. 97-686 (1982), reprinted in 

 1982 U.S.C.C.A.N. 2487 ................................................... 10, 11, 13, 24 

1B Philip E. Areeda & Herbert Hovenkamp, Antitrust Law 

¶ 272i1 (3d ed. 2009) .......................................................................... 29 

Webster’s Third New International Dictionary (1981) .................... 20, 26 
STATEMENT OF INTEREST 

The United States and the Federal Trade Commission enforce the 

federal antitrust laws and have a strong interest in the correct 

interpretation of the Foreign Trade Antitrust Improvements Act of 1982 

(FTAIA), which added Section 6a to the Sherman Act, 15 U.S.C. § 6a. 

The FTAIA also added Section 5(a)(3) to the FTC Act, 15 U.S.C. 

§ 45(a)(3), which closely parallels Section 6a and limits the antitrust 

enforcement authority of the FTC. This amicus brief addresses the 

meaning of the “import commerce” and “direct effects” exceptions in the 

FTAIA but does not express a view on the proper disposition of this 

case. It is filed pursuant to Federal Rule of Appellate Procedure 29(a). 

STATEMENT OF ISSUES 

1. Whether the FTAIA’s import commerce exception is limited to 

conduct that specifically targets U.S. import commerce. 

2. Whether the FTAIA’s direct effects exception is limited to 

effects that follow as an immediate consequence of the challenged 

conduct. 
2 

STATEMENT 

This case involves an alleged foreign conspiracy to fix the price of 

potash in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. It 

raises important questions regarding the proper interpretation of the 

Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. 

§ 6a. 

1. Section 1 of the Sherman Act prohibits agreements “in 

restraint of trade or commerce among the several States, or with foreign 

nations.” 15 U.S.C. § 1. The FTAIA, however, provides that: 

Sections 1 to 7 of [the Sherman Act] shall not apply to conduct 

involving trade or commerce (other than import trade or import 

commerce) with foreign nations unless— 

(1) such conduct has a direct, substantial, and reasonably 

foreseeable effect— 

(A) on trade or commerce which is not trade or commerce with 

foreign nations, or on import trade or import commerce with 

foreign nations; or 

(B) on export trade or export commerce with foreign nations, 

of a person engaged in such trade or commerce in the United 

States; and 

(2) such effect gives rise to a claim under the provisions of 

sections 1 to 7 of this title, other than this section. 

15 U.S.C. § 6a. 
3 

The FTAIA initially places all conduct involving foreign 

commerce, with the exception of conduct involving import commerce, 

outside the Sherman Act’s reach. F. Hoffmann-La Roche Ltd. v. 

Empagran S.A., 542 U.S. 155, 162 (2004). Thus, the FTAIA leaves the 

Sherman Act applicable to conduct involving import commerce; courts 

sometimes refer to this as the “import commerce exception.” Slip Op. 

17, 19. The FTAIA also brings conduct involving non-import foreign 

commerce “back within the Sherman Act’s reach” if that conduct 

“sufficiently affects American commerce, i.e., it has a ‘direct, 

substantial, and reasonably foreseeable effect’ on American domestic, 

import, or (certain) export commerce.” Empagran, 542 U.S. at 162. 

Courts sometimes call this the “direct effects exception.” Slip Op. 19. 

2. Purchasers of potash in the United States (plaintiffs) filed 

class actions alleging that certain foreign potash producers (defendants) 

violated Section 1 of the Sherman Act by agreeing to “restrict output 

and fix prices of potash at artificially high levels.” Slip. Op. 2, 5. 

Plaintiffs alleged that the defendants “coordinated price hikes in Brazil, 

China, and India,” which in turn increased the price of potash imported 
4 

into the United States, because the price of potash in these foreign 

markets served as a “benchmark” for U.S. sales. Id. at 9-10. 

Defendants moved to dismiss the Sherman Act claims for lack of 

subject-matter jurisdiction under the FTAIA and alternatively for 

failure to state a claim upon which relief can be granted. Slip Op. 10. 

The district court denied the motion. Id. It ruled that the import 

commerce exception to the FTAIA was satisfied because the defendants 

imported potash into the United States and there was a sufficiently 

“tight nexus between the alleged [global conspiracy] and [d]efendants’ 

import activities . . . to conclude that the former ‘involved’ the latter.” 

Id. at 19. The court also concluded that plaintiffs sufficiently alleged a 

price-fixing conspiracy to state a claim under Section 1. Id. at 10. 

3. On a certified interlocutory appeal, a two-judge panel of this 

Court vacated the district court’s decision. Slip. Op. 1-27.1 The panel 

explained that the district court “essentially conflate[d] the ‘import 

commerce’ exception and the ‘direct effects’ exception” by assuming that 

“foreign anticompetitive conduct can ‘involve’ U.S. import commerce 

even if it is directed entirely at markets overseas.” Id. at 19. The panel 

 

1 Judge Evans, the third member of the panel, died before the case was decided. 
5 

further noted that the district court had erred in reasoning that “a 

foreign company that does any import business in the United States 

would violate the Sherman Act whenever it entered into a joint-selling 

arrangement overseas regardless of its impact on the American 

market.” Id. at 19-20. 

The panel then held that “the relevant inquiry under the importcommerce exception is ‘whether the defendants’ alleged anticompetitive 

behavior was directed at an import market,’” which “‘requires that the 

defendants’ [foreign anticompetitive] conduct target [U.S.] import goods 

or services.’” Slip Op. 20-21 (quoting Animal Sci. Prods., Inc. v. China 

Minmetals Corp., 654 F.3d 462, 470 (3d Cir. 2011)). Plaintiffs failed to 

satisfy that requirement, the panel concluded, because they did not 

sufficiently allege either “that the offshore defendants agreed to an 

American price or production quota for potash” or “that the defendants 

agreed to worldwide production quotas for all members of the 

conspiracy or that a global cartel price was ever set.” Id. at 21. Rather, 

plaintiffs “describe[d] anticompetitive conduct aimed at the potash 

markets in Brazil, China, and India—not the U.S. import market.” Id.
6 

The panel also concluded that plaintiffs’ claims did not come 

within the “direct effects” exception (an issue the district court had not 

reached). Slip Op. 21-27. The panel found “compelling” the definition of 

“direct” adopted in United States v. LSL Biotechnologies, 379 F.3d 672 

(9th Cir. 2004): that an effect is “direct” if “it follows as an immediate 

consequence of the defendant’s activity,” and hence, “[a]n effect cannot 

be ‘direct’ where it depends on . . . uncertain intervening developments.” 

Slip Op. 22 (quoting LSL Biotechs., 379 F.3d at 680-81). The alleged 

effects failed to satisfy this requirement, the panel held, because the 

complaints lacked “specific factual content to support the asserted 

proposition that prices in China, India, and Brazil serve as a 

‘benchmark’ for prices in the United States and that this benchmark, if 

it exists, has a strong enough relationship with the domestic potash 

market to raise a plausible inference that the defendants’ foreign 

anticompetitive conduct has a ‘direct, substantial, and reasonably 

foreseeable effect’ on domestic or import commerce.” Id. at 24. Thus, 

dismissal of the Sherman Act claims was required. Id. at 27. 

4. On December 2, 2011, the Court granted plaintiffs’ petition 

for rehearing en banc and vacated the panel’s decision. Dkt. 58. 
7 

SUMMARY OF ARGUMENT 

1. Congress enacted the FTAIA to make clear to U.S. exporters 

and U.S. firms doing business abroad that the Sherman Act does not 

apply to their business arrangements “as long as those arrangements 

adversely affect only foreign markets.” F. Hoffmann-La Roche Ltd. v. 

Empagran S.A., 542 U.S. 155, 161 (2004). But Congress also sought to 

ensure that purchasers in the United States remained fully protected by 

the federal antitrust laws. Thus, the FTAIA leaves the Sherman Act 

applicable to conduct “involving” import trade or commerce (the import 

commerce exception) and to conduct that has a “direct, substantial, and 

reasonably foreseeable effect” on commerce within the United States, 

U.S. import commerce, or the export trade of a U.S. exporter (the direct 

effects exception). 15 U.S.C. § 6a. 

2. The import commerce exception guarantees the continuing 

applicability of the Sherman Act to import restraints that harm 

purchasers in the United States. The exception does not apply merely 

because the defendants engaged in import commerce; rather, the 

conduct being challenged must itself “involv[e]” import trade or 

commerce. 15 U.S.C. § 6a. In a Section 1 case, the conduct involves 
8 

import commerce when the challenged agreement is, at least in part, in 

restraint of import commerce. 

Courts have described the FTAIA’s import commerce exception as 

applying when the challenged conduct is “directed at an import 

market,” Turicentro, S.A. v. Am. Airlines Inc., 303 F.3d 293, 303 (3d 

Cir. 2002), or “target[s] import goods or services,” Animal Sci. Prods., 

Inc. v. China Minmetals Corp., 654 F.3d 462, 470 (3d Cir. 2011). 

Although the panel apparently did not intend this result, “directed at” 

and “targeting” could be understood to narrow substantially the 

statutory language. These terms wrongly suggest that the import 

commerce exception applies only if the defendants specifically or 

uniquely focused on U.S. imports. 

3. The direct effects exception leaves the Sherman Act 

applicable to conduct involving non-import foreign commerce that has a 

“direct, substantial, and reasonably foreseeable effect” on commerce 

within the United States, U.S. import commerce, or export commerce of 

a U.S. exporter. “Direct” has many meanings, but in light of the 

statutory context, the FTAIA’s history and purpose, and antitrust 

precedent, it is best defined here as “reasonably proximate.” 
9 

The panel borrowed the definition of “direct” adopted by the panel 

majority in United States v. LSL Biotechnologies, 379 F.3d 672 (9th Cir. 

2004): that an effect is “direct” if “it follows as an immediate 

consequence of the defendant’s activity,” and hence, “[a]n effect cannot 

be ‘direct’ where it depends on . . . uncertain intervening developments.” 

Slip Op. 22 (quoting LSL Biotechs., 379 F.3d at 680-81). Defining 

directness in this way, however, would render multiple provisions in the 

FTAIA superfluous and undermine Congress’s objective of ensuring 

that the Sherman Act protects purchasers in the United States from 

anticompetitive harm. 

ARGUMENT 

I. Congress Crafted the FTAIA’s Exceptions To Protect Purchasers in 

the United States from Antitrust Injury. 

The FTAIA should be construed in light of its history and purpose. 

See F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 169 

(2004). The statute “seeks to make clear to American exporters (and to 

firms doing business abroad) that the Sherman Act does not prevent 

them from entering into business arrangements (say, joint-selling 

arrangements), however anticompetitive, as long as those arrangements 

adversely affect only foreign markets.” Id. at 161. By making clear to 
10 

U.S. firms when the federal antitrust laws apply to conduct involving 

export commerce or other commerce outside the United States, 

Congress intended to “increase United States exports of products and 

services.” Pub. L. No. 97-290, § 102(b), 96 Stat. 1233, 1234; see also

H.R. Rep. No. 97-686, at 7-8 (1982), reprinted in 1982 U.S.C.C.A.N. 

2487, 2494. 

To this end, Congress limited the application of the Sherman Act 

when the challenged conduct involves export commerce or wholly 

foreign commerce—that is, commerce within, between, or among foreign 

nations. Clear limits were necessary because the Sherman Act goes “to 

the utmost extent of [Congress’s] Constitutional power.” United States 

v. Se. Underwriters Ass’n, 322 U.S. 533, 558 (1944). As a result, U.S. 

firms—and Congress—were concerned that courts would apply the 

Sherman Act to some anticompetitive conduct involving only export or 

wholly foreign commerce with no impact on the United States. This 

undesirable outcome, the FTAIA’s drafters explained, was exemplified 

by Pacific Seafarers, Inc. v. Pacific Far East Line, Inc., 404 F.2d 804 

(D.C. Cir. 1968), which applied the Sherman Act to an alleged 

conspiracy among U.S. shipping companies to destroy plaintiffs’ 
11 

business of carrying cement and fertilizer between Taiwan and South 

Vietnam. H.R. Rep. No. 97-686, at 9, reprinted in 1982 U.S.C.C.A.N. at 

2494. Yet, such anticompetitive conduct “should not, merely by virtue 

of the American ownership, come within the reach of our antitrust 

laws.” Id. 

Congress’s solution was the FTAIA. It provides that the Sherman 

Act “shall not apply to conduct involving trade or commerce (other than 

import trade or import commerce) with foreign nations unless such 

conduct has a direct, substantial, and reasonably foreseeable effect” on 

commerce within the United States, U.S. import commerce, or export 

trade of a U.S. exporter. 15 U.S.C. § 6a. 

Because the FTAIA addresses whether the Sherman Act applies, 

the term “conduct” in the FTAIA refers to the activity that might violate 

the Sherman Act. But, as the statutory language makes clear, the 

application of the FTAIA turns on the type of commerce involved and 

not on the location of the conduct or on the nationality of the 

defendants. Potentially anticompetitive activity by U.S. exporters in 

the United States is precisely the sort of conduct Congress sought to 

exclude from the Sherman Act so long as it affects only non-import 
12 

foreign commerce. Conversely, the FTAIA leaves the Sherman Act fully 

applicable to conduct involving U.S. import commerce, even if the 

conduct takes place entirely outside the United States.2 

Congress also sought to ensure that purchasers in the United 

States remained fully protected by the federal antitrust laws. For this 

reason, the FTAIA leaves the Sherman Act applicable to 

anticompetitive conduct involving commerce within the United States, 

even though the conduct also involves foreign commerce. If U.S. 

manufacturers fixed the price of products sold in the United States and 

also exported to Canada, the FTAIA would be irrelevant to a suit under 

the Sherman Act brought by purchasers in the United States or by the 

U.S. government. See Empagran, 542 U.S. at 161; cf. Pfizer, Inc. v. 

Gov’t of India, 434 U.S. 308, 314 (1978) (“Congress’ foremost concern in 

passing the antitrust laws was the protection of Americans.”). 

 

2 “[I]t is well established by now that the Sherman Act applies to foreign conduct 

that was meant to produce and did in fact produce some substantial effect in the 

United States.” Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 (1993). 

Thus, the Sherman Act authorizes antitrust actions “predicated on wholly foreign 

conduct which has an intended and substantial effect on the United States.” United 

States v. Nippon Paper Indus. Co., 109 F.3d 1, 4 (1st Cir. 1997). While Hartford 

Fire and Nippon Paper focus on the where the conduct took place, the FTAIA 

considers what commerce the conduct involves or affects. 
13 

For conduct that does not involve commerce within the United 

States, the FTAIA makes the Sherman Act inapplicable unless the 

conduct comes within a statutory exception. The first exception applies 

to conduct involving import commerce. By providing that the Sherman 

Act “shall not apply to conduct involving trade or commerce (other than 

import trade or import commerce) with foreign nations,” the FTAIA 

leaves the Sherman Act fully applicable to conduct involving import 

commerce. 15 U.S.C. § 6a; see Animal Sci. Prods., Inc. v. China 

Minmetals Corp., 654 F.3d 462, 466 (3d Cir. 2011) (“[T]he FTAIA 

provides that it does not apply (and thus that the Sherman Act does

apply) if the defendants were involved in ‘import trade or import 

commerce’ (the ‘import trade or commerce’ exception).”). This exception 

was included so there would be “no misunderstanding that import 

restraints, which can be damaging to American consumers, remain 

covered by the law.” H.R. Rep. No. 97-686, at 9, reprinted in 1982 

U.S.C.C.A.N. at 2494. 

The second exception applies to conduct involving only non-import 

foreign commerce that, nevertheless, affects the United States. The 

FTAIA leaves the Sherman Act applicable to such conduct if it has a 
14 

“direct, substantial, and reasonably foreseeable effect” on commerce 

within the United States, U.S import commerce, or the export trade of a 

U.S. exporter. 15 U.S.C. § 6a(1). This exception also requires that 

“such effect gives rise to a claim under [the Sherman Act].” 15 U.S.C. 

§ 6a(2).3

II. The Import Commerce Exception Is Not Limited to Conduct that 

Specifically Targets U.S. Import Commerce. 

The import commerce exception provides that conduct “involving” 

import trade or commerce is not exempted from the Sherman Act. 15 

U.S.C. § 6a. As the panel correctly observed, this exception does not 

apply merely because the defendants engaged in import commerce. Slip 

Op. 20. Rather, the conduct being challenged must itself “involv[e]” 

import trade or commerce. Id. at 20-21; Carpet Grp. Int’l v. Oriental 

Rug Imps. Ass’n, 227 F.3d 62, 71 (3d Cir. 2000) (the relevant inquiry is 

 

3 In Empagran, the Supreme Court concluded that this requirement was not met by 

foreign plaintiffs’ damages claim to recover for “foreign injury” caused by “foreign 

anticompetitive conduct” producing “an adverse domestic effect” and “an 

independent foreign effect giving rise to the claim.” 542 U.S. at 158-59. No case 

prior to the FTAIA had “applied the Sherman Act to redress foreign injury in such 

circumstances,” and the FTAIA did not expand the Sherman Act’s reach. Id. at 169-

73. Consistent with the pre-FTAIA understanding that the antitrust laws “redress 

domestic antitrust injury that foreign anticompetitive conduct has caused” and 

“principles of prescriptive comity,” the term “gives rise to a claim” must mean “gives 

rise to the plaintiff’s claim.” Id. at 165, 173-74. Thus, “the exception does not apply 

where the plaintiff’s claim rests solely on the independent foreign harm.” Id. at 159. 
15 

whether the “alleged conduct by the defendants ‘involved’ import trade 

or commerce”). 

Section 1 of the Sherman Act applies when the challenged 

contract, combination, or conspiracy is, at least in part, in restraint of 

import commerce. For instance, a price-fixing conspiracy among foreign 

manufacturers “involv[es]” import commerce if the conspirators fix the 

price of goods sold in or for delivery to the United States—i.e., goods in 

import commerce. See Animal Sci., 654 F.3d at 471 n.11 (emphasizing 

the importance of defendants’ “sales of magnesite for delivery in the 

United States”). Likewise, import commerce is involved if conspirators 

fix the price of services necessary to the importation of goods, for 

example, freight transportation into the United States. A group boycott 

or market allocation in which foreign participants agree not to sell into 

the United States also involves import commerce because the 

conspirators restrain import commerce by agreeing not to engage in it. 

And while joint export activities—the promotion of which was the 

impetus for the FTAIA—normally are outside the reach of the Sherman 

Act, joint ventures that involve products or services for sale in or for 
16 

delivery to the United States may restrain import commerce and thus 

come within the import commerce exception. 

The import commerce exception, however, is not limited to conduct 

that restrains import commerce. The Sherman Act prohibits more than 

just agreements in restraint of trade. See 15 U.S.C. § 2 (prohibiting 

monopolizing and attempts or conspiracies to monopolize “commerce 

among the several States, or with foreign nations”). The statutory term 

“involving” accommodates the full range of conduct that might violate 

the Sherman Act. 

Courts have explained that the exception applies when the 

challenged conduct “target[s] import goods or services,” Animal Sci., 654 

F.3d at 470, or “was directed at an import market,” Turicentro, S.A. v. 

Am. Airlines Inc., 303 F.3d 293, 313 (3d Cir. 2002). These formulations 

can be useful in explaining why the import commerce exception applies 

in particular cases. For example, in Animal Science, magnesite 

purchasers in the United States alleged that Chinese producers and 

exporters conspired to fix the price of magnesite exported from China to 

the United States. 654 F.3d at 464. The district court held the 

exception inapplicable because the defendants were not importers. Id.
17 

at 470. The Third Circuit disagreed. Id. “[T]he relevant inquiry is 

whether the defendants’ alleged anticompetitive behavior ‘was directed 

at an import market,’” or, “to phrase it slightly differently, the import 

trade or commerce exception requires that the defendants’ conduct 

target import goods or services.” Id. (quoting Turicentro, 303 F.3d at 

303). 

While conduct “directed at” or “targeting” import commerce 

satisfies the import commerce exception, those terms do not convey the 

full breadth of the statutory term “involving.” Adopting those terms as 

a standard risks rewriting, and thereby narrowing, the FTAIA’s import 

commerce exception. Cf. Vainisi v. CIR, 599 F.3d 567, 572 (7th Cir. 

2010) (cautioning courts not to “rewrite statutes . . . merely because [the 

courts] think they imperfectly express congressional intent”). 

Terms like “directed at” and “targeting” suggest that the import 

commerce exception applies only if the defendants specifically or 

uniquely focused on U.S. imports. But the FTAIA’s import commerce 

exception does not impose a requirement that defendants subjectively 

intend to restrain U.S. imports. Nor does it require that U.S. imports 
18 

be singled out for anticompetitive conduct.4 Cf. Kruman v. Christie’s 

Int’l PLC, 284 F.3d 384, 393 (2d Cir. 2002) (“Our markets benefit when 

antitrust suits stop or deter any conduct that reduces competition in our 

markets regardless of where it occurs and whether it is also directed at 

foreign markets.”), abrogated on other grounds by Empagran, 542 U.S. 

155. 

 “Directed at” and “targeting” also might be misunderstood to 

suggest that the import commerce exception turns on the proportion or 

dollar value of products sold in or for delivery to the United States. A 

price-fixing conspiracy “involv[es]” U.S. import commerce even if the 

conspirators set prices for products sold around the world (so long as 

the agreement includes products sold into the United States) and even 

if only a relatively small proportion or dollar amount of the price-fixed 

goods were sold into the United States. 

 

4 Applying the import commerce exception to conduct that restrains U.S. import 

commerce as well as commerce in foreign countries will not benefit Empagran-like 

plaintiffs whose damages claims rest solely on independent foreign harm. While the 

import commerce exception has no “gives rise to” requirement similar to the direct 

effects exception, see supra note 3, courts nevertheless should dismiss damages 

claims to recover for “foreign injury” caused by “foreign anticompetitive conduct” 

when the conduct causing the injury involves import commerce but the injury does 

not relate to import commerce. As the Empagran Court recognized, the federal 

antitrust laws do not “redress foreign injury in such circumstances” regardless of 

the FTAIA, but rather “reflect a legislative effort to redress domestic antitrust 

injury that foreign anticompetitive conduct has caused.” 542 U.S. at 165, 169-73. 
19 

While borrowing the “directed at” and “targeting” formulations 

from the Third Circuit, the panel appears to have correctly understood 

the exception. Slip Op. 20-21. The panel did not require a subjective 

intent to restrain U.S. imports or a specific focus on U.S. imports. Nor 

did it require a minimum proportion or dollar value of products sold in 

or for delivery to the United States. Rather, the panel held that the 

import commerce exception did not apply because the complaint failed 

to allege adequately that defendants had agreed either “to an American 

price or production quota” or “to worldwide production quotas . . . or 

that a global cartel price was ever set.” Slip Op. 21. Thus, the panel 

apparently understood that allegations of a global cartel price or 

production limits would be within the import commerce exception. 

Nevertheless, litigants elsewhere have already seized upon the 

panel’s use of “directed at” and “targeting” to assert that the import 

commerce exception applies only if the challenged conduct “is 

particularly directed at the American import market.”5 Thus, this 

 

5 Defendants’ Proposed Preliminary Jury Instructions on the Elements of the 

Offense, and Memorandum in Support of Proposed Instructions at 5, United States 

v. AU Optronics Corp., Case No. Cr-09-0110 (SI) (N.D. Cal. Nov. 2, 2011). 
20 

Court should make clear that the import commerce exception is not 

limited to conduct specifically targeting U.S. import commerce. 

III. The Direct Effects Exception Is Not Limited to Effects that Follow 

as an Immediate Consequence of the Challenged Conduct. 

The direct effects exception to the FTAIA provides that conduct 

involving (non-import) trade or commerce with foreign nations is 

nonetheless subject to the Sherman Act if it has a “direct, substantial, 

and reasonably foreseeable effect” on (1) “trade or commerce which is 

not trade or commerce with foreign nations” (that is, trade or commerce 

within the United States), (2) import trade or commerce, or (3) export 

trade or commerce of a person engaged in such trade or commerce in the 

United States. 15 U.S.C. § 6a(1). 

“Direct” is not defined in the statute, and it is a word of many 

meanings.6 Thus, the meaning of “direct” in the FTAIA must be 

informed by history, context, and statutory purpose. See, e.g., 

Almendarez-Torres v. United States, 523 U.S. 224, 228 (1998) (history 

and context “help courts determine a statute’s objectives and thereby 

 

6 The 1981 edition of Webster’s Third New International Dictionary, published one 

year prior to the enactment of the FTAIA, contained seven primary meanings for 

“direct” in the adjectival form, encompassing 31 more specific, subsidiary meanings. 

Webster’s Third New International Dictionary 640 (1981). 
21 

illuminate its text”); A.M.I. Diamonds Co. v. Hanover Ins. Co., 397 F.3d 

528, 530 (7th Cir. 2005) (where contractual or statutory text is not 

written in terms of its purposes, “the task for the court is to interpret 

the text in light of its purposes”). So viewed, “direct” is best defined as 

“reasonably proximate.” 

Antitrust courts historically limited Section 1 liability to conduct 

with a “direct effect in restraint of trade or commerce among the several 

states, or with foreign nations.” Hopkins v. United States, 171 U.S. 

578, 586-87 (1898); see Anderson v. United States, 171 U.S. 604, 616 

(1898); LSL Biotechs., 379 F.3d at 685-86 (Aldisert, J., dissenting).7 

The reasoning in these cases suggested that the existence of such a 

direct effect is “a question of proximity and de[g]ree.” N. Sec. Co. v. 

United States, 193 U.S. 197, 409-10 (1904) (Holmes, J., dissenting); see 

also Anderson, 171 U.S. at 616 (an agreement “only indirectly and 

unintentionally” affecting interstate trade or commerce is not within 

the scope of the Sherman Act); Hopkins, 171 U.S. at 596 (“charges of the 

 

7 Antitrust courts stopped requiring proof of a “direct effect” on interstate commerce 

after the Supreme Court abandoned the direct/indirect distinction in Commerce 

Clause cases. See Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 

219, 231 (1948); Wickard v. Filburn, 317 U.S. 111, 122-23 (1942). Nevertheless, this 

history informs the interpretation of “direct” in the FTAIA. 
22 

nature described do not amount to a regulation of interstate trade or 

commerce because they touch it only in an indirect and remote way”); 

United States v. Joint Traffic Ass’n, 171 U.S. 505, 568 (1898) (“An 

agreement . . . with no purpose to thereby affect or restrain interstate 

commerce, and which does not directly restrain such commerce, is not, 

as we think, covered by the act, although the agreement may indirectly 

and remotely affect that commerce.”); cf. Carter v. Carter Coal Co., 298 

U.S. 238, 327-28 (1936) (Cardozo, J., dissenting) (surveying cases and 

observing that “direct” means “the causal relation . . . is so close and 

intimate and obvious”). 

Antitrust courts also have long relied on the concept of 

“directness” in determining whether a private plaintiff’s injury gives 

rise to standing under the antitrust laws. See Blue Shield of Va. v. 

McCready, 457 U.S. 465, 476-77 & n.12 (1982) (citing cases).8 The 

courts contrasted the “directness” of some injuries with the 

“remoteness” of others, and have applied the common-law concept of 

proximate cause. Id. at 476-77 nn.12-13. As this Court has explained, 

“directness relates to the question whether there exists a chain of 

 

8 The FTAIA was enacted a few months after McCready was decided. 
23 

causation between a defendant’s action and a plaintiff’s injury or (in 

contrast) if the connection is based instead only on ‘somewhat vaguely 

defined links.’” Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 486-

87 (7th Cir. 2002) (quoting Associated Gen. Contractors of Cal., Inc. v. 

Cal. State Council of Carpenters, 459 U.S. 519, 540 (1983)). 

The proper understanding of “direct” leaves conduct involving 

non-import foreign commerce subject to the Sherman Act if it has a 

reasonably proximate (as well as substantial and reasonably 

foreseeable) effect on commerce within the United States, U.S. import 

commerce, or export commerce of a U.S. exporter.9 Suppose, for 

example, that a conspiracy of foreign manufactures fixed the price of 

inputs sold to other foreign manufacturers which incorporate the input 

into finished goods sold in the United States. If successful, the 

 

9 Proximate cause is the correct standard for the FTAIA’s requirement, discussed 

above in note 3, that the “direct, substantial, and reasonably foreseeable” effect 

“gives rise to” the plaintiff’s damages claim, 15 U.S.C. § 6a(2). See Empagran S.A. 

v. F. Hoffmann-LaRoche Ltd., 417 F.3d 1267, 1271 (D.C. Cir. 2005) (holding, on 

remand from the Supreme Court, that the direct effect must proximately cause the 

claimed injuries); accord In re Dynamic Random Access Memory (DRAM) Antitrust 

Litig., 546 F.3d 981, 988 (9th Cir. 2008); In re Monosodium Glutamate (MSG) 

Antitrust Litig., 477 F.3d 535, 539 (8th Cir. 2007). Because “the proximate cause 

standard is consistent with general antitrust principles, which typically require a 

direct causal link between the anticompetitive practice and plaintiff's damages,” a 

proximate cause, rather than but for, standard is proper. DRAM, 546 F.3d at 988; 

see MSG, 477 F.3d 538-39 (Proximate cause is “consistent with general antitrust 

principles, which typically require a more direct causation standard.”). 
24 

conspirators’ restraint of trade in the inputs (which is non-import 

foreign commerce) would proximately cause effects on import commerce 

in the finished goods, notably by increasing the price. This effect should 

be viewed as direct, and therefore, the direct effects exception would 

apply (assuming the effect was also reasonably foreseeable and 

substantial). Cf. Mandeville Island Farms, 334 U.S. at 235-38 (an 

unlawful restraint of local commerce in sugar beets had the requisite 

effect on interstate commerce in sugar). In addition, a cartel making no 

sales into the United States would come within the direct effects 

exemption if it created “a world-wide shortage . . . that had the effect of 

raising domestic prices.” H.R. Rep. No. 97-686, at 13, reprinted in 1982 

U.S.C.C.A.N. at 2498. 

Principles of prescriptive comity fully support defining “direct” as 

reasonably proximate. By leaving the Sherman Act applicable to 

conduct that has a reasonably proximate (and substantial and 

reasonably foreseeable) effect on commerce within the United States, 

import commerce, or export commerce of a U.S. exporter, Congress 

sought to redress domestic antitrust injuries in this commerce. 

American “courts have long held that application of our antitrust laws 
25 

to foreign anticompetitive conduct is nonetheless 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.” Empagran, 542 U.S. at 165.10 

The panel here found “compelling” the definition of “direct” 

adopted by the panel majority in LSL Biotechnologies: that an effect is 

“direct” if “it follows as an immediate consequence of the defendant’s 

activity,” and hence, “[a]n effect cannot be ‘direct’ where it depends 

on . . . uncertain intervening developments.” Slip Op. 22. (quoting 379 

F.3d at 680-81). But the LSL majority’s reasoning was seriously flawed, 

and its definition threatens effective antitrust enforcement. 

When the FTAIA was enacted in 1982, there were many “ordinary 

and common” usages of the term “direct.” LSL Biotechs., 379 F.3d at 

692 (Aldisert, J., dissenting); see also supra note 6. The definition of 

“direct” adopted by the LSL majority corresponds to one such usage—

“proceeding from one point to another in time or space without 

deviation or interruption”—while the definition adopted by the LSL

 

10 Similarly, by leaving the Sherman Act applicable to conduct that restrains import 

commerce, Congress sought to redress the domestic injury caused by that restraint 

on U.S. imports. 
26 

dissent corresponds to another—“characterized by or giving evidence of 

a close especially logical, causal, or consequential relationship.” 

Webster’s Third New International Dictionary 640 (1981). The LSL 

majority never adverted to any definitions of “direct” other than its own, 

much less explained why such constructions would be inferior. The 

majority may have adopted the first dictionary definition because it was 

the first, but “the relative order of the common dictionary definitions of 

a single term does little to clarify that term’s meaning within a 

particular context. When a word has multiple definitions, usage 

determines its meaning.” Trs. of the Chi. Truck Drivers, Helpers & 

Warehouse Workers Union (Indep.) Pension Fund v. Leaseway Transp. 

Corp., 76 F.3d 824, 828 n.4 (7th Cir. 1996). 

The LSL majority also relied on the fact that the Supreme Court 

had defined a “nearly identical term” in the Foreign Sovereign 

Immunities Act (FSIA), 28 U.S.C. § 1605(a)(2), in the same way. 379 

F.3d at 680 (citing Republic of Arg. v. Weltover, Inc., 504 U.S. 607 

(1992)). But Weltover was decided ten years after the FTAIA’s 

enactment and concerned a different statute with a significantly 

different purpose and history. While the FTAIA deals only with the 
27 

limits of the reach of the antitrust laws, the FSIA deals with the 

general immunity of foreign nations from suit in U.S. courts and applies 

to numerous federal statutes. Moreover, while both statutes have a 

“direct effects” exception, the language of the exceptions differs. As the 

Weltover Court emphasized, the FSIA’s “direct effects” exception does 

not include an expressed or “unexpressed requirement of ‘substantiality’ 

or ‘foreseeability,’” 504 U.S. at 618, while the FTAIA requires a “direct, 

substantial, and reasonably foreseeable effect,” 15 U.S.C. § 6a. 

Weltover’s construction of the FSIA’s direct effects exception thus sheds 

no light on the meaning of “direct” in the FTAIA. 

Placing the term “direct” in the context of the FTAIA 

demonstrates the flaws in the LSL majority’s definition. Following “as 

an immediate consequence” could be understood to mean that there can 

be no subsequent sales or other steps before the product is sold or 

delivered into the United States.11 If so, the direct effects exception 

would reach only conduct that qualifies for the import commerce 

exception. Moreover, any antitrust injury that is an “immediate 

consequence” of anticompetitive conduct would be “reasonably 

 

11 One district court has rejected such a construction. In Re: TFT-LCD (Flat Panel) 

Antitrust Litig., No. 07-1827, 2011 WL 4634031, at *9 (N.D. Cal. Oct. 5, 2011). 
28 

foreseeable,” so the LSL majority’s definition of “direct” robs the 

“reasonable foreseeab[ility]” requirement of any function. Thus, the 

LSL majority’s definition of “direct” violates the “cardinal principle” 

that a statute should be interpreted so that, if possible, “no clause, 

sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. 

v. Andrews, 534 U.S. 19, 31 (2001). 

In contrast, if direct is defined as “reasonably proximate,” the 

import commerce and direct effects exceptions fit comfortably together: 

the former applies when the challenged conduct itself involves import 

commerce, while the latter applies when the challenged conduct 

proximately causes an effect on import commerce (or on commerce 

within the United States or certain export commerce). While proximate 

cause includes notions of foreseeability, proximate cause and reasonable 

foreseeability are distinct concepts. And defining “direct” as reasonably 

proximate gives each of the three parts of the direct effects exception its 

own function: “direct” goes to the effect’s cause, “substantial” goes to its 

amount, and “reasonably foreseeable” goes to its objective predictability. 

Finally, adopting the LSL majority’s definition of “direct” could 

undermine Congress’s objective of protecting purchasers in the United 
29 

States from anticompetitive conduct. Many finished goods sold in the 

United States are manufactured or assembled abroad and incorporate 

component parts sold, manufactured, or assembled in other countries.12 

Courts applying the LSL majority’s definition of “direct” could 

erroneously find that the foreign assembly of these finished goods 

constitutes an “interruption” that places a restraint of trade in the 

component parts outside the reach of the Sherman Act, even though 

that restraint proximately causes substantial and reasonably 

foreseeable effects on U.S. import commerce in those finished goods. 

See 1B Philip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 272i1, 

at 295 (3d ed. 2009) (“Many, perhaps most, restraints are on 

‘intermediate’ goods,” but effects “that occur in upstream markets 

quickly filter into consumer markets as well.”). 

The application of the direct effects exception should not turn on 

the particular manufacturing process used, but rather on the 

challenged conduct’s likely and significant harm to purchasers in the 

 

12 See, e.g., TFT-LCD Flat Panel, supra note 11, at *5 (“Once a defendant 

manufactures a panel, the panel may enter the United States in a number of ways. 

Defendants may import it as part of a finished product. Defendants may sell it 

directly to a U.S. company, which incorporates the panel into a finished product. Or 

defendants may sell the panel to a foreign company that assembles it into a final 

product before it is sold to a U.S. company and imported into the United States.”). 
30 

United States. Cf. Metallgesellschaft AG v. Sumitomo Corp. of Am., 

325 F.3d 836, 842 (7th Cir. 2003) (“In a global economy, where domestic 

and foreign markets are interrelated and influence each other, it is 

sometimes difficult to put strict economic boundaries around any 

particular country. . . . A global conspiracy to inflate prices could have 

anticompetitive effects on the U.S. economy whether the conspiracy 

occurred within the United States or abroad.”). Defining “direct effects” 

as reasonably proximate effects ensures an inquiry tailored to the 

conduct alleged. And it accomplishes Congress’s primary goal of 

protecting purchasers in the United States, while allowing U.S. firms to 

engage in export or wholly foreign commerce that has no U.S. effects 

without fear of treble damages lawsuits under the Sherman Act based 

on sales outside the United States. 
31 

CONCLUSION 

The Court should hold that the FTAIA’s import commerce 

exception is not limited to conduct specifically targeting U.S. imports. 

The Court should also hold that the direct effects exception is not 

limited to effects that follow as an immediate consequence but includes 

those proximately caused by the challenged conduct. 

Respectfully submitted. 

 /s/ Nickolai G. Levin 

January 12, 2012 

WILLARD K. TOM 

General Counsel

SHARIS A. POZEN 

Acting Assistant Attorney General 

JOHN F. DALY 

Deputy General Counsel 

Federal Trade Commission

600 Pennsylvania Ave., N.W. 

Washington, D.C. 20580

CATHERINE G. O’SULLIVAN 

ROBERT B. NICHOLSON 

JAMES J. FREDRICKS 

NICKOLAI G. LEVIN 

KRISTEN C. LIMARZI 

Attorneys 

U.S. Department of Justice 

Antitrust Division 

950 Pennsylvania Ave., N.W. 

Room 3224 

Washington, D.C. 20530-0001 

202-514-2886
32 

CERTIFICATE OF COMPLIANCE 

1. This brief complies with the type-volume limitations of Rule 

32(a)(7)(B) of the Federal Rules of Appellate Procedure because it 

contains 6,222 words, excluding the parts of the brief exempted by Rule 

32(a)(7)(B)(iii). 

2. This brief complies with the typeface requirements of Rule 

32(a)(5) of the Federal Rules of Appellate Procedure and the type style 

requirements of Rule 32(a)(6) because this brief has been prepared in a 

proportionally spaced typeface using Microsoft Office Word 2007 with 

14-point New Century Schoolbook font in the body and 12-point New 

Century Schoolbook font in the footnotes. 

January 12, 2012 /s/ Nickolai G. Levin 

 Nickolai G. Levin 

 
33 

CERTIFICATE OF SERVICE 

I, Nickolai G. Levin, hereby certify that on January 12, 2012, I 

electronically filed the foregoing Brief for the United States and the 

Federal Trade Commission as Amici Curiae in Support of Neither Party 

on Rehearing En Banc with the Clerk of the Court of the United States 

Court of Appeals for the Seventh Circuit by using the CM/ECF System. 

Once the brief is accepted for filing by the Clerk’s Office, I will send 30 

copies to the Clerk of the Court by FedEx. 

I certify that all participants in the case are registered CM/ECF 

users and that service will be accomplished by the CM/ECF system. 

January 12, 2012 /s/ Nickolai G. Levin 

 Nickolai G. Levin