18

an injury resulting from the domestic anticompetitive effects
of a conspiracy, any foreign purchaser can piggyback on that
claim and sue for treble damages in United States courts,
even when that purchaser is “injured solely by that [conspir-
acy’s] effect on foreign commerce.” Pet. App. 4a. Consider,
for example, an international price-fixing cartel with wholly
foreign members that had annual foreign sales of $2 billion to
50 foreign customers, and annual sales in the United States
of $1 million to one customer. Because the domestic cus-
tomer could sue based on the conspiracy’s domestic effects,
all 50 foreign customers also could bring a claim under the
Sherman Act, “even if those plaintiffs had no commercial re-
lationship with any United States market and their injuries
were unrelated to the injuries suffered in the United
States.” Statoil, 241 F.3d at 427-428.

No decision pre-dating the FTAIA has been cited that
permitted such a suit. Statoil, 241 F.3d at 429 (“{W]e have
found no case in which jurisdiction was found in a case like
this—where a foreign plaintiff is injured in a foreign market
with no injuries arising from the anticompetitive effect on a
United States market.”). Congress passed the FTAIA to
“exempt from the Sherman Act export transactions that did
not injure the United States economy,” Hartford Fire Ins.
Co., 509 U.S. at 796 n.28, and to create a “single, objective
test—the ‘direct, substantial, and reasonably foreseeable ef-
fect? test”—to “serve as a simple and straightforward clarifi-
cation of existing American law,” H.R. Rep. No. 686, 97th
Cong., 2d Sess. 2 (1982) (House Report) (emphasis added). It
is highly doubtful that the same Congress that intended to
codify limits on the extraterritorial reach of the antitrust
laws intended at the same time to bring about the sweeping
expansion that the court of appeals’ decision would accom-
plish.

ce. The statutory text should also be read in light of back-
ground principles concerning the extraterritorial reach of
United States law. As noted above (see p. 7, supra),


30

United States’ enforcement efforts and would impose on
federal courts potentially burdensome and complex antitrust
suits brought by plaintiffs around the globe based on
transactions that took place overseas. See pp. 21-23, supra;
cf. Associated General Contractors, 459 U.S. at 545 (“mas-
sive and complex damages litigation not only burdens the
courts, but also undermines the effectiveness of treble-dam-
ages suits”). Those considerations, and the fact that such
suits are far removed from the core policy of the antitrust
laws to protect commerce in the United States, establish
that respondents lack standing to invoke the treble damages
remedy of Section 4 of the Clayton Act.

CONCLUSION
The judgment of the court of appeals should be reversed.
Respectfully submitted.

Epwin S. KNEEDLERTM
Acting Solicitor General

R. HEWITT PATE
Assistant Attorney General

MaKAN DELRAHIM
WILLIAM H. T. ‘AFT, IV Deputy Assistant Attorney
Legal Adviser General
United States Department
of State Lisa S. BLATT .
ex + Assistant to the Solicitor
JOHN D. GRAUBERT General
Acting General Counsel R
; eg OBERT B. NICHOLSON
Federal Trade Commission SrevEN J. MINTZ
Attorneys
FEBRUARY 2004

* ‘The Solicitor General is recused in this case.
“The General Counsel is recused in this case.


7

ARGUMENT

RESPONDENTS HAVE NO CLAIM UNDER THE ANTI-
TRUST LAWS

Section 1 of the Sherman Act declares illegal “[e]very con-
tract, combination in the form of trust or otherwise, or con-
spiracy, in restraint of trade or commerce among the several
States, or with foreign nations.” 15 U.S.C. 1. Although this
Court has articulated a general presumption in other con-
texts that Congress intends its laws to apply only within the
territorial jurisdiction of the United States, EEOC v. Ara-
bian American Oil Co., 499 U.S. 244, 248 (1991), “it 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); Matsushita
Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574,
582-588 n.6 (1986); see United States v. Nippon Paper Indus.
Co., 109 F.3d 1, 4-6 (1st Cir. 1997) (holding that Sherman
Act’s criminal provisions apply to wholly foreign conduct
with intended and substantial domestic effects), cert. denied,
522. U.S. 1044 (1998).

Consistent with that judicial construction of the Sherman
Act, Congress provided in the FTAIA that the Sherman Act
applies to foreign conduct when “(1) such [foreign] conduct.
has a direct, substantial, and reasonably foreseeable effect
* * * on [United States domestic commerce] * * * and
(2) such effect gives rise to a claim” under the Sherman Act.
15 U.S.C. 6a. It is not disputed in this case that, under Sec-
tion 6a, the Sherman Act applies to a plaintiff’s claim that
arises from an illegal conspiracy’s anticompetitive effects on
domestic commerce, whether the plaintiff is located here or
abroad, or is a citizen of the United States or of another
country. Pfizer, Inc. v. Government of India, 484 U.S. 308
(1978) (holding that a foreign government may sue under the
Sherman Act); see Statoil, 241 F.3d at 427 n.22, 428 n.25.


17

neither the extraterritorial reach of the antitrust laws nor
the extent to which a plaintiff’s claim must have some con-
nection to United States commerce. Rather, Pfizer held that
a foreign government that purchased goods from United
States companies is a “person” “entitled to sue for treble
damages under the antitrust laws to the same extent as any
other plaintiff.” 434 U.S. at 320. Although the Court in
Pfizer observed that “suits by foreigners who have been
victimized by antitrust violations clearly may contribute to
the protection of American consumers,” id. at 314, the
Court’s decision in Pfizer involved foreign purchasers
injured by anticompetitive domestic conduct and effects. Id.
at 318 (observing that foreign governments “enter[ed] our
commercial markets as a purchaser of goods or services”).
The Court nowhere intimated that the purposes of the anti-
trust laws would support the availability of a private treble
damages action when foreign injury is sustained exclusively
as a result of foreign conduct, and the House Report’s dis-
cussion of Pfizer therefore carries no such intimation either.
The remainder of the legislative history, in fact, cuts
strongly against such an interpretation. For example, the
House Report states that the Act “preserves antitrust pro-
tections in the domestic marketplace for all purchasers;
regardless of nationality or the situs of the business.” House
Report 10 (emphasis added).’ Such purchasers, however, are
markedly different from foreign purchasers who “bought
[goods] exclusively outside the United States” and whose in-
juries arise exclusively from a conspiracy’s foreign anticom-
petitive effects. Pet. App. 8a. Other passages in the House
Report uniformly tie the application of United States anti-

4 There was no Senate Report on the bill, and the brief discussion in
the conference report, H.R. Conf. Rep. No. 924, 97th Cong., 2d Sess. 29-80
(1982), sheds no light on the issue.


Cases—Continued: Page

United Phosphorus, Ltd. v. Angus Chem. Co.,
322 F.3d 942 (7th Cir.), cert. denied, 124 8. Ct.

538 (2003) 8
U.S. Dep't. of Labor v. Triplett, 494 U.S. 715

(1990) 12
United States v. Aluminum of America, 148 F.2d

416 (2d Cir. 1945) ..... 17
United States v. Borden Co., 347 U.S. 514 (1954) 21

United States v. Nippon Paper Indus. Co., 109
F.3d 1 (Ist Cir. 1997), cert. denied, 522 U.S. 1044
(1998) .. sees 7
Valley Forge Christian Coll v. Americans United for
Separation of Church & State, Inc., 454 U.S. 464

(1982) . 12
Verizon Communications Inc. v. Law Offices of

Curtis V. Trinko, 124 S. Ct. 872 (2004) 26

Vitamins Antitrust Litig., Inre, No. 99-197
2000 WL 1737867 (D.D.C. Mar. 31, 2000) 2
Warth v. Seldin, 422 U.S. 490 (1975) 12
Constitution and statutes:

Panama Const. art. 290 ..... oa 25

15US.C.1 2,7,11

3, 14

8, 8, 23

passim

5, 11,20

18 U.S.C. 3668 ... 24
Ecuador Civ. Codi
Art. 2211 ..... 25
Art. 2241 25
Art. 2256 25



28

parties who were injured in the United States conflicts with
basic principles of standing generally. See p., 12, supra.

The court of appeals reasoned that “[t]he foreign plain-
tiffs’ paying of inflated prices in foreign commerce” was a
loss that the antitrust laws were designed to prevent. Pet.
App. 35a. The fact that respondents were direct purchasers
victimized by a price-fixing conspiracy, however, does not
mean that respondents suffered the kind of injury contem-
plated by Section 4 of the Clayton Act when their particular
injuries did not arise from anticompetitive effects on United
States commerce. Under the FTAIA, the conduct of peti-
tioners at issue in this case was unlawful under the Sherman
Act only because of its anticompetitive effect on domestic
United States commerce. Respondents’ injury, which is not
based on any such an effect, does not “flow[] from that which
makes the defendants’ acts unlawful,” Brunswick Corp., 429
U.S. at 489, and therefore is outside the zone of interests
protected by the antitrust laws.

“American antitrust laws do not regulate the competitive
conditions of other nations’ economies.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 582 (1986).
Rather, the central purpose of the antitrust laws is to pro-
tect consumers, competition, and commerce in the United
States. “Congress’ foremost concern in passing the antitrust
laws was the protection of Americans.” Pfizer, 434 U.S. at
314; see 1A Phillip E. Areeda & Herbert Hovenkamp, Anti-
trust Law { 272h, at 358 (2d ed. 2000) (“[The FTAIA] makes
clear that the concern of the antitrust laws is protection of
American consumers and American exporters, not foreign
consumers or producers.”); Turicentro, S.A. v. American
Airlines Inc., 303 F.3d 298, 307 (8d Cir. 2002) (“Plaintiffs’
injuries occurred exclusively in foreign markets. They are
not of the type Congress intended to prevent through the
[FTAIA] or the Sherman Act.”).. Accordingly, to award
treble damages and attorney’s fees to a class of foreign
plaintiffs whose injuries arise exclusively from a conspiracy’s


14

although this Court has adopted a general presumption that
Congress intends for its laws to apply only within the
territorial jurisdiction of the United States, it is well
established—quite apart from the FTAIA—that the
Sherman Act applies to foreign conduct that was meant to
and did produce some substantial effect in the United States.
And the FTAIA ratifies that fundamental proposition by
providing that the Sherman Act applies to foreign conduct
that has a “direct, substantial, and reasonably foreseeable
effect” on the domestic commerce of the United States, if
that effect in turn “gives rise to a claim” under the Sherman
Act. 15 U.S.C. 6a. The Sherman Act and the FTAIA have
thus supplanted any general background presumption
against extraterritoriality within those fields involving
effects on domestic commerce. It does not follow, however,
that general background principles are entirely irrelevant in
considering the further question presented in this case.

Here, respondents’ alleged injuries do not flow from any
effect of petitioners’ conduct on the domestic commerce of
the United States (e.g., from sales to customers in the United
States), which would fall within the rubric of Hartford Fire
Insurance Co. and the terms of the FTAIA. They instead
flow from sales transactions that occurred outside the
United States, either entirely within one foreign country or
between a seller in one foreign country and a purchaser in
another. To apply the Sherman Act to those transactions
would extend the Act one significant step further than this
Court’s Sherman Act decisions culminating in Hartford Fire
Insurance Co. and anything required by the terms of the
FTAIA. Such an application would regulate not merely the
defendants’ conduct (their conspiracy to fix prices and
allocate markets) and the remedies for persons injured by
that conduct in United States commerce (persons who
bought vitamins from those defendants at supracompetitive
prices in domestic sales transactions). It also would subject
wholly foreign sales transactions having no significant effect


20

investigation and meet the program’s requirements; (2) the
possibility of amnesty even if cooperation begins after an
investigation is underway; and (8) if a corporation qualifies
for automatic amnesty, all directors, officers, and employees
who come forward and agree to cooperate also receive auto-
matic amnesty. 4 Trade Reg. Rep. (CCH) { 18,113 (Aug. 10,
1993). Critically, amnesty is available only to the first con-
spirator to break ranks with the cartel and come forward.
The incentives, transparency, and certainty of treatment es-
tablished by the program set up a “winner take all” dynamic
that sows tension and mistrust among cartel members and
encourages defection from the cartel.

The amnesty program has been extremely valuable to
enforcement of the antitrust laws. The majority of the Anti-
trust Division’s major international investigations, including
the investigation of the vitamin cartel, have been advanced
through cooperation of an amnesty applicant. The program
has been responsible for cracking more international cartels
than all of the Division’s search warrants, secret audio or
videotapes, and FBI interrogations combined. Since 1997,
cooperation from amnesty applications has resulted in scores
of criminal convictioris and more than $1.5 billion in criminal
fines.

The court of appeals’ interpretation of Section 6a would
undermine the effectiveness of the government’s amnesty
program. Eventi those conspirators who come forward and
receive amnesty from criminal prosecution still face expo-
sure to private treble damage actions under 15 U.S.C. 15(a).
Potential amnesty applicants therefore weigh their civil li-
ability exposure when deciding whether to avail themselves
of the government’s amnesty program. The court of appeals’
interpretation would tilt the scale for conspirators against
seeking amnesty by expanding the scope of their potential
civil liability. Faced with joint and several liability for co-
conspirators’ illegal acts all over the world, a conspirator
could not readily quantify its potential liability. The pros-


16

2. The FTAIA’s Legislative History Does Not Reveal An
Intent To Open United States Courts To Claims
Seeking Redress For Foreign Injuries Sustained As
A Result Of Foreign Conduct

The court of appeals’ majority acknowledged that portions
of the FTAIA’s legislative history could be read to support
the government’s interpretation of the Act, Pet. App. 24a,
29a, but concluded that, on the whole, the legislative history
favors an expansive interpretation because nothing in the
history affirmatively “denigrate[s] or exclude[s]” an expan-
sive interpretation, ibid. The majority thus assumed that, in
the absence of express legislative history to the contrary,
Congress must have intended the more expansive interpre-
tation—a dubious analytical approach to begin with for a
statute that was prompted in significant part by a perceived
need to clarify the limitations of the Sherman Act’s reach
over international transactions. House Report 2.

More fundamentally, however, the majority looked for an
answer to the wrong question in its review of the legislative
history. Because application of the Sherman Act to wholly
foreign sales transactions having no substantial effect on
United States commerce would be contrary to the most
natural reading of the text of the FTAIA and to the back-
ground presumption against application of United States
laws to transactions in foreign countries, the proper question
is whether the legislative history contains a clearly ex-
pressed intent to extend the reach of the Sherman Act in
that manner. There is no suggestion, much less a clear ex-
pression, of such an intent. See Statoil, 241 F.3d at 429 n.28
(‘Nothing is said about protecting foreign purchasers in
foreign markets.”) (quoting In re Microsoft Corp. Antitrust
Litig., 127 F. Supp. 2d 702, 715 (D. Md. 2001)).

The only explicit mention of suits by foreign purchasers,
and the deterrent effect such suits might have, is a discus-
sion in the House Report of this Court’s decision in Pfizer,
supra. House Report 10. Pfizer, however, addressed


29

foreign anticompetitive effects would “divorce antitrust
recovery from the purposes of the antitrust laws without a
clear statutory command to do so.” Brunswick Corp., 429
US. at 487; Matsushita, 475 U.S. at 582-284 & nn. 6 & 7
(antitrust damages unavailable except where foreign con-
duct caused plaintiffs’ injury in American market).?

The conclusion that the Clayton Act does not afford
respondents a cause of action is reinforced by the fact that
private suits such as this would undermine enforcement of
the Sherman Act by the United States Government, which is
primarily responsible for protecting American consumers
and markets. All of the lower court decisions interpreting
Section 6a(2), 7.2, this case, Krwman and Statoil, have in-
volved private actions by foreign plaintiffs that followed
directly on the heels of criminal or civil enforcement actions
initiated by United States and foreign antitrust authorities.
As explained previously, the United States’ experience is
that the most effective method of enforcement features an
amnesty program that offers strong incentives to con-
spirators to break ranks with and expose their cartels by
seeking amnesty from criminal prosecution. Greatly expand-
ing the scope of private follow-on litigation would weaken
the incentives to seek amnesty, and ultimately weaken the
protection of United States consumers by making inter-
national cartels difficult to detect. See pp. 19-21, supra.
Opening our courts to suits with no connection to United
States commerce also would risk undermining the relation-
ships with foreign governments that are important to the

% The court of appeals viewed respondents as proper plaintiffs because
respondents’ claimed injuries, in the court’s view, suffered none of the
defects mentioned in Associated General Contractors, supra. Pet. App.
86a-87a. The factors mentioned in that decision, however, simply per-
suaded the Court that the plaintiffs in that particular case lacked standing.
The Court did not intimate that those factors were exclusive, and explic-
itly stated that “{a] number of other factors may be controlling” in deter-
mining whether a plaintiff has antitrust standing. 459 U.S. at 538.


BI

petitive effects on United States commerce?” Statoil, 241
F.3d at 427 n.22°

For similar reasons, the Second Circuit in Kruman, 284
F.3d at 397-400, erred in concluding that the only relevant
inquiry is whether the conduct that caused the anticompeti-
tive domestic effect violated the substantive provisions of
the antitrust laws, such that the government would have a
valid claim for injunctive relief under Section 4 of the Sher-
man Act, 15 U.S.C. 4. Under that view, the phrase “gives
rise to a claim” adds nothing, because the United States
always has a claim under Section 4 of the Sherman Act
whenever that Act is violated. Nor is there any suggestion
in the FTAIA’s text that Congress intended the availability
of relief under the Sherman Act to turn on whether the
government would have a claim—particularly since the
FTAIA equally governs whether a private party may seek
relief, and a price-fixing conspiracy that violates Section 1 of
the Sherman Act, 15 U.S.C.:1, does not “give[] rise” to a
private “claim” under the Sherman Act in the absence of in-
jury to the particular plaintiff. See 15 U.S.C. 15(a) (provid-
ing for private right of action to “any person injured in his
business or property”). In short, as the court of appeals in
this case pointed out, “[t]he view that FTAIA must be taken
to refer only to defendant’s conduct tends to ignore the fact

3 Contrary to respondents’ contention, the government’s reading of-
the statute does not mean that only injury that occurs in the United States
comes within the terms of the FTAIA. Br. in Opp. 20-21. Rather, the text
of the FTAIA requires that any anticompetitive injury, whether here or
abroad, arise from the conspiracy’s requisite effect on domestic commerce.
See, ¢.g., Caribbean Broad. Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d
1080, 1086-1087 (D.C. Cir. 1998) (while the situs of injury was overseas,
plaintiff’s claim arose from a conspiracy’s effect on the United States ad-
vertising market). Moreover, the federal agencies charged with the re-
sponsibility of enforcing the antitrust laws “do not discriminate in the
enforcement of the antitrust laws on the basis of the nationality of the
parties.” U.S. Dep’t of Justice & Federal Trade Comm’n, Antitrust En-
forcement Guidelines For International Operations § 2 (1995), reprinted
in 4 Trade Reg. Rep. (CCH) { 13,107, at 20,589-20,592 (Apr. 5, 1995).


3

of purchasers of “vitamins abroad from the vitamin com-
panies or their alleged co-conspirators * * * for delivery
outside the United States.” Pet. App. 6a. The district court
held (id. at 47a-58a) that it lacked subject matter jurisdiction
over respondents’ claims against petitioners under the For-
eign Trade Antitrust Improvements Act of 1982 (FTAIA),
15 U.S.C. 6a, which provides that the Sherman Act shall not
apply to non-import foreign conduct unless it has “a direct,
substantial, and reasonably foreseeable effect” on United
States commerce, 15 U.S.C. 6a(1), and that “such effect gives
rise to a claim” under the Sherman Act, 15 U.S.C. 6a(2).!
The district court explained that, although respondents had
alleged that “the conduct causing their injuries resulted in a
‘direct, substantial, and reasonably foreseeable effect on U.S.
commerce,’” they had not alleged that the conduct’s effect on
United States commerce gave rise to respondents’ claims.
Pet. App. 48a-49a. Because the district court found subject

1 The FTAIA, which was enacted in 1982 (Pub. L. No. 97-290, § 402, 96
Stat. 1248) and became Section 7 of the Sherman Act, .15 U.S.C. 6a,
provides:

Sections 1 to 7 of this title 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.
If sections 1 to 7 of this title apply to such conduct only because of the
operation of paragraph (1)(B), then sections 1 to 7 of this title shall
apply to such conduct only for injury to export business in the United
States.


26

“to encompass every harm that can be attributed directly or
indirectly to the consequences of an antitrust violation.”
Associated General Contractors, 459 U.S. at 529; accord
Verizon Communications, Inc. v. Law Offices of Curtis V.
Trinko, 124 S. Ct. 872, 877 (2004) (concurring opinion of
Stevens, J). Thus, even if an antitrust plaintiff has suffered
harm sufficient to satisfy the constitutional standing re-
quirement of “injury in fact,” the court must make a further
determination whether the plaintiff has “antitrust standing,”
i.e, “whether the plaintiff is a proper party to bring a
private antitrust action.” Associated General Contractors,
459 U.S. at 535 n.31.

This Court accordingly has established several limitations
on antitrust standing based on substantive antitrust and
policy considerations. For instance, in Hawaii v. Standard
Oil Co., 405 U.S. 251 (1972), the Court held that States could
not sue in their parens patriae capacity for damages to their
general economy. Similarly, in Illinois Brick Co. v. Illinois,
431 U.S. 720 (1977), the Court held that the antitrust laws do
not provide relief to indirect purchasers who paid an en-
hanced price because their suppliers had been victimized by
a price-fixing conspiracy. In Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977), the Court held
that a plaintiff must show “antitrust injury, which is to say
injury of the type the antitrust laws were, intended to pre-
vent and that flows from that which makes the defendants’
acts unlawful.” And in Associated General Contractors, 459
U.S. at 545, the Court found that a union lacked antitrust
standing to sue a multi-employer association for alleged anti-
trust violations, after considering “the nature of the Union’s
injury, the tenuous and speculative character of the rela-
tionship between the alleged antitrust violation and the
Union’s alleged injury, the potential for duplicative recovery
or complex apportionment of damages, and the existence of
more direct victims of the alleged conspiracy.”


23

requisite effects on United States commerce and that those
effects give rise to a claim. 15 U.S.C. 6a(1) and (2).

For plaintiffs whose injuries are sustained in United
States commerce, proof of the FTAIA’s prerequisites will
overlap substantially with the merits of the plaintiff’s claim.
But for plaintiffs entitled to sue under the court of appeals’
holding, «.e., plaintiffs whose injuries are sustained entirely
abroad and arise from purely foreign transactions, the statu-
tory inquiry would turn on claims and persons not before the
court. Courts faced with such suits nonetheless would be
forced to adjudicate whether the challenged foreign conduct
was part of some global conspiracy, whether that global con-
spiracy had the requisite effects on domestic commerce, and
whether some third person was injured in United States
commerce in such a way that gave rise to a claim. Pet. App.
4a, 20a. Those questions might be intensely factual, hotly
disputed, and difficult to resolve, particularly when the criti-
cal person and claim are not before the court. The court of
appeals’ decision thus would thrust upon federal courts the
potential for burdensome and protracted satellite litigation
that is far removed from the claim before the court.

d. The court of appeals failed to take into account any of
the foregoing considerations. It rather believed that “forc-
[ing] the conspirator to internalize the full costs of his anti-
competitive conduct” would provide maximum deterrence to
cartels that injure American consumers. Pet. App. 32a. The
theoretical possibility of additional deterrence contemplated
by the court, however, would come only at the expense of
weakening the ability of the United States government to
discover the wrongdoing in the first place. The court of
appeals similarly overlooked that the primary deterrent to
cartel activity is the threat of imprisonment and other
criminal penalties (especially when heightened through the
fear of exposure created by the amnesty program). Scott D.
Hammond, Director of Criminal Enforcement, Antitrust
Div., Detecting and Deterring Cartel Activity Through an


VII

Miscellaneous—Continued: Page

US. Dep’t of Justice, Scott D. Hammond, Director
of Criminal Enforcement, Antitrust Division, Detect-
‘ing and Deterring Cartel Activity Through an
Effective Leniency Program Brighton, England
Nov. 21-22, 2000) <http://www.sudoj.gov/atr/public
speeches/9928.htm ...

US. Dep’t of Justice & Federal Trade Comm’n,
Antitrust Enforcement Guidelines For International
Operations (1995), reprinted in 4 Trade Reg. Rep.
(CCH) 13,107 (Apr. 5, 1995) ... .

11,17, 18


VI

Statutes—Continued: Page
Ecuador Crim. Code:
Art. 67 25

Art. 363 .. 25
Ecuador Organic Law for Consumer Protectio:

Art. 2. 25

Art. 51 25

Art. 70 25

Art. 87 25
Law of Ukraine On Protecting the Economie Com-

petition (2001), art. 55 ..... 25
Law of Ukraine On Restriction of Monopolism and

Prevention of Unfair Competition in Business

Activities (1992) ...... 25

Miscellaneous:

1A Phillip E. Areeda & Herbert & Hovenkamp,

Antitrust Law (2d ed. 2000) ... 28
Phillip E. Areeda & H. Hovenkamp, Antitrust Law

(Supp. 2003) 28
Black’s Law Dictionary (6th ed. 1990) 10
Chemical Business NewsBase: Press Release, Rhone-

Poulence Issues Statement Regarding Vitamin

Business, 1999 WL 17728220 (May 26, 1999) ... soe 2
B. Evans & C, Evans, A Dictionary of Contemporary

American Usage (1957) eee 10
HLR. Rep. No. 686, 97th Cong., 2d Sess. (1982) .... » 18, 16,

17, 18, 19, 27

HLR. 5235, 97th Cong., 2d Sess. (1982) .... eeT:)
<http://www.usdoj.gov/atr/public/guidelines/0091.

himl> 1
4 Trade Reg. Rep. (CCH) § 13,113 (Aug. 10, 1993) 1,10
US. Dep't of Justice Press Release, F. Hoffman-

LaRoche and BASF Agree To Pay Record Criminal

Fines For Participating In International Vitamin

Cartel (May 20, 1999) .. 2


12

that FTAIA does refer on its face to the conduct’s effect
giving rise to a claim’—which even the court acknowledged
“arguably refers to a plaintiffs injury.” Pet. App. 21a.

Thus, when the court of appeals recognized that “the usual
meaning of ‘a claim’ is a private action,” Pet. App. 22a, it
should have further recognized that, in the context of a
statute governing a private civil action, the words “a claim”
are most naturally understood to refer to a claim that is actu-
ally being asserted in the civil action arising under that
statute. Indeed, we are not aware of any statutory scheme
that makes the determination of statutory coverage turn on
whether a person not before the court, i.¢., a hypothetical
plaintiff in some other civil action, has a claim. Ordinarily, a
litigant “must assert his own legal rights and interests, and
cannot rest his claim to relief on the legal rights or interests
of third parties.” Valley Forge Christian Coll. v. Americans
United for Separation of Church & State, Inc., 454 U.S. 464,
474 (1982) (quoting Warth v. Seldin, 422 U.S. 490, 499
(1975)). “This is generally so even when the very same
allegedly illegal act that affects the litigant also affects a
third party.” United States Dep’t of Labor v. Triplett, 494
USS. 715, 720 (1990).

b. The implausibility of the panel’s expansive interpre-
tation of Section 6a(2) is confirmed by the fact that it would
produce results that Congress could not have intended. The
panel’s holding would open United States courts to suits that
are strikingly localized to foreign countries. For example,
under the panel’s holding, a buyer in Nigeria could file suit in
the United States against its own Nigerian supplier if that
supplier was a member of an international cartel, simply by
alleging (and being able to prove if contested, see, p. 22,
infra) that some unnamed third person who was injured by
the same cartel in United States commerce would have a
claim under the Sherman Act.

In other words, under the panel’s reading of Section 6a(2),
once any person is determined to have a claim arising from


2

distributors of bulk vitamins. In exchange for amnesty, the
company exposed the cartel, which had sold billions of
dollars of vitamins in the United States and other countries
around the world. The company cooperated with the United
States’ subsequent investigations into violations by the vita-
min companies of Section 1 of the Sherman Act, 15 U.S.C. 1.
Chemical Business NewsBase: Press Release, Rhone-Pou-
lenc issues statement regarding vitamin business, available
in 1999 WL 17728220 (May 26, 1999); U.S. Dep’t Of Justice
Press Release, F. Hoffman-LaRoche and BASF Agree To
Pay Record Criminal Fines For Participating In Interna-
tional Vitamin Cartel (May 20, 1999) (Press Release).

To date, the investigation triggered by Rhone-Poulenc’s
application for amnesty has resulted in plea agreements with
twelve corporate defendants and thirteen individual defen-
dants and the imposition of fines exceeding $900 million—
including the largest criminal fine ($500 million) ever ob-
tained by the Department of Justice under any statute.
Press Release, at 1-2. Eleven of the thirteen individuals
have received sentences resulting in imprisonment, and an
additional individual awaits a criminal trial. European
Union, Canadian, Australian, and Korean authorities simi-
larly have obtained record civil penalties exceeding €855
million against the vitamin companies. Pet. 5; Pet. App. 68a.

In the wake of the government’s investigations, domestic
private parties sued the vitamin companies seeking treble
damages and attorney’s fees, see 15 U.S.C. 1, 15, 26, for over-
charges that the domestic companies paid in United States
commerce as a result of the price-fixing conspiracy. In set-
tlement of suits by some United States purchasers, the vita-
min companies paid amounts “exceeding $2 billion.” Pet. 5;
In re Vitamins Antitrust Litig., No. 99-197 TFH, 2000 WL
1737867 (D.D.C. Mar. 31, 2000).

2. Respondents are foreign corporations domiciled in
Ecuador, Panama, Australia, and Ukraine. Pet. App. 6a; Pet.
ii, 5; Br. in Opp. ii. They brought this class action on behalf


18

trust laws to foreign transactions to a domestic anticompeti-
tive effect.

Finally, the explanation in the legislative history for the
language of Section 6a(2) as ultimately enacted strongly
undermines the court of appeals’ interpretation. The House
Judiciary Committee amended the relevant bill, as proposed
by the Subcommittee, to add Section 6a(2) with language
that provided that “(2) such effect is the basis of the violation
alleged.” House Report, 16; H.R. 5235, 97th Cong., 2d Sess.
§ 2 (Aug. 2, 1982). Absent that subsection, the House Report
explained, a plaintiff might have been able to bring suit in
federal court “merely by proving a beneficial effect within
the United States, such as increased profitability of some
other company or increased domestic employment.” House
Report 11. The Report explained that the language the
Committee added would “require that the ‘effect’ providing
the jurisdictional nexus must also be the basis for the injury
alleged under the antitrust laws.” Id. at 11-12 (emphasis
added). That passage unambiguously contemplates that the
plaintiffs claim must be based on injury resulting from the

5 See, eg., House Report 5 (“Since Judge Learned Hand’s opinion in
United States v. Aluminwm’Co. of America, 148 F.2d 416, 443-444 (2d Cir.
1945), it has been rélatively clear that it is the situs of the effects as
opposed to the conduct, that determines whether United States antitrust
law applies.”); ibid. (quoting Antitrust Div., DOJ, Antitrust Guide to In-
ternational Operations 6-7 (1977) (“[I]t would be a miscarriage of Con-
gressional intent to apply the Sherman Act to ‘foreign activities which
have no direct or intended effect on United States consumers or export
opportunities.”); id. at 7 (bill would “reinforc[e] the fundamental commit-
ment of the United States to a competitive domestic marketplace”); id. at
9-10 (“A transaction between two foreign firms, even if American-owned,
should not, merely by virtue of the American ownership, come within the
reach of our antitrust laws. Such foreign transactions should, for purposes
of this legislation, be treated in the same manner as export transactions—
that is, there should be no American antitrust jurisdiction absent a direct,
substantial and reasonably foreseeable effect on a domestic consumer or a
domestic competitor.”).


No. 03-724

In the Supreme Court of the United States

F. HOFFMANN-LA ROCHE LTD., ET AL., PETITIONERS
Vv.
EMPAGRAN, §.A., ET AL.

ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS

WILLIAM H. Tart, IV
Legal Adviser
United States Department
of State
Washington, D.C. 20520
JOHN D. GRAUBERT
Acting General Counsel
Federal Trade Commission
Washington, D.C. 20580

EDWIN S. KNEEDLER
Acting Solicitor General
Counsel of Record

R. HEWITT PATE
Assistant Attorney General
MAKAN DELRAHIM
Deputy Assistant Attorney
General
Lisa S. BLATT
Assistant to the Solicitor
General
ROBERT B. NICHOLSON
STEVEN J. MINTZ
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217



5

respondents’ claims would maximize deterrence of interna-
tional cartels by “fore[ing] the conspirator to internalize the
full cost of his anticompetitive conduct,” id. at 32a.

The majority further held that respondents have antitrust
standing under Section 4 of the Clayton Act, 15 U.S.C. 15(a).
Pet. App. 33a-37a. The court reasoned that “the arguments
that have already persuaded [the court] that, where anti-
competitive conduct harms domestic commerce, FTAIA al-
lows foreign plaintiffs injured by anticompetitive conduct to
sue to enforce the antitrust laws similarly persuade us that
the antitrust laws intended to prevent the harm that the
foreign plaintiffs suffered here.” Id. at 36a.

Judge Henderson dissented. Pet. App. 40a-42a. She dis-
agreed with the majority’s interpretation of the FTAIA, rea-
soning that the Fifth Circuit’s reading was “unambiguously”
supported by the Act’s text and history. Id. at 40a.

SUMMARY OF ARGUMENT

A. The Foreign Trade Antitrust Improvements Act pro-
vides that the Sherman Act shall not apply to foreign con-
duct unless it has a requisite effect on United States com-
merce and “such effect gives rise to a claim” under the
Sherman Act. 15 U.S.C. 6a(2). The most natural reading of
that statutory language is that the required effect on United
States commerce must give rise to a claim by the particular
plaintiff before the court. In rejecting that interpretation,
the court of appeals reached the implausible conclusion that
Congress intended to permit suits in the United States that
seek redress for injuries that were sustained entirely over-
seas and that arise out of purely foreign commerce. That
conclusion finds no support in the Act’s legislative history.

Such an expansive interpretation of the FTAIA would
greatly expand the potential liability for treble damages in
United States courts and would thereby deter members of
international cartels from seeking amnesty from criminal
prosecution by the United States Government. The inter-


4

matter jurisdiction lacking, the court did not reach peti-
tioners’ alternative contention that respondents lacked anti-
trust standing because they “fall outside the class of persons
whom the Sherman Act is designed to protect.” Id. at 58a,
54a.

8. A divided panel of the court of appeals reversed and
remanded. Pet. App. la-42a. The court observed that the
“Second and Fifth Circuits have split” on “the question
whether FTAIA requires that the plaintiffs claim arise from
the U.S. effect of the anticompetitive conduct.” Id. at 14a-
15a. The court explained (ibid.) that the Fifth Cireuit in Den
Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420,
427 (2001) (Statoil), cert. denied, 5384 U.S. 1127 (2002), held
that the plain text of the FTAIA bars claims that do not
stem from the conspiracy’s anticompetitive domestic effects.
By contrast, the court explained (Pet. App. 16a-17a), the
Second Circuit in Kruman v. Christie’s International PLC,
284 F.3d 384, 400 (2002), cert. dismissed, 124 S. Ct. 27 (2008),
held that the FTAIA permits suit, even when the plaintiff’s
injury does not arise from the domestic effect of the conspir-
acy, as long as the “domestic effect violate[s] the substantive
provisions of the Sherman Act.”

The majority adopted a “view of the statute [that] falls
somewhere between the views of the Fifth and Second Cir-
cuits, albeit somewhat closer to the latter than the former.”
Pet. App. 20a. The majority rejected respondents’ argument
—hbased on Kruman, 284 F.3d at 397-400—that the “FTAIA
only speaks to the question what conduct is prohibited, not
which plaintiffs can sue.” Pet. App. 20a. The majority none-
theless interpreted the phrase “gives rise to a claim” in 15
U.S.C. 6a(2) as requiring only that “the conduct’s harmful
effect on United States commerce must give rise to ‘a claim’
by someone, even if not the foreign plaintiff who is before
the court.” Pet. App. 4a. The majority also found its inter-
pretation supported by the FTAIA’s legislative history, id.
at 24a-30a, and by its view that asserting jurisdiction over


ft

25

prohibit price-fixing and laws that authorize private civil
actions by persons who suffer damages from antitrust viola-
tions.® These countries have enacted the remedies that their
governments consider appropriate, and United States law
should not promote forum shopping that undermines those
sovereign judgments.

B. PLAINTIFFS WHOSE INJURIES ARE NOT TIED TO
A CONSPIRACY’S ANTICOMPETITIVE EFFECT ON
UNITED STATES COMMERCE LACK ANTITRUST
STANDING

Even if the Court were to conclude, contrary to our sub-
mission in Point A, that the FTAIA does not limit the appli-
cation of the Sherman Act itself in a manner that excludes
claims arising from wholly foreign sales transactions with no
significant effect on United States commerce, respondents’
suit must fail because the Clayton Act does not in any event
offer a cause of action in these circumstances.

1. Section 4 of the Clayton Act, 15 U.S.C. 15(a), provides
that “any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust
laws” may sue for treble damages and attorney’s fees.
Despite that broad language, Section 4 never was intended

8 Australia Trade Practices Act § 454 (agreement is unlawful if it has
purpose or effect of “fixing, controlling or maintaining * * * the price for
* * * goods or services”) and Federal Court of Australia Act § 83C, et
seq.; Panama Const. art. 290 and Law No. 29 of 1996 arts. 5, 11(1) (per se
violations include any agreement that involves “to fix, manipulate, arrange
or impose the sale or purchase price of goods or services or to exchange
information with the same purpose or effect”), 142 (allowing suit by “any
affected party”); Law of Ukraine On Restriction of Monopolism and Pre-
vention of Unfair Competition in Business Activities (1992) and Law of
Ukraine On Protecting the Economic Competition art. 55 (2001). The
situation in Ecuador is less clear, but it does appear that damages caused
by cartel behavior (which appears to be illegal in Ecuador, Crim. Code
arts. 67, 363) may be available under Ecuador's general consumer protec-
tion and contract laws. Ecuador Organic Law for Consumer Protection
arts. 2, 51, 70, 87; Civ. Code arts. 2211, 2241, 2256.


24

Effective Leniency Program (Brighton, England, Nov. 21-22,
2000) (“Based on our experience, there is no greater deter-
rent to the commission of cartel activity than the risk of im-
prisonment for corporate officials.”) (available at <http:/huww.
usdoj.gov/atr/public/speeches/9928.him>), Criminal fines also
can be substantial, as the penalties imposed on the partici-
pants in the vitamin cartel demonstrate. P. 2, supra.®

The court of appeals likewise failed to consider the large
number of antitrust statutes around the world that deter and
punish cartel activity. It is our understanding that approxi-
mately 100 countries now have comprehensive antitrust
laws, and at least one-third of those, including most of the
major industrialized countries, allow private lawsuits to re-
cover damages for antitrust violations or provide for dam-
ages in conjunction with administrative proceedings.’ Pri-
vate civil suits have been filed against the vitamin cartel in
Canada, the United Kingdom, Germany, Belgium, and the
Netherlands, and class actions have been filed in Canada,
Australia, and New Zealand. Pet. 5. At least three of the
four home countries of respondents have antitrust laws that

6 Persons who violate the Sherman Act are subject to a maximum
statutory term of imprisonment of three years, a statutory maximum cor-
porate fine of $10 million, and a statutory maximum: individual fine of
$350,000. 15 U.S.C. 1. Fines may exceed those amounts however, as de-
fendants may be fined up to twice the gross gain from the offense or twice
the gross loss to victims of the offense if those amounts exceed the Sher-
man Act’s maximum fine. 18 U.S.C. 3571. Defendants may also be
ordered to pay restitution in the full amount of the victim’s loss. 18 U.S.C.
3663, 3663A; U.S.S.G. § 8B1.1.

7 Eg. ABA Section of Antitrust Law, Competition Laws Outside the
United States 1:13, 2:13-14, 3:16-17, 9:11, 10:10 (2001); Global Competition
Review, Cartel Regulation, Getting the Fine Down in 25 Jurisdictions
Worldwide (2002); Global Competition Review, Private Antitrust Litiga-
tion in 16 Jurisdictions Worldwide (2004); World Trade Organization,
Working Group on the Interaction Between Trade and Competition
Policy, Overview of Members’ National Competition Legislation, Note by
the Secretariat, WT/WGTCP/W/128/Rev. 2 (July 4, 2000), available at
<hitp:/howw.wto.orglenglishitratop_e/comp_e/comp_e.htm>


In the Supreme Court of the Gnited States

No. 03-724
F. HOFFMANN-LA ROCHE LTD., ET AL., PETITIONERS
Vv.
EMPAGRAN, S8.A., ETAL.

ON WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The Department of Justice and the Federal Trade Com-
mission have primary responsibility for enforcing the federal
antitrust laws, and thus they have a strong interest in the
correct application of those laws and in the effect of judicial
interpretations on antitrust enforcement programs. The
United States is concerned that the court of appeals’ holding
will substantially harm its ability to uncover and break up in-
ternational cartels and undermine law enforcement relation-
ships between the United States and its trading partners.

STATEMENT

1. The Antitrust Division of the United States Depart-
ment of Justice has a Corporate Leniency Policy that pro-
vides amnesty from criminal prosecution in certain cireum-
stances. 4 Trade Reg. Rep. (CCH) { 13,118 (Aug. 10, 1993);
<http:/howw.usdoj.gov/atr/public/guidelines/0091.him>. In
1999, one of the petitioners, Rhone-Poulenc SA, applied for
admission to the government’s amnesty program for Rhone-
Poulene’s role in global price-fixing and market-allocation
conspiracies among domestic and foreign manufacturers and

q@)


15

on United States commerce to regulation under our antitrust
laws, by affording a Sherman Act claim to injured purchas-
ers of vitamins in foreign countries against the defendants
who charged them supracompetitive prices in those foreign
transactions. See San Diego Bldg. Trades Council v. Gar-
mon, 359 U.S. 236, 247 (1959) (“[RJegulation can be as effec-
tively exerted through an award of damages as through
some form of preventive relief.”).

In Foley Brothers v. Filardo, 336 U.S. 281 (1949), this
Court held that a federal law requiring employers to pay
overtime for work in excess of an eight-hour day did not
apply in a foreign country. Because the statute and associ-
ated cause of action were motivated by “concern with domes-
tic labor conditions,” the Court saw no reason to apply them
to conditions in foreign countries. Jd. at 286. The Court
concluded that “{a]n intention so to regulate labor conditions
which are the primary concern of a foreign country should
not be attributed to Congress in the absence of a clearly
expressed purpose.” Ibid. Similarly, in EEOC v. Arabian
American Oil Co., the Court declined to apply Title VII to
employment in a foreign country in the absence of “clearer
evidence of congressional intent.” 499 U.S. at 255. In both
cases, the Court’s conclusion was reinforced by its deter-
mination that. to subject such transactions or relationships in
foreign countries to United States law would risk friction
with the foreign governments concerned. So too here, in the
absence of a clearer expression of congressional intent, the
Court should not interpret Section 6a(2) to afford a private
claim under the Sherman Act to foreign purchasers in wholly
foreign sales transactions, which “are the primary concern of
a foreign country” when such sales have no significant effect
on our commerce. Foley Bros., 336 U.S. at 286; see, eg.,
McCulloch v. Sociedad Nacional de Marineros de Hondu-
ras, 372 U.S. 10, 19, 21 (1963); Romero v. International
Terminal Operating Co., 358 U.S. 854, 382-388 (1959).


21

pect of civil liability to all global victims would provide a sig-
nificant disincentive to seek amnesty from the government.

From a practical standpoint, moreover, the court of ap-
peals’ analysis of deterrence is unsound because its focus is
on private lawsuits that often follow the exposure of a cartel
by the government. Such lawsuits are possible, of course,
only if the cartel is discovered in the first place. A private
action “supplements government enforcement of the anti-
trust: laws; but it is the Attorney General and the United
States district attorneys who are primarily charged by Con-
gress with the duty of protecting the public interest under
these laws.” United States v. Borden Co., 347 U.S. 514, 518
(1954).

In the government’s judgment, the amnesty program, by
creating a high risk of defection and exposure, deters cartel
behavior more effectively than an increase in private liti-
gation after the cartel has been exposed. It follows that
deterrence is best maximized, and United States consumers
are best protected, not by maximizing the potential number
of private lawsuits, but by encouraging conspirators to seek
amnesty and thus expose cartels in the first place.

b. The court of appeals’ holding would also present a risk
of undermining the foreign relations of the United States.
Germany, a major trading partner of the United States,
expressed the view in its amicus brief at the petition stage
(at 9) that, “(bly applying the United States’ antitrust laws
in cases where neither the plaintiff nor the alleged harm has
direct effects on United States commerce, the court of ap-
peals’ decision fails to respect the fundamental right of for-

* eign sovereigns to regulate their.own markets and indus-
tries.” We understand that other countries share that view.
A scheme in which United States courts would adjudicate
treble damages actions arising out of transactions that occur
wholly in foreign countries and that have no meaningful
connection to the United States would be likely to result in
tension with our trading partners and attempts by foreign


IV

Cases—Continued: Page

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429
US. 477 (1977) .. aoe
Caribbean Broad. Sys., Lid. v. Cable & Wireless,

26, 27, 28, 29

PLC, 148 F.3d 1080 (D.C. Cir. 1998) ... i
Den Norske Stats Oljeselskap As v. HeereMac Vof,

241 F.3d 420 (2001), cert. denied, 534 U.S. 1127

(th Cir. 2002) a 4,7,

9, 11, 18, 16

EEOC v. Arabian Am. Oil Co., 499 U.S. 244

(1991) . 7,15
Foley v. Filardo, 336 U.S. 281 (1949) 1
Hartford Fire Ins. Co. v. California, 509 U.S. 764

(1993) .. 7,18
Hawazti v. Standard Oil Co., 405 U.S. 251 (1972) 26
Heckler v. Edwards, 465 U.S. 870 (1984) .... 10
Illinois Brick v. Illinois, 431 U.S. 720 (1977) 26
Kruman v. Christies Int'l, PLC, 284 F.3d 384 (2d Cir.

2002), cert. dismissed, 124 S. Ct. 27 (2003) - 49,11
Malamud v. Sinclair Oil Corp., 521 F.2d 1142 (6th

Cir. 1975) ... 27
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.

475 U.S. 574 (1986) ...... 7, 28, 29
McCulloch v. Sociedad Nacional de Marineros de

Honduras, 372 U.S. 10 (1968) ....... 15
Microsoft Corp. Antitrust Litig., In re, 127 F. Supp.

2d 702 (D. Md. 2001) ....... 16
National Credit Union Admin. v. First Nat'l Bank

& Trust Co., 522 U.S. 479 (1998) .. 27
Pfizer, Inc. v. Government of India, 434 U.S. 308

(1978; 7, 16, 17, 28
San Diego Bldg. Trades Council v. Garmon,

359 U.S. 236 (1959) ... one 15
Textron Lycoming Reciprocating Engine Div. AVCO

Corp. v. UAW, 523 U.S. 658 (1998) ... 9
Turicento, S.A. v. American Airlines Inc., 303

F.3d 298 (8d Cir. 2002) ... 28



8

The question presented in this case is whether the Sher-
man Act permits respondents to recover treble damages and
attorney’s fees under the United States’ antitrust laws for
injuries that they sustained entirely overseas and that arose
out of purely foreign sales transactions that had no substan-
tial effect on United States commerce. The court of appeals
held that respondents were entitled to seek such relief on
the theory that the foreign conduct by petitioners that in-
jured respondents was part of a global price-fixing conspir-
acy that had anticompetitive effects in the United States,
and that those effects give rise to a claim by some other
person.

Such an expansive reach of the antitrust laws is not justi-
fied by either the text or history of the FTAIA. The result
reached by the court of appeals is also highly likely to have
the perverse effect of undermining the government's efforts
to detect and deter international cartel activity.

A. THE FTAIA REQUIRES A PLAINTIFF’S CLAIM TO
ARISE OUT OF A CONSPIRACY’S ANTICOMPETI-
TIVE EFFECT IN THE UNITED STATES
1. The Text Of The Statute Requires A Plaintiff To

Allege That His Claim Arises From The Domes-
tic Anticompetitive Effect Of A Sherman Act
Violation

a. The FTAIA governs whether a federal court:may hear

a plaintiff’s complaint alleging violations of the Sherman Act

involving foreign conduct. Section 6a(1) provides that the

Sherman Act extends to foreign conduct only when it has a

requisite effect on United States commerce. 15 U.S.C. 6a(1).

That such effect was caused by the vitamin cartel has not

been disputed. Pet. App. 9a. A requisite effect is not enough

to establish that the Sherman Act applies to foreign conduct,
however, for Section 6a(2) imposes the further condition that


10

“(aletually, it is used to indicate a definite but unspecified
individual, as in a man in our town. * * * When we wish to
refer indefinitely to a single person or thing we say any, as
in any man in our town, any library book.” Bergen Evans
& Cornelia Evans, A Dictionary of Contemporary American
Usage 8 (1957). Thus, the article “a” is far too slender a reed
on which to rest the conclusion that Congress intended to
give Section 6a(2) an unprecedented world-wide scope when-
ever any person in the domestic commerce of the United
States would have any claim under the Sherman Act based
on the same conduct.

Moreover, the article “a” in Section 6a(2) is immediately
followed by the specific term “claim.” 15 U.S.C. 6a(2). Con-
gress surely intended a federal court to examine not any
hypothetical “claim,” but a claim that is being asserted by
the party seeking to invoke the jurisdiction of the court in
the case actually pending before it. In other words, the
reference to “a claim” presupposes, but leaves unstated, that
the “claim” to which the conduct in question “gives rise” is
one advanced by the plaintiff. In this respect, Section 6a(2)
is just like Rule 12(b)(6) of the Federal Rules of Civil Pro-
cedure, which provides for dismissal of a complaint for
“failure to state a claim on which relief can be granted.”
Surely Rule 12(b)(6) refers to “a claim” asserted by the
plaintiff in the case, not by some other hypothetical person
not before the court. Accordingly, to recognize jurisdiction
in a federal district court under the United States’ antitrust
laws over a private action lacking the requisite “effect” on
United States commerce—on the premise that the require-
ment of such “a claim” might be satisfied by some third
party—‘“would not be consistent with the ‘sense of the thing,’
and would confer upon [the court] jurisdiction beyond what
‘naturally and properly belongs to it’” Heckler v. Edwards,
465 U.S. 870, 879 (1984) (citation omitted). Instead, the criti-
eal inquiry under Section 6a(2) “is, regardless of the situs of
the plaintiff’s injury, did that injury arise from the anticom-


TABLE OF CONTENTS

Interest of the United States

Statement .. 1
Summary of argument 5
Argument:
Respondents have no claim under the antitrust
laws .... 7
A. The FTAIA requires a plaintiff’s claim to arise
out of a conspiracy’s anticompetitive effect in the
United States ..... 8
1. The text of the statute requires a plaintiff
to allege that his claim arises from the domestic
anticompetitive effect of a Sherman Act
violation ... 8
2. The FTAIA’s legislative history does not
reveal an intent to open United States courts to
claims seeking redress for foreign injuries
sustained as a result of foreign conduct 16
3. Important policy considerations grounded in
the antitrust laws significantly undermine the
court of appeals’ interpretation ... 19
B. Plaintiffs whose injuries are not tied to a con-
conspiracy’s anticompetitive effect on United
States commerce lack antitrust standing ..... 25
Conclusion ...... 30
TABLE OF AUTHORITIES
Cases:
Association Gen. Contractors of California, Inc. v.
California State Council of Carpenters, 459 U.S.
519 (1983) 6, 26, 29, 30
Bennett v. Spear, 520 U.S. 154 (1997) . we 27

(IIT)


19

domestic effect of the defendant’s conduct in violation of the
Sherman Act.

As contemplated in the separate statement by Chairman
Rodino (see House Report 18), Section 6a(2), as added by the
Committee, was subsequently amended to require that “such
effect gives rise to a claim.” The Chairman stated that “[t]he
substituted language accomplishes the same result as the
Committee version” but was preferable “because the Com-
mittee language may suggest that an effect, rather than
conduct, is the basis for a violation.” Ibid. Thus, Section
6a(2) as finally enacted was intended to accomplish the same
result as the language the House Report described as re-
quiring that the “effect” of the defendant’s conduct on
United States commerce “must also be the basis for the in-
jury alleged”—i.e., by the plaintiff—“under the antitrust
laws.” Id. at 2. The decision of the court of appeals cannot
be reconciled with that expression of congressional intent.

83. Important Policy Considerations Grounded In The
Antitrust Laws Significantly Undermine The Court
Of Appeals’ Interpretation

a. The court of appeals’ interpretation of the FTAIA
would substantially interfere with the primary enforcement
of the antitrust laws by the United States Government.
Price-fixing conspiracies, including those operating globally,
are inherently difficult to detect and prosecute. Cooperation
by one of the conspirators, through provision of documents
or testimony, is often vital to law enforcement.

In light of those practical realities, the Antitrust Division
of the Department of Justice maintains a robust amnesty
program that offers strong incentives to conspirators who
voluntarily disclose their criminal conduct and cooperate
with prosecutors. Cf. Germany Am. Br. Pet. Stage 14-16
(discussing EU and German amnesty policies). Since 1993,
the program has offered: (1) automatic (i.e., not discretion-
ary) amnesty to corporations that come forward prior to an


QUESTIONS PRESENTED
1. Whether under the Foreign Trade Antitrust Im-
provements Act of 1982 (FTAIA), 15 U.S.C. 6a, the Sherman
Act applies to claims of foreign plaintiffs whose injuries do
not arise from the effects of antitrust violations on United
States commerce.

2. Whether such foreign plaintiffs lack antitrust standing
under Section 4 of the Clayton Act, 15 U.S.C. 15(a).

@


27

Those decisions establish that antitrust standing should
be denied to a plaintiff whose suit would “divorce[] antitrust
recovery from the purposes of the antitrust laws without a
clear statutory command to do so.” Brunswick, 429 U.S. at
487; accord Associated General Contractors, 459 U.S. at 538
(observing that the plaintiff should be seeking to redress
injuries that are tied to the central purposes of the antitrust
laws). In analogous circumstances, this Court has inter-
preted the Administrative Procedure Act, 5 U.S.C. 701 e
seq., and other statutes to deny standing when the plaintiffs
interests do not fall within the “zone of interests” protected
by the statute. E.g., National Credit-Union Admin. v. First
Nat'l Bank & Trust Co., 522 U.S. 479, 488 (1998); Bennett v.
Spear, 520 U.S. 154, 168 (1997); see Malamud v. Sinclair Oil
Corp., 521 F.2d 1142, 1152 (6th Cir. 1975) (applying zone of
interests analysis to the antitrust laws).

2. Foreign purchasers in transactions having no substan-
tial connection to United States commerce are not proper
plaintiffs under Section 4 of the Clayton Act. As explained
above, there is a background presumption that Congress did
not intend to regulate such transactions in foreign countries
under United States law, and nothing in the Clayton Act
itself suggests a congressional intent to afford a treble dam-
ages remedy. The FTAIA did not amend the Clayton Act,
and nothing in the text or history of the FTAIA’s amend-
ment of the Sherman Act suggests a congressiorial intent,
much less a “clear statutory command” (Brunswick, 429 U.S.
at 487), to displace the background presumption and create a
treble damages remedy under the Clayton Act for a wide
class of global plaintiffs whose injuries have no connection to
United States commerce. To the contrary, the House Re-
port makes clear (at 11) that the FTAIA was “not intend[ed]
to alter existing concepts of antitrust injury or antitrust
standing.” And to conclude, as did the court of appeals, that
such a class of plaintiffs may sue based on the rights of third


22

countries to enact statutory counter-reactions to any judg-
ments entered in such suits. See id. at 11-14 (describing
foreign “blocking” and “claw back” statutes and refusals to
enforce certain United States judgments). It is for reasons
such as these that the Court declined to apply United States
Jaw to transactions in foreign countries in Arabian Ameri-
can Oil Co. and Foley Brothers. See p. 15, supra.

Extension of the Sherman Act to foreign transactions
having no substantial relation to the United States might
also undermine the cooperative relationships that this Na-
tion’s antitrust agencies have forged with their foreign
counterparts in recent years. In the cartel area, conspirato-
rial meetings frequently take place in more than one coun-
try, witnesses may be scattered around the world, and docu-
mentary evidence may be located in multiple jurisdictions.
Effective prosecution of an international cartel requires the
ability to gather evidence in different countries and, fre-
quently, coordination of investigative strategies among
multi-national enforcement agencies. Because the United
States and many of its foreign counterparts now have similar
views on the seriousness of cartel behavior (see infra, p. 24),
and effective mechanisms for coordinating investigations,
the United States has become more effective in attacking
conspiracies that straddle borders.. But.:those cooperative
relationships depend on mutual good will and reciprocity. If
our foreign counterparts fear that the fruits of their coopera-
tion ultimately will be used to support follow-on treble dam-
age actions in the United States that they perceive as
inappropriate, cooperation may be strained, to the overall
detriment of international cartel enforcement.

e. The court of appeals’ decision also would be likely to
burden the federal courts with a wave of antitrust cases rais-
ing potentially complex satellite disputes. For cases in
which defendants contest whether the Sherman Act applies
to foreign conduct covered by the FTAIA, plaintiffs must
prove both that the challenged foreign conduct had the


6

pretation adopted by the court of appeals thus would weaken
the Department of Justice’s criminal amnesty program,
which has served as an effective means of cracking inter-
national cartels. That interpretation also likely would dam-
age the cooperative law enforcement relationships that the
United States has nurtured with foreign governments and
would burden the federal courts with a wave of new inter-
national antitrust cases raising potentially complex satellite
disputes that turn on hypothetical claims of persons not
before the courts.

B. Antitrust standing principles independently support
the conclusion that foreign plaintiffs whose claims arise
solely from a conspiracy’s effects on foreign commerce can-
not bring antitrust lawsuits in United States courts. Section
4 of the Clayton Act, which defines the class of persons who
may maintain a private damages action under the antitrust
laws, does not provide a treble damages remedy for all in-
juries that result from an antitrust violation. Associated
General Contractors v. California State Council of Carpen-
ters, 459 U.S. 519 (1983). This Court accordingly has limited
the types of plaintiffs who are proper parties to bring a
private antitrust action based on substantive antitrust and
other policy considerations.

Foreign plaintiffs whose claims arise from a conspiracy’s
effects outside the United States are not proper plaintiffs to
invoke our antitrust laws. The focus of the FTAIA, and the
fundamental purpose of the Sherman. Act, are the protection
of American consumers and commerce. To provide antitrust
relief to respondents, even though their injuries have no con-
nection to a conspiracy’s effects on United States commerce,
would divorce antitrust recovery from the central purposes
of the antitrust laws.


9

“such effect gives rise to a claim” under the Sherman Act. 15
U.S.C. 6a(2)?

It is a “fundamental principle of statutory construction”
that the meaning of statutory language “cannot be deter-
mined in isolation, but must be drawn from the context in
which it is used.” Textron Lycoming Reciprocating Engine
Div., AVCO Corp. v. UAW, 523 U.S. 658, 657 (1998) (internal
quotation marks omitted). The FTAIA’s focus is explicitly
and only on the domestic effect of anticompetitive conduct.
Its text contains no hint of a statutory purpose to permit re-
covery where the situs of the plaintiff’s injury is entirely
foreign and that injury arises exclusively from a price-fixing
or market-allocation conspiracy’s effect on foreign com-
merce. Accordingly, read in context, by far the most natural
reading of Section 6a(2)’s requirement that “such effect gives
rise to a claim” under the Sherman Act is that the requisite
anticompetitive effect on domestic commerce must give rise
to a Sherman Act claim brought by the particular plaintiff
before the court.

The requirement that a plaintiff tie his own claim to a con-
spiracy’s domestic anticompetitive effect does not conflict
with a supposedly literal or “plain” meaning of Section 6a(2),
based on its use of the indefinite article “a,” as has been sug-
gested. See Kruman, 284 F.3d at 400; Statoil, 241 F.3d at
432 (Higginbotham, J., dissenting). “The word ‘a’ has vary-
ing meanings and uses,” and “the meaning depends on con-
text.” Black’s Law Dictionary 1 (6th ed. 1990). And in par-
ticular, although “[a] (or am) is called the indefinite article,”

2 ‘The court of appeals treated the FTAIA as setting forth a threshold
requirement for subject matter jurisdiction rather than a substantive ele-
ment of a Sherman Act claim. Pet. App. 8a; see generally United Phos-
phorus, Lid. v. Angus Chem. Co., 322 F.3d 942, 949-951 (7th Cir.) (en
bane), cert. denied, 124 S. Ct. 583 (2003). That issue has no bearing on the
question of statutory interpretation before the Court, i.e, whether the
Sherman Act applies to foreign conduct when a claim by the plaintiff does
not arise from a conspiracy’s effect on United States commerce.