No. 01-7115

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

EMPAGRAN S.A., ET AL.,

Plaintiffs-Appellants,

v.

F. HOFFMANN-LAROCHE, LTD., ET AL.,

Defendants-Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

BRIEF FOR THE UNITED STATES AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE IN SUPPORT OF

PETITION FOR REHEARING EN BANC

EDWIN S. KNEEDLER

 Acting Solicitor General

R. HEWITT PATE

 Acting Assistant Attorney General

LISA S. BLATT

JOHN D. GRAUBERT Assistant to the Solicitor General

 Acting General Counsel

 Federal Trade Commission ROBERT B. NICHOLSON

 Washington, D.C. 20580 ADAM D. HIRSH

 Attorneys

 Department of Justice

 Washington, D.C. 20530-0001

 202-514-2217
(i)

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

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

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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

DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. THE PANEL DECISION MERITS EN BANC REVIEW . . . . . . . . . . . . . . . . . 6

B. THE PANEL MAJORITY’S HOLDING IS INCONSISTENT WITH THE

STATUTORY TEXT, HISTORY, AND PURPOSES .................... 8

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ADDENDUM
ii

TABLE OF AUTHORITIES

CASES

Page

BHP New Zealand, Ltd. v. UCAR International, Inc., 

Nos. 01-3329, 01-3340 & 01-3991 (3d Cir. argued Mar. 11, 2003) ................. 7

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) .................. 9

Den Norske Stats Oljeselskap AS v. HeereMac v.o.f., 

241 F.3d 420 (5th Cir. 2001), cert. denied, 534 U.S. 1127 (2002) . . . . . . . . . . . . . 4, 6, 10

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

No. Civ. 001686TFH, 2001 WL 761360 (D.D.C. June 7, 2001) . . . . . . . . . . . . . . . . . . . 3, 4

Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993) . . . . . . . . . . . . . . . . . . . . 14

Kruman v. Christie’s International PLC, 

284 F.3d 384 (2d Cir. 2002), petition for cert. pending, 

No. 02-340 (filed Sept. 3, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 7, 9

Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) . . . . . . . . . 11

Metallgesellschaft AG v. Sumitomo Corp. of America, 

No. 00-3700 (7th Cir. argued Sept. 5, 2001) .................................. 7

In re Microsoft Corp. Antitrust Litigation, 127 F. Supp. 2d 702 (D. Md. 2001) . . . . . . . . . . 10

National Credit Union Admin. v. First National Bank & Trust Co., 522 U.S. 429 (1998) . . 10

Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978) . . . . . . . . . . . . . . . . . . . . . . . 10-11, 12

Reiter v. Sonotone, 442 U.S. 330 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

In re Vitamins Antitrust Litigation, 

No. 99-197THF, 2000 WL 1737867 (D.D.C. Mar. 31, 2000) ..................... 2

Warth v. Seldin, 422 U.S. 490 (1975) .......................................... 8
iii

FEDERAL STATUTES AND RULE

Page

Clayton Act, 15 U.S.C. 15 et seq.:

§ 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

§ 15(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

§ 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. 6a ........ passim

Sherman Act, 15 U.S.C. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Fed. R. App. P. 35(b)(1)(B) ................................................. 7

MISCELLANEOUS

Australian Competition & Consumer Commission, Federal Court Imposes 

Record $26M Penalties Against Vitamin Suppliers (Mar. 1, 2001), 

http://203.6.251.7/accc.internet/media/search/view_media.cfm?RecordID=267 ...... 2

Brooke Barnes, Sotheby’s, Christie’s to Settle Claims by Overseas Customers, 

Wall Street Journal (Mar. 12, 2003) ......................................... 4

Canadian Competition Bureau, Fines in Order of Magnitude - Competition Act,

(Oct. 10, 2002), http://strategis.ic.gc.ca/SSG/ct01709e.html ...................... 2

H.R. Rep. No. 686 (1982), 97th Cong., 2d Sess.,

reprinted in 1982 U.S.C.C.A.N. 2487 ....................................... 5, 9, 10, 14

Francisco Peiró, Commission adopts eight new decisions imposing fines on hardcore cartels, 1 Competition Policy Newsletter (European Comm’n) (Feb. 2002),

http://europa.eu.int/comm/competition/publications/cpn/cpn2002_1.pdf ............ 2

U.S. Dep’t of Justice, Corporate Leniency Policy,

4 Trade Reg. Rep. (CCH) ¶ 13,113 (Aug. 10, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13
(1)

No. 01-7115

____________________________________________________________

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

____________________

EMPAGRAN SA, ET AL.,

Plaintiffs-Appellants,

v.

F. HOFFMANN-LAROCHE ET AL.,

Defendants-Appellees.

____________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

____________________

BRIEF FOR THE UNITED STATES AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE IN SUPPORT OF

PETITION FOR REHEARING EN BANC

___________________

STATEMENT OF INTEREST

This brief is submitted in response to the Court’s Order of March 7, 2003, inviting the

Solicitor General to express the views of the United States.

QUESTION PRESENTED

Whether the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. 6a,

provides jurisdiction under the Sherman Act over the claims of a foreign plaintiff injured by a

conspiracy having direct, substantial, and reasonably foreseeable anticompetitive effects on

United States trade or commerce, when the foreign plaintiff’s claimed injury does not arise from

those domestic effects.
2

1

 Francisco Peiró, Commission adopts eight new decisions imposing fines on hard-core

cartels, 1 Competition Policy Newsl. (European Comm’n), Feb. 2002, at 30-34 (over €855

million in fines), available at http://europa.eu.int/comm/competition/publications/cpn/

cpn2002_1.pdf; Australian Competition & Consumer Comm’n, Federal Court Imposes Record

$26M Penalties Against Vitamin Suppliers (Mar. 1, 2001), available at http://203.6.251.7/

accc.internet/media/search/view_media.cfm?RecordID=267; Canadian Competition Bureau,

Fines in Order of Magnitude - Competition Act, available at http://strategis.ic.gc.ca/SSG/

ct01709e.html.

STATEMENT

1. In the mid-1990s, the United States began investigating global price-fixing and

market allocation conspiracies among domestic and foreign manufacturers and distributors of

bulk vitamins (“vitamin companies”), in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. 

Pursuant to those conspiracies, cartel members sold billions of dollars’ worth of vitamins in the

United States and around the world. To date, the United States has negotiated plea agreements

with twelve corporate defendants and thirteen individual defendants, obtaining fines exceeding

$900 million—including the largest criminal fine ($500 million) ever obtained by the

Department of Justice under any statute. Moreover, eleven of the thirteen individuals have

received sentences resulting in imprisonment, while one defendant awaits sentencing. European

Union, Canadian, and Australian authorities similarly have obtained record fines against the

vitamin companies.1

In the wake of the government’s investigation, private parties brought multiple suits

against the vitamin companies, seeking treble damages and attorneys’ fees (15 U.S.C. 1, 15, 26)

stemming from overcharges paid as a result of the price-fixing conspiracy. In settlement of suits

by some United States purchasers, the vitamin companies paid hundreds of millions of dollars. 

In re Vitamins Antitrust Litig., No. 99-197 THF, 2000 WL 1737867 (D.D.C. Mar. 31, 2000). 
3

2

 The FTAIA, which in 1982 became Section 7 of the Sherman Act, provides:

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.

[Proviso] 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.

15 U.S.C. 6a.

This case arises from claims by “foreign corporations domiciled in various foreign countries,

who purchased vitamins abroad from the vitamin companies . . . for delivery outside the United

States.” Pet. App. A6.

2. The district court (Hogan, J.) dismissed the foreign plaintiffs’ claims for lack of

subject matter jurisdiction, holding that those plaintiffs had “not alleged that the precise injuries

for which they seek redress here have the requisite domestic effects necessary to provide subject

matter jurisdiction over this case” under the Foreign Trade Antitrust Improvements Act of 1982

(FTAIA), 15 U.S.C. 6a. Empagran, S.A. v. F. Hoffman-La Roche, Ltd., No. Civ. 001686TFH,

2001 WL 761360, at *3 (D.D.C. June 7, 2001).2

 The district court explained that, although the

foreign plaintiffs had alleged that “the conduct causing their injuries resulted in a ‘direct,

substantial, and reasonably foreseeable effect on U.S. commerce,’” the plaintiffs had not alleged
4

3

 Because the district court found subject matter jurisdiction lacking, it did not reach the

defendants’ alternative argument that the foreign plaintiffs lacked antitrust standing. Empagran

S.A., 2001 WL 761360, at *5.

4

 The parties in the Kruman case have reportedly agreed to settle their case. Brooke

Barnes, Sotheby’s, Christie’s to Settle Claims by Overseas Customers, Wall St. J., Mar. 12, 2003,

at B2.

that “the effect providing the jurisdictional nexus . . . [was also] the basis for the injury alleged

under the antitrust laws.” Id. at *2 (citations omitted).3

3. A divided panel of this Court (Edwards, Henderson, and Rogers, JJ.) reversed and

remanded. Pet. App. A1-A36. The court observed that “the Second and Fifth Circuits have

split” on “the question whether the FTAIA requires that the plaintiff’s claim arise from the U.S.

effect of the anticompetitive conduct.” Id. at A13. The court observed (id. at A13-A14) that the

Fifth Circuit in Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 427 (2001)

(Statoil), cert. denied, 534 U.S. 1127 (2002), held that the FTAIA bars claims in which the

plaintiff’s injury does not stem from the conspiracy’s anticompetitive domestic effects. By

contrast, the Second Circuit in Kruman v. Christie’s International PLC, 284 F.3d 384, 400

(2002), petition for cert. pending, No. 02-340 (filed Sept. 3, 2002), held that the FTAIA permits

suit when the plaintiff’s injury does not arise from the domestic effect of the conspiracy as long

as a “domestic effect violate[s] the substantive provisions of the Sherman Act.”4

The majority adopted a “view of the statute [that] falls somewhere between the views of

the Fifth and Second Circuits, albeit somewhat closer to the latter than the former.” Pet. App.

A19. The majority rejected the plaintiffs’ argument—based 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. A20. The majority nonetheless interpreted the phrase “gives rise to
5

a claim” in Section 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.” Id. at A19.

The majority also relied on the legislative history of the FTAIA and policy considerations

to support its expansive interpretation of the Act. Acknowledging that portions of the sole

relevant congressional committee report, H.R. Rep. No. 686 (1982), 97th Cong., 2d Sess.,

reprinted in 1982 U.S.C.C.A.N. 2487 (House Report), support the Fifth Circuit’s interpretation

of the FTAIA, the majority believed it “most noteworthy . . . that the presence of legislative

history that is consistent with the restrictive view does not (when read in context) denigrate or

exclude the less restrictive view, whereas the less restrictive view includes within it the view that

plaintiffs harmed by the U.S. effects can sue.” Pet. App. A23. The majority found “most

compelling,” however, the prospect that an expansive interpretation of the FTAIA to allow

persons like appellants to sue would maximize deterrence of international cartels by “forc[ing]

the conspirator to internalize the full costs of his anticompetitive conduct.” Id. at A30.

The majority further held that the appellants have antitrust standing. Pet. App. A31-A34. 

The court reasoned that “the arguments that have already persuaded us that, where

anticompetitive conduct harms domestic commerce, FTAIA allows 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 A33.

Judge Henderson dissented. Pet. App. A37-A39. She disagreed with the majority’s

interpretation of the FTAIA, explaining that, “[n]otably, the word ‘claim’ in the [Act] refers to

the specific claim asserted by the injured party.” Id. at A37 n.2.
6

5

 For the Court’s convenience, we attach as an addendum a copy of the government’s

amicus brief in Statoil.

DISCUSSION

A. THE PANEL DECISION MERITS EN BANC REVIEW

1. The Fifth Circuit in Statoil held that “the plain language of the FTAIA precludes

subject matter jurisdiction over claims by foreign plaintiffs against defendants where the situs of

the injury is overseas and that injury arises from effects in a non-domestic market.” 241 F.3d at

428. After a certiorari petition was filed in Statoil, the Supreme Court invited the Solicitor

General to express the views of the United States. In response, the Solicitor General filed an

amicus brief on behalf of the United States and Federal Trade Commission taking the position

that the Fifth Circuit’s decision in Statoil correctly interpreted the FTAIA to require that the

anticompetitive effects on United States commerce give rise to a plaintiff’s claimed injuries. 

Brief For The United States And The Federal Trade Commission As Amici Curiae, at 10-17,

Statoil ASA v. HeereMac v.o.f., No. 00-1842 (Statoil Br.).5

 The government’s brief also

explained that the Fifth Circuit’s reading of the Act would not impair effective deterrence of

antitrust violations or federal criminal enforcement of the antitrust laws against international

cartels. Id. at 8-10. The government concluded, moreover, that the Fifth Circuit’s decision did

not warrant the Supreme Court’s attention at that time because the decision was “the first

appellate decision to address whether a plaintiff’s antitrust claim involving foreign conduct must

derive from that conduct’s effect on domestic commerce.” Id. at 5.

Since the filing of the government’s Statoil brief, two courts of appeals have reached

interpretations of the FTAIA that conflict with the Fifth Circuit’s decision in Statoil. As the
7

panel observed (Pet. App. A4, A13-A14), the Second Circuit in Kruman rejected the view that

the FTAIA “require[s] that the ‘effect’ on domestic commerce be the basis for the alleged injury

suffered by a plaintiff,” and instead held that the FTAIA’s “language ‘gives rise to a claim’ only

requires that the ‘effect’ on domestic commerce violate the substantive provisions of the

Sherman Act.” 284 F.3d at 399. Moreover, the majority’s decision in the present case holds that

the FTAIA permits a plaintiff to sue based on foreign injury arising from foreign conduct. That

decision sharply contrasts with the Fifth Circuit’s decision in Statoil, but also differs from the

Second Circuit’s decision in Kruman. See Pet. App. A19 (“Our view of the statute falls

somewhere between the views of the Fifth and Second Circuits, albeit somewhat closer to the

latter than the former.”).

2. The government urges that this Court grant rehearing en banc because the majority’s

decision deepens a circuit split on an issue of exceptional and recurring importance regarding the

scope of the antitrust laws. Fed. R. App. P. 35(b)(1)(B). With increasing frequency, foreign

plaintiffs have sued to recover damages arising out of foreign purchases of conspiratorially pricefixed items, when the conspiracy’s conduct also affects United States commerce. Statoil Br. 7. 

Indeed, appeals involving the issue whether such suits are permissible under the FTAIA are

under submission in the Third and Seventh Circuits. BHP New Zealand Ltd. v. UCAR Int’l, Inc.,

Nos. 01-3329, 01-3340 & 01-3991 (3d Cir. argued Mar. 11, 2003); Metallgesellschaft AG v.

Sumitomo Corp. of Am., No. 00-3700 (7th Cir. argued Sept. 5, 2001). The issue also has been

addressed in many district court decisions. Reh’g Pet. 8 n.4 (collecting cases); Statoil Br. 7. The

United States expects that similar suits will follow in light of the majority’s holding in this case

that the FTAIA does not bar such suits.
8

B. THE PANEL MAJORITY’S HOLDING IS INCONSISTENT WITH THE

STATUTORY TEXT, HISTORY, AND PURPOSES

 The government continues to adhere to the position set forth in its amicus brief in Statoil

that the FTAIA bars a private suit when the plaintiff’s claim does not arise from the domestic

effects of the challenged anticompetitive conduct.

1. It is settled that the Sherman Act extends to foreign conduct with intended and

substantial effects on United States commerce, and that the FTAIA provides for jurisdiction

under the Sherman Act over a claim by a plaintiff that suffers injury arising from direct,

substantial, and reasonably foreseeable anticompetitive effects of foreign conduct on United

States commerce, whether the plaintiff is located in the United States or abroad. Statoil Br. 11. 

The panel has embraced the remarkable proposition, however, that the FTAIA allows a suit even

when a plaintiff is injured overseas and the injury stems entirely from a conspiracy’s effects

overseas. The panel reached that result by a “literal” reading of the word “a” in Section 6a(2) to

mean 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. A19. Read in

context, however, the most natural reading of Section 6a(2)’s requirement that “such effect gives

rise to a claim” is that the requisite anticompetitive effects on domestic commerce must give rise

to the claim brought by the particular plaintiff before the court. Statoil Br. 12; cf. Warth v.

Seldin, 422 U.S. 490, 499 (1975) (a plaintiff “cannot rest his claim to relief on the legal rights or

interests of third parties”).

This interpretation is supported by principles of antitrust injury and standing embedded in

the FTAIA. Section 6a(2) of the FTAIA requires that domestic effects of the conduct in question
9

“give[] rise to a claim” under the Sherman Act. 15 U.S.C. 6a(2). In Kruman, the Second Circuit

held that because the FTAIA amended the Sherman Act—not the Clayton Act—the FTAIA “only

speaks to the question what conduct is prohibited, not which plaintiffs can sue.” Pet. App. A20

(citing Kruman, 284 F.3d at 397-400). The panel majority correctly rejected that approach

because “Congress referred to both prohibited conduct and plaintiffs’ injury, importing concepts

from both the Sherman and Clayton Acts, in making the nexus of ‘conduct,’ ‘effect,’ and ‘claim’

the key to FTAIA.” Id. at A20; see also Statoil Br. 12-13.

The majority erred, however, in concluding that the statute requires merely that “some

private person or entity has suffered actual or threatened injury as a result of the U.S. effect of the

defendant’s violation of the Sherman Act,” Pet. App. A22 (emphasis added), because Congress

incorporated antitrust injury and standing concepts in the FTAIA. See House Report at 11

(“[T]he Committee does not intend to alter existing concepts of antitrust injury or antitrust

standing.”). To have a “claim,” a plaintiff must show “antitrust injury”—“injury of the type the

antitrust laws were intended to prevent and that flows from that which makes defendants’ acts

unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). A contrary

result would “divorce[] antitrust recovery from the purposes of the antitrust laws without a clear

statutory command to do so.” Id. at 487.

The FTAIA’s focus is on domestic effects of anticompetitive conduct. Its text contains

no hint of a statutory purpose to permit recovery where the situs of injury is entirely foreign and

the injury exclusively arises from a conspiracy’s effect on foreign commerce. Thus, established

principles of antitrust injury and standing inform a proper interpretation of the FTAIA’s language

and require that the plaintiff—not just someone—have a “claim” under the Sherman Act. Cf.
10

National Credit Union Admin. v. First Nat’l Bank & Trust Co., 522 U.S. 479, 488 (1998)

(describing zone-of-interest requirement for prudential standing).

2. The majority acknowledges that portions of the FTAIA’s legislative history support

the Fifth Circuit’s interpretation of the Act, Pet. App. A23, A28, but concludes that, on the

whole, the legislative history favors an expansive interpretation because nothing in the history

affirmatively “denigrate[s] or exclude[s]” an expansive interpretation, id. at A23. The majority

thus assumes that, in the absence of express legislative history to the contrary, Congress must

have intended the more expansive interpretation—a dubious analytical approach to 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 at 2. The salient point is that nothing

in the Act’s legislative history speaks to the issue of foreign purchasers whose injuries do not

arise from a conspiracy’s effects on domestic commerce. The majority’s interpretation of what

the legislative history “implicitly assumes,” Pet. App. A25, is simply unavailing because there is

no indication that Congress had in mind the scenario occurring here—foreign plaintiffs suing to

recover for alleged overcharges paid in foreign transactions for foreign goods. 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 Supreme Court’s decision in Pfizer, Inc. v. Government of India, 434 U.S. 308

(1978), provides the relevant context for all of the House Report passages cited by the majority. 

See House Report at 10 (citing Pfizer). Pfizer did not address the jurisdictional reach of the

antitrust laws. Rather, it 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
11

extent as any other plaintiff.” 434 U.S. at 320. As discussed above, there is no dispute that the

FTAIA permits suits by foreign purchasers who are injured by domestic anticompetitive effects

of illegal conduct. Those plaintiffs, however, are markedly different from foreign purchasers

who “bought [goods] exclusively outside the United States” and whose injuries arise exclusively

from overseas conduct. Pet. App. A9.

3. a. We further disagree with the majority’s reliance (Pet. App. A30) on what it

considered a “most compelling” rationale: that its expansive interpretation of the FTAIA is

necessary to deter international cartels from harming United States commerce. The majority

reasons that allowing foreign plaintiffs to sue for treble damages in U.S. district court for foreign

injuries suffered by defendants’ foreign conduct “forces the conspirator to internalize the full

costs of his anticompetitive conduct.” Ibid. The paramount purpose of the United States’

antitrust laws, however, is to protect consumers, competition, and commerce in the United

States. Pfizer, 434 U.S. at 314 (“Congress’ foremost concern in passing the antitrust laws was

the protection of Americans.”). 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,” ibid., the Court’s decision in Pfizer, as we have pointed out, involved

foreign purchasers injured by anticompetitive domestic conduct and effects. The Court did not

intimate that the purposes of the antitrust laws would support the availability of a private treble

damages action when foreign injury is sustained exclusively as a result of foreign conduct.

The Supreme Court has made clear that “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). The Department of Justice follows that admonition in
12

6

 The majority’s decision also ignores the striking change in the legal landscape since

Pfizer. Not only has Congress enhanced the penalties available against cartels, but there has been

a marked growth in foreign antitrust statutes and enforcement, particularly in the last decade. 

Statoil Br. 15-16; Reh’g Pet. 4-5.

prosecuting international cartels by focusing on domestic commerce when calculating fines under

the Sentencing Guidelines. See Statoil Br. 8-10. Similarly, for private plaintiffs, that admonition

is appropriately followed by providing a cause of action only for such plaintiffs—domestic and

foreign—who suffer injury from a conspiracy’s effect on domestic commerce.6

Moreover, policy considerations based on deterrence counsel against the panel’s

expansive interpretation of the FTAIA that permits suits for injuries sustained abroad that arise

from foreign conduct. Price-fixing conspiracies are inherently difficult to detect and prosecute. 

Cooperation by a co-conspirator, through provision of documents or testimony, thus is often vital

to law enforcement. To induce such cooperation, the Antitrust Division of the Department of

Justice maintains a robust Corporate Leniency Policy, 4 Trade Reg. Rep. (CCH) ¶ 13,113

(Aug. 10, 1993), that offers strong incentives to co-conspirators who elect voluntarily to disclose

their criminal conduct and cooperate with prosecutors. That policy has proven indispensable in

government antitrust enforcement; it is the number one source of leads for breaking up

international cartels—including the vitamins cartel that is the subject of this case—that continue

to injure American consumers.

Under the policy, the first cooperating corporation (and its officers) may receive amnesty

from criminal prosecution. 4 Trade Reg. Rep. (CCH) ¶ 13,113 at 20,649-21, 20,649-22. They

remain subject, however, to private actions seeking treble damages under 15 U.S.C. 15(a). Thus,

potential amnesty applicants weigh their civil liability exposure when deciding whether to avail
13

themselves of the government’s amnesty policy. Without question, “private suits provide a

significant supplement . . . to the Department of Justice for enforcing the antitrust laws and

deterring violations.” Reiter Corp. v. Sonotone, 442 U.S. 330, 344 (1979). The rule adopted by

the majority, however, would effect a sea change in the number and type of private actions

permitted under the Sherman Act. We are aware of no other country whose antitrust laws

provide for treble damages. By permitting suits for treble damages by overseas plaintiffs whose

injuries arise from overseas conduct, the majority’s decision, if allowed to stand, would create a

potential disincentive for corporations and individuals to report antitrust violations and seek

leniency under the Corporate Leniency Policy or, when amnesty under the policy is unavailable,

to cooperate with prosecutors by plea agreement. The panel’s decision thus threatens to impair

the ability of the government to seek criminal penalties, and of private parties (whether located

here or overseas) to seek treble damages for injuries stemming from a conspiracy’s

anticompetitive effects on commerce in the United States. Such a decrease in effective

enforcement of the antitrust laws, therefore, has the potential to weaken deterrence—the opposite

of what the panel intended. Pet. App. A28-A31.

b. There are additional countervailing policy reasons to require that a plaintiff’s injury

arise from a conspiracy’s anticompetitive domestic effects. The rule embraced by the majority

threatens to burden the federal courts in the United States with suits seeking to recover for

injuries sustained abroad and arising exclusively from foreign conduct and foreign

anticompetitive effects. Under the panel’s decision, the critical inquiry is whether a conspiracy’s

effect on domestic commerce “give[s] rise to ‘a claim’ by someone, even if not the foreign

plaintiff who is before the court.” Pet. App. A19. The majority does not explain how that
14

determination is to be made when the party who suffered the relevant injury is not “before the

court.” Ibid. It is clear, however, that once any plaintiff is determined to have a claim arising

from an injury sustained by the domestic anticompetitive effects of a conspiracy, the rule

embraced by the panel would permit any foreign purchaser to bring suit for treble damages in the

district courts of the United States, even when the purchaser is “injured solely by that

[conspiracy’s] effect on foreign commerce.” Id. at A5.

We are unaware of any decision pre-dating the FTAIA that permitted such suits. 

Congress passed the FTAIA to “exempt from the Sherman Act export transactions that did not

injure the United States economy,” Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 n.23

(1993), and to create a “single, objective test—the ‘direct, substantial, and reasonably foreseeable

effect’ test” to “serve as a simple and straightforward clarification of existing American law,”

House Report, supra, at 2 (emphasis added). Congress did not intend the sweeping change

brought about by the rule adopted by the majority, which would open the district courts of the

United States to suits to recover for injuries suffered abroad solely as a result of a conspiracy’s

effect on foreign commerce.
15

*

 The Solicitor General is recused in this case.

CONCLUSION

The Court should grant rehearing en banc.

Respectfully submitted.

EDWIN S. KNEEDLER

 Acting Solicitor General*

R. HEWITT PATE

JOHN D. GRAUBERT Acting Assistant Attorney General

 Acting General Counsel

 Federal Trade Commission LISA S. BLATT

 Washington. D.C. 20580 Assistant to the Solicitor General

ROBERT B. NICHOLSON

ADAM D. HIRSH

 Attorneys

 Department of Justice

 Washington, D.C. 20530-0001

 (202) 514-2217

March 24, 2003
CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitations of Fed. R. app. P. 32(a)(7), Local

Rule 32(a)(1), and the Court’s Order of March 7, 2003 because it has been prepared in a

proportionally spaced typeface using WordPerfect 10 in 12-point Times New Roman.

Adam D. Hirsh

Dated: March 24, 2003
ADDENDUM
No. 00-1842

In the Supreme Court of the United States

STATOIL ASA, PETITIONER

v.

HEEREMAC V.O.F., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES AND

THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE

WILLIAM E. KOVACIC

General Counsel

Federal Trade Commission

Washington, D.C. 20580

THEODORE B. OLSON

Solicitor General

Counsel of Record

CHARLES A. JAMES

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

R. HEWITT PATE

Deputy Assistant Attorney

General

LISA SCHIAVO BLATT

Assistant to the Solicitor

General

ROBERT B. NICHOLSON

ADAM D. HIRSH

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217
(I)

QUESTION PRESENTED

Whether federal courts have jurisdiction under the

Sherman Act and the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. 1, 6a, over

the claims of a foreign plaintiff that it has been injured

by a conspiracy that has direct, substantial, and reasonably foreseeable anticompetitive effects on United

States trade or commerce, if the foreign plaintiff’s

claimed injury does not arise from those domestic

effects.
(III)

TABLE OF CONTENTS

Page

Statement ........................................................................................ 1

Discussion ........................................................................................ 5

A. The issue decided by the court of appeals is not

ripe for this Court’s review ........................................... 6

B. The court of appeals’ decision does not adversely

affect the government’s enforcement of the

Sherman Act .................................................................... 8

C. The court of appeals’ holding is consistent with

the statutory text, history, and purposes .................. 10

Conclusion ....................................................................................... 17

TABLE OF AUTHORITIES

Cases:

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.

477 (1977) ................................................................................. 13

Caribbean Broadcasting System, Ltd. v. Cable &

Wireless PLC, 148 F.3d 1080 (D.C. Cir. 1998) ................. 6

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

(1991) ........................................................................................ 11

Ferromin Int’l Trade Corp. v. UCAR Int’l, Inc., 153

F. Supp. 2d 700 (E.D. Pa. 2001) ........................................... 7, 8

Galavan Supplements, Ltd. v. Archer Daniels Midland

Co., No. C97-3259 FMS, 1997 WL 732498 (N.D. Cal.

Nov. 9, 1997) ........................................................................... 7

Hartford Fire Ins. Co. v. California, 509 U.S. 764

(1993) ...................................................................................... 6, 11

Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574 (1986) .............................................................. 3, 11

National Credit Union Admin. v. First Nat’l Bank

& Trust Co., 522 U.S. 479 (1998) ........................................ 13

Pfizer, Inc. v. Government of India, 434 U.S. 308

(1978) .................................................................................... 11, 13
IV

Cases—Continued: Page

Textron Lycoming Reciprocating Engine Div.

AVCO Corp. v. UAW, 523 U.S. 653 (1998) .................... 12

United States v. Nippon Paper Indus. Co., 109

F.3d 1 (1st Cir. 1997) ........................................................... 8, 11

Vitamins Antitrust Litig., In re, No. 99-197 TFH,

2000 WL 1737867 (D.D.C. Mar. 31, 2000) .......................... 16

Warth v. Seldin, 422 U.S. 490 (1975) .................................. 12

Statutes and regulations:

Antitrust Amendments Act of 1990, Pub. L.

No. 101-588, § 4(a), 104 Stat. 2880 ...................................... 15

Antitrust Procedures and Penalties Act, Pub. L.

No. 93-528, § 3, 88 Stat. 1708 ............................................... 15

Foreign Trade Antitrust Improvements Act, 15 U.S.C.

6a et seq.:

§ 6a, 15 U.S.C. 6a ........................................................... 3, 11

§ 6a(1), 15 U.S.C. 6a(1) .......................... 2-3, 6, 8, 12, 13, 14

§ 6a(2), 15 U.S.C. 6a(2) ..................... 4, 5, 6, 7, 8, 12, 13, 14

Sherman Act, 15 U.S.C. 1 ............................................. 2, 4, 10, 11

18 U.S.C. 3553(b) ....................................................................... 9

18 U.S.C. 3571 ............................................................................ 16

United States Sentencing Guidelines:

§ 2R1.1(d)(1) .......................................................................... 8, 10

§ 5K2.0 ..................................................................................... 9

§ 8C2.5 ...................................................................................... 9

§ 8C2.6 ...................................................................................... 9

Miscellaneous:

Australian Competition & Consumer Comm’n,

Federal Court Imposes Record $26M Penalties

Against Vitamin Suppliers (Mar. 1, 2001), available at

<http://203.6.251.7/acc.internet/media/search/view_

media.cfm?RecordID=267> ............................................... 16-17

Canadian Competitioner Bureau, Fines in Order of

Magnitude Competition Act, available at <http://

strategis.ic.gc.ca/SSG/ct01709e.html> ............................... 17
V

Miscellaneous—Continued: Page

European Comm’n, Commission imposes fines on

vitamin cartels, available at <http://europa.eu.int/

comm/competition/index_en.html> .................................... 16

H.R. Rep. No. 686, 97th Cong., 2d Sess. (1982) ............... 13, 15

A. Douglas Melamed, An Address to the 27th Annual

Conference on International Antitrust Law and

Policy, on the Subject of Promoting Sound Antitrust

Enforcement In The Gobal Economy (Oct. 19, 2000),

available at <http://www.usdoj.gov/atr/public/

speeches/6785.htm> .............................................................. 16

Gary R. Spratling, Negotiating The Waters of

International Cartel Prosecutions: Antitrust Division

Policies Relating to Plea Agreements in International

Cases (Mar. 4, 1999), available at <http://www.usdoj.

gov/atr/public/speeches/2275.htm> .................................... 9

U.S. Dep’t of Justice & Federal Trade Comm’n,

Antitrust Enforcement Guidelines For International

Operations (Apr. 1995), reprinted in 4 Trade Reg.

(CCH) ¶ 13,107 ....................................................................... 14
(1)

In the Supreme Court of the United States

No. 00-1842

STATOIL ASA, PETITIONER

v.

HEEREMAC V.O.F., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES AND

THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE

This brief is submitted in response to the Court’s

invitation to the Solicitor General to express the views

of the United States.

STATEMENT

1. In 1997, the United States uncovered a global

price-fixing and market-allocation scheme in the heavylift marine construction services industry. Oil and gas

companies engage heavy-lift marine construction firms

to construct, install, move and remove offshore oil and

gas production platforms, decks, and similar structures.

Such firms use heavy-lift derrick barges, which are

floating crane vessels able to lift loads exceeding 4,000

tons. Between 1993 and May 1997, respondents

HeereMac, v.o.f., Saipem UK Limited, and McDermott,

Inc., and their affiliates, controlled the world’s supply of

heavy-lift derrick barges. Pet. App. 4a-5a. Those three
2

companies are based in The Netherlands, the United

Kingdom, and the United States, respectively. Id. at 5a

n.2. In December 1997, the United States charged

respondent HeereMac and one of its managing directors with participating in a conspiracy to rig bids for

heavy-lift barge services in the United States and

elsewhere, in violation of Section 1 of the Sherman Act.

15 U.S.C. 1. The corporation and individual pleaded

guilty and agreed to pay fines of $49 million and

$100,000, respectively. Pet. App. 6a, 56a, 57a.

In December 1998, petitioner, an oil company owned

by the government of Norway, brought suit seeking

treble damages for overcharges it allegedly paid to

respondents HeereMac and Saipem for heavy-lift barge

services in the Norwegian sector of the North Sea. Pet.

App. 7a; Pet. 4-5. Petitioner purchased no heavy-lift

barge services in the United States, nor did it purchase

any such service from McDermott, the only U.S.-based

respondent. Rather, its contracts with HeereMac and

Saipem were executed and performed abroad and did

not specify that United States law applied to disputes

arising under those contracts. Pet. App. 5a n.3, 6a n.5.

2. The district court dismissed petitioner’s suit on

the ground that the alleged conspiracy to fix prices in

the North Sea “did not have a direct, substantial, and

reasonably foreseeable anticompetitive effect on United

States trade or commerce,” and thus that the court

lacked subject matter jurisdiction under Section 6a(1)

of the Foreign Trade Antitrust Improvements Act of
3

1982 (FTAIA), 15 U.S.C. 6a(1). Pet. App. 51a.1

 The

court also observed that petitioner “was allegedly

injured outside the United States by [respondents’] bid

rigging on jobs located in the Norwegian sector of the

North Sea having no direct, substantial effect on

United States commerce.” Id. at 52a. The court accordingly held that petitioner lacked standing to bring

its claim, reasoning that the “United States antitrust

laws do not extend to protect foreign markets from

anticompetitive effects and ‘do not regulate the competitive conditions of other nations’ economies.’ ” Ibid.

(quoting Matsushita Elec. Indus. Co. v. Zenith Radio

Corp., 475 U.S. 574, 582 (1986)).

 

1 The FTAIA, which in 1982 became a part of the Sherman Act,

provides:

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.

[Proviso] 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.

15 U.S.C. 6a.
4

3. a. A divided panel of the Court of Appeals for the

Fifth Circuit affirmed. Pet. App. 1a-22a. The court

observed that the FTAIA extends the Sherman Act to

non-import foreign conduct only when that conduct has

“a direct, substantial, and reasonably foreseeable

effect” on United States domestic commerce, 15 U.S.C.

6a(1), and “such effect gives rise to a claim,” under the

Sherman Act, 15 U.S.C. 6a(2). The court concluded that

the alleged conspiracy had a sufficient effect on United

States commerce within the meaning of Section 6a(1),

because petitioner had alleged that “the conspiracy not

only forced purchasers of heavy-lift services in the Gulf

of Mexico to pay inflated prices, but also that the agreement compelled Americans to pay supra-competitive

prices for oil.” Pet. App. 13a-14a. The court held,

however, that the district court nonetheless lacked

subject matter jurisdiction under Section 6a(2) because

petitioner’s claimed injury—inflated prices that it paid

for heavy-lift services in the North Sea—did not arise

from the anticompetitive effects on United States

commerce. Id. at 16a n.26.2

The court concluded that the FTAIA requires that

“the effect on United States commerce * * * must

give rise to the claim that [petitioner] asserts against

[respondents].” Pet. App. 14a. A contrary reading of

the Act, the court explained, would invite plaintiffs

 

2 The court also expressed (Pet. App. 12a) its “doubt that

foreign commercial transactions between foreign entities in foreign

waters is conduct cognizable by federal courts under the Sherman

Act,” which applies to “trade or commerce with foreign nations.”

15 U.S.C. 1. The court stated that “[t]he commerce that gives rise

to the action here—the contracting for heavy lift barge services in

the North Sea—was not United States commerce with foreign

nations, but commerce between or among foreign nations.” Pet.

App. 12a.
5

worldwide to “flock to United States federal court for

redress, even if those plaintiffs had no commercial

relationship with any United States market and their

injuries were unrelated to the injuries suffered in the

United States.” Id. at 15a-16a.

b. Judge Higginbotham dissented. Pet. App. 22a38a. In his view, Section 6a(2)’s reference to “a claim,”

rather than the “plaintiff ’s claim,” means that the

FTAIA confers jurisdiction whenever a conspiracy’s

conduct has direct, substantial, and reasonably foreseeable effects on U.S. commerce, and those domestic

effects give rise to a claim by some party, even if not

the plaintiff. Id. at 24a-26a. Judge Higginbotham reasoned that, once jurisdiction is established over the

conspiracy’s conduct as a whole, a plaintiff may bring

suit in federal court to redress foreign injury allegedly

suffered as a result of the conspiracy’s effects on

foreign commerce. Id. at 23a, 30a.

DISCUSSION

The decision in this case is the first appellate decision

to address whether a plaintiff ’s antitrust claim involving foreign conduct must derive from that conduct’s

effect on domestic commerce. Appeals that raise the

same issue are pending in five other courts of appeals.

Thus, even if the issue otherwise warranted this

Court’s review, it would not be ripe for review at this

time. Nor is there any basis for concluding that the

Fifth Circuit’s decision will impair the United States’

efforts to enforce the Sherman Act against international cartels. The court of appeals was, moreover,

correct in holding that the FTAIA requires that the

anticompetitive effects on United States commerce

must give rise to a plaintiff ’s claimed injuries.
6

A. THE ISSUE DECIDED BY THE COURT OF

APPEALS IS NOT RIPE FOR THIS COURT’S

REVIEW

1. Petitioner argues (Pet. 24-26) that the Court’s

review is warranted to resolve a conflict between the

Fifth Circuit’s decision and the District of Columbia

Circuit’s decision in Caribbean Broadcasting System,

Ltd. v. Cable & Wireless PLC, 148 F.3d 1080 (1998).

See also Pet. App. 55a (statement of Higginbotham, J.,

on denial of rehearing en banc). We disagree. In

Caribbean Broadcasting, the plaintiff, which owned a

radio station in the Eastern Caribbean (which includes

Puerto Rico and the U.S. Virgin Islands), sued the

owner of several competing radio stations and its joint

venture partner for violations of the Sherman Act. The

court of appeals held that the plaintiff had averred a

“direct, substantial, and reasonably foreseeable effect”

on United States commerce within the meaning of

Section 6a(1), because the plaintiff allegedly had been

foreclosed from selling advertisements to customers in

the United States. Id. at 1086. That holding was

limited to whether the plaintiff had alleged a sufficient

impact on domestic commerce, and the court of appeals

did not address whether the alleged domestic effect

“gave rise” to plaintiff ’s claim. Indeed, the decision

does not refer to Section 6a(2). See also Pet. App. 20a21a & n.31 (distinguishing Caribbean Broadcasting and

explaining that the claim in that case arose from an

alleged effect on domestic commerce).3

 

3 Petitioner also errs in contending (Pet. 22-24) that the Fifth

Circuit’s decision conflicts with Hartford Fire Insurance Co. v.

California, 509 U.S. 764 (1993). That decision neither interpreted

Section 6a(2) of the FTAIA, cf. id. at 796 n.23, nor considered
7

2. Although the decision below is the first appellate

decision to interpret Section 6a(2), with increasing

frequency foreign plaintiff s have sued to recover damages arising out of foreign purchases of conspiratorially

price-fixed items, when the conspiracy’s conduct also

affects United States commerce. To date, no district

court that has considered the application of Section

6a(2) to such facts has embraced petitioner’s reading of

the Act. See, e.g., Ferromin Int’l Trade Corp. v. UCAR

Int’l, Inc., 153 F. Supp. 2d 700, 704 (E.D. Pa. 2001)

(citing cases); see also Galavan Supplements, Ltd. v.

Archer Daniels Midland Co., No. C97-3259 FMS, 1997

WL 732498, at *2, *3-*4 (N.D. Cal. Nov. 19, 1997) (dismissing for lack of standing). Five decisions considering the issue are pending on appeal in the District of

Columbia, Second, Third, Seventh, and Ninth Circuits.

Empagran, S.A. v. F. Hoffman-La Roche, Ltd., No. 01-

7115 (D.C. Cir. filed July 25, 2001); Kruman v.

Christie’s Int’l PLC, No. 01-7309 (2d Cir. argued Oct. 3,

2001); BHP New Zealand, Ltd. v. UCAR Int’l, Inc.,

Nos. 01-3329, 01-3340, & 01-3991 (3d Cir. filed Aug. 29,

2001) (appeals from the Ferromin decision); Metallgesellschaft AG v. Sumitomo Corp. of Am., No. 00-3700

(7th Cir. argued Sept. 5, 2001); Litton Systems, Inc. v.

Honeywell, Inc., No. 99-56892 (9th Cir. argued Mar. 5,

2001). Resolution of those appeals will likely provide

further illumination concerning the question presented

and may or may not generate a conflict in the circuits

warranting this Court’s review. Review by this Court

at the present time accordingly would be premature.4

 

whether the Sherman Act extends to foreign injury that lacks a

connection to United States commerce.

4 Petitioner mistakenly suggests (Reply Br. 4) that this case

uniquely alleges a global conspiracy that includes geographic
8

B. THE COURT OF APPEALS’ DECISION DOES NOT

ADVERSELY AFFECT THE GOVERNMENT’S

ENFORCEMENT OF THE SHERMAN ACT

Petitioner argues (Pet. 18-21) that, because the

Sherman Act has the same jurisdictional reach in both

civil and criminal cases, see United States v. Nippon

Paper Indus. Co., 109 F.3d 1, 4-6 (1st Cir. 1997), cert.

denied, 522 U.S. 1044 (1998), this Court’s review is necessary to prevent the Fifth Circuit’s decision from impairing the government’s ability to enforce the Sherman Act. That contention lacks merit.

1. The Fifth Circuit’s holding that a plaintiff’s claim

must derive from the conspiracy’s effect on domestic

commerce does not preclude the government from

prosecuting violations of the Act by global cartels.

District courts have jurisdiction over illegal foreign

activity that has a “direct, substantial, and reasonably

foreseeable effect” on domestic commerce. 15 U.S.C.

6a(1). When an international cartel’s conduct as a whole

has that effect, “such effect gives rise” to the United

States’ “claim” under the Act. 15 U.S.C. 6a(2); see also

Pet. App. 21a (noting that global conspiracy that has

the effect of raising prices in the United States gives

rise to a government claim).

2. Petitioner also errs in suggesting (Pet. 18-20) that

the Fifth Circuit’s decision may inappropriately reduce

the size of fines the United States can recover under

the Sentencing Guidelines, which instruct courts to use

“20 percent of the volume of affected commerce” in establishing a Base Fine. Sentencing Guidelines

§ 2R1.1(d)(1). It is the policy of the United States to

 

market allocation. Other cases contain similar allegations. See,

e.g., Ferromin, 153 F. Supp. 2d at 701-702; Empagran, 2001 WL

761360, at *2.
9

calculate the Base Fine by using only the domestic

commerce affected by the illegal scheme, and in all but

two of the dozens of international cartel cases prosecuted (see p. 10 & note 5, infra), fines obtained by the

government were based solely on domestic commerce.

Gary R. Spratling, Negotiating The Waters Of International Cartel Prosecutions: Antitrust Division Policies

Relating To Plea Agreements In International Cases

14-15 (Mar. 4, 1999) (speech by Deputy Assistant Attorney General for Criminal Enforcement), available at

< h t t p : / / w w w .u s d o j . g o v / a t r / p u b l i c / s p e e c h e s / 2 2 7 5 . h t m > .

The Base Fine is then adjusted by minimum and maximum multipliers that are derived from a culpability

score. Guidelines §§ 8C2.5 and 8C2.6. Using that

framework, the United States has obtained very large

fines against international cartels. In the last five

years, fines of $10 million or more have been imposed

against 35 domestic and foreign-based corporations, including six fines of $100 million or more, and one fine of

$500 million, which represents the largest criminal fine

ever obtained by the Department of Justice under any

statute.

Moreover, and consistent with the Fifth Circuit’s

decision, a court may consider the foreign commerce

affected by the illegal conduct when the amount of affected domestic commerce understates the seriousness

of the defendant’s role in the offense and, therefore, the

impact of the defendant’s conduct on United States

consumers. In that circumstance, the court may take

into account the defendant’s worldwide sales affected

by the conspiracy in making an upward departure in a

defendant’s sentence under Guideline § 5K2.0. See 18

U.S.C. 3553(b) (permitting sentence in excess of Guidelines range when court finds “that there exists an

aggravating * * * circumstance of a kind, or to a
10

degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines”).

The United States has used that approach in negotiating two plea agreements, one of which involved the

conduct that is the subject of petitioner’s suit. The

government and respondent HeereMac, v.o.f. agreed to

increase the fine by $20 million after taking into account

the company’s foreign sales of heavy-lift barge services

of more than $1 billion as a more accurate indication of

the defendant’s culpability. The United States did not,

however, simply plug the company’s foreign sales into

the Base Fine calculation of § 2R1.1(d)(1)—which would

have yielded a fine exceeding $240 million—nor has it

ever treated foreign sales in that way. Rather, the

level of foreign sales was used as an indication of the

company’s culpability and that approach yielded a total

fine of $49 million. See Pet. App. 56a, 60a-63a. That

type of vigorous enforcement of the Sherman Act

against international cartels will continue unimpaired

by the Fifth Circuit’s decision.5

C. THE COURT OF APPEALS’ HOLDING IS CONSISTENT WITH THE STATUTORY TEXT, HISTORY, AND PURPOSES

Section 1 of the Sherman Act declares illegal “[e]very

contract, combination in the form of trust or otherwise,

or conspiracy, in restraint of trade or commerce * * *

 5 The other instance in which a negotiated fine partially

reflected foreign sales was United States v. Roquette Freres, Crim.

No. CR 97-00356 (N.D. Cal. 1997), in which the defendant’s United

States market share was relatively small compared to its share of

the worldwide market. Based on defendant’s volume of United

States commerce of $2.6 million, the corresponding Guidelines fine

range was $748,000 to $1,282,000. The court imposed the agreedupon fine of $2.5 million.
11

with foreign nations.” 15 U.S.C. 1. Although Congress

generally intends that its laws apply only within the

territorial jurisdiction of the United States, EEOC v.

Arabian 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, 582-583 n.6 (1986);

see also 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).

In amending the Sherman Act in 1982, Congress in

the FTAIA provided that the Sherman Act applies to

import commerce, in a more limited way to United

States export commerce, and 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 Section 6a confers

subject matter jurisdiction over a plaintiff’s claim that

arises from an illegal conspiracy’s anticompetitive

effects on domestic commerce, whether the plaintiff is

located here or abroad. Pet. App. 14a n.22 & 16a n.25;

cf. Pfizer, Inc. v. Government of India, 434 U.S. 308

(1978) (holding that a foreign country may sue under

the Sherman Act). The question presented in this case

is whether the Sherman Act applies “where the situs of

the injury is overseas and that injury arises from

effects in a non-domestic market.” Pet. App. 16a. The

Fifth Circuit properly answered that question in the

negative.
12

1. a. Section 6a(1) of the FTAIA provides that the

Sherman Act extends to foreign non-import conduct

only when it has a sufficient effect on United States

commerce. 15 U.S.C. 6a(1). Section 6a(2) further

requires that “such effect gives rise to a claim” under

the Sherman Act. 15 U.S.C. 6a(2).

Petitioner argues (Pet. 10-13) that, because Section

6a(2) states that the requisite effects on United States

commerce must give rise to “a” claim, a plaintiff need

only point to the existence of some other party’s viable

claim arising from the same conduct that injured the

plaintiff, even though the plaintiff ’s claimed injury has

no connection to United States commerce. Read in

context, however, the most natural reading of Section

6a(2)’s requirement that “such effect gives rise to a

claim,” is that the requisite anticompetitive effects on

domestic commerce must give rise to the claim brought

by the particular plaintiff before the court. See

Textron Lycoming Reciprocating Engine Div. AVCO

Corp. v. UAW, 523 U.S. 653, 657 (1998) (noting “fundamental principle of statutory construction (and, indeed,

of language itself) that the meaning of a word cannot be

determined in isolation, but must be drawn from the

context in which it is used”) (internal quotation marks

omitted); cf. Warth v. Seldin, 422 U.S. 490, 499 (1975)

(“[E]ven when the plaintiff has alleged injury sufficient

to meet the ‘case or controversy’ requirement, * * *

the plaintiff * * * cannot rest his claim to relief on the

legal rights or interests of third parties.”).

b. The Fifth Circuit’s decision also comports with

principles of antitrust injury and standing that ensure

that the antitrust laws redress only the type of injury

that the laws were designed to prevent. By requiring

that the effect on domestic commerce must “give[] rise

to a claim,” 15 U.S.C. 6a(2), Congress incorporated
13

general concepts of antitrust injury and standing into

the FTAIA. See H.R. Rep. No. 686, 97th Cong., 2d

Sess. 11 (1982) (“[T]he Committee does not intend to

alter existing concepts of antitrust injury or antitrust

standing”). To establish standing to seek relief under

the Sherman Act, a plaintiff must show “antitrust

injury, which is to say injury of the type the antitrust

laws were intended to prevent and that flows from that

which makes defendants’ acts unlawful.” Brunswick

Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489

(1977). A contrary result would “divorce antitrust recovery from the purposes of the antitrust laws without

a clear statutory command to do so.” Id. at 487; cf.

National Credit Union Admin. v. First Nat’l Bank &

Trust Co., 522 U.S. 479, 488 (1998) (describing prudential standing requirement that a plaintiff ’s interest

must arguably fall within the zone of interests to be

protected by statute).

The FTAIA’s text contains no hint of a statutory

purpose to permit recovery where the situs of injury is

entirely foreign and the injury exclusively arises from a

conspiracy’s effect on foreign commerce. To the contrary, the FTAIA is concerned with foreign conduct

that affects commerce in the United States. 15 U.S.C.

6a(1). Indeed, the paramount purpose of the United

States’ antitrust laws is to protect consumers, competition, and commerce in the United States. See Pfizer,

434 U.S. at 314 (“Congress’ foremost concern in passing

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

That purpose is served by applying the Sherman Act to

foreign conduct when it has a “direct, substantial, and

reasonably foreseeable effect” on United States commerce and “such effect gives rise” to the plaintiff ’s

claim. 15 U.S.C. 6a(1) and (2). That purpose is not
14

served when the plaintiff ’s injuries have no nexus to

United States commerce.6

Indeed, petitioner’s interpretation of Section 6a

would expand the jurisdiction of the Act in ways that

Congress could not have intended. 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 U.S. customer.

Under petitioner’s construction, because the domestic

customer could sue based on the conspiracy’s requisite

domestic effects, all 50 foreign customers could bring

treble-damages actions in federal court, “even if those

plaintiffs had no commercial relationship with any

United States market and their injuries were unrelated

to the injuries suffered in the United States.” Pet. App.

15a-16a.

2. Petitioner contends (Pet. 12-13) that the legislative history of Section 6a manifests a purpose to extend

the jurisdictional reach of the Sherman Act to foreign

injury with no connection to United States commerce.

The House Report indicates, however, that Congress

inserted Section 6a(2) merely to ensure that the

covered foreign conduct must have an anticompetitive

impact on domestic commerce to be actionable under

 

6 As the court of appeals recognized (Pet. App. 14a n.22 & 16a

n.25), the antitrust laws protect all participants in United States

commerce, regardless of nationality. Moreover, the Department of

Justice and the Federal Trade Commission, the federal agencies

charged with the responsibility 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 Enforcement Guidelines For

International Operations § 2 (Apr. 1995), reprinted in 4 Trade

Reg. Rep. (CCH) ¶ 13,107, at 20,589-20,592.
15

the Sherman Act. H.R. Rep. No. 686, 97th Cong., 2d

Sess. 11-12 (1982). Absent that subsection, the House

Report explains, a plaintiff injured abroad 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.” Id. at 11; see also

id. at 18. Although the House Report further indicates

a legislative intent to extend antitrust protection to

foreign purchasers in the “domestic marketplace,” id. at

10, nothing in the FTAIA’s history addresses foreign

purchasers, such as petitioner, whose injuries are not

linked to a conspiracy’s effects on domestic commerce.

3. Petitioner also argues (Pet. 16-20) that its construction is necessary to ensure adequate deterrence of

international cartels. The Fifth Circuit’s holding,

however, reads Section 6a broadly to extend to all

plaintiffs (whether domestic or foreign) whose injuries

arise from a conspiracy’s anticompetitive effect on

United States commerce. That holding does not undermine the Sherman Act’s protection of United States

consumers and commerce.

Indeed, the legal landscape in recent years has

changed significantly in response to the need to deter

illegal cartels operating both here and abroad. In 1974,

Congress raised the statutory maximum corporate fine

for a violation of the Sherman Act from $50,000 to $1

million. Antitrust Procedures and Penalties Act, Pub.

L. No. 93-528, § 3, 88 Stat. 1708. In 1990, Congress increased that amount ten-fold, to $10 million. Antitrust

Amendments Act of 1990, Pub. L. No. 101-588, § 4(a),

104 Stat. 2880. Moreover, since 1987, defendants may

be fined up to twice the gross gain from the offense or

twice the gross loss to victims of the offense if those
16

amounts exceed the maximum fine authorized under

the Sherman Act. 18 U.S.C. 3571.

There also has been a marked growth in foreign antitrust statutes in the last decade. Today, approximately

90 countries have laws protecting competition. A.

Douglas Melamed, An Address to the 27th Annual Conference on International Antitrust Law and Policy, on

the Subject of Promoting Sound Antitrust Enforcement

In The Global Economy 5 (Oct. 19, 2000), available at

<http://www.usdoj.gov/atr/public/speeches /6785.htm>.

Although it remains to be seen how vigorously foreign

nations will implement or enforce their new antitrust

laws—and therefore how substantial their deterrent

effect will be—their existence counsels caution in

extending the reach of United States antitrust laws,

and makes it all the more appropriate for this Court to

allow further development of the present issue in the

lower courts. Of particular relevance here, Norwegian

law provides for criminal prosecution and private

actions in response to anticompetitive conduct, and

petitioner has filed a civil action against respondents

under Norwegian law. Pet. 10 n.8.7

 

7 The global response to the international “bulk vitamins cartel” well illustrates energetic enforcement efforts against cartels

operating worldwide. The United States negotiated plea agreements with eleven corporate defendants and obtained fines of approximately $900 million. Those defendants also have paid hundreds of millions of dollars to domestic purchasers of vitamins, and

further litigation continues. In re Vitamins Antitrust Litig., No.

99-197 TFH, 2000 WL 1737867 (D.D.C. Mar. 31, 2000). In addition,

European Union, Canadian, and Australian authorities obtained

record fines against vitamin suppliers. European Commission,

Commission imposes fines on vitamin cartels, available at <http://

europa.eu.int/comm/competition/index_en.html> (over $750 million

in fines); Australian Competition & Consumer Comm’n, Federal

Court Imposes Record $26M Penalties Against Vitamin Suppliers
17

* * * * *

In sum, the court of appeals’ decision does not conflict

with any decision of this Court or of any other court of

appeals. The decision will not impair the United States’

ongoing efforts to enforce the Sherman Act against

international cartels, and it is correct in its interpretation of the FTAIA. Moreover, because appeals

raising basically the same legal question are currently

pending in five other courts of appeals—whose decisions could provide further illumination—review by this

Court would be premature at this time.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WILLIAM E. KOVACIC

General Counsel

Federal Trade Commission

THEODORE B. OLSON

Solicitor General

CHARLES A. JAMES

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

R. HEWITT PATE

Deputy Assistant Attorney

General

LISA SCHIAVO BLATT

Assistant to the Solicitor

General

ROBERT B. NICHOLSON

ADAM D. HIRSH

Attorneys

JANUARY 2002

 

(Mar. 1, 2001), available at <http://203.6.251.7/accc.internet/media/

search/view_media.cfm?RecordID=267>; Canadian Competition

Bureau, Fines in Order of Magnitude-Competition Act, available

at <http://strategis.ic.gc.ca/SSG/ ct01709e.html>.
CERTIFICATE OF SERVICE

I certify that on March 24, 2003, two true and correct copies of the Brief For The United

States And The Federal Trade Commission As Amici Curiae In Support Of Petition For

Rehearing En Banc were served, by first-class mail and by electronic mail, on:

Charles S. Duggan, Esq.

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY 10017

 Counsel for Defendants-Appellees

Paul T. Gallagher, Esq.

Cohen, Milstein, Hausfeld & Toll, P.L.L.C.

1100 New York Avenue NW

Suite 500, West Tower

Washington, D.C. 20005

 Counsel for Plaintiffs-Appellants

Adam D. Hirsh