New Decisions Highlight Old Misgivings: A Reassessment of the Foreign Trade Antitrust Improvements Act Following Minn-Chem

What role does the United States play in policing international commerce? At what point do the laws of the United States end and those of other nations begin? These questions, among others, arise in determining when U.S. antitrust laws apply to foreign conduct. Looking back, the Sherman Act, for some time, has applied to foreign conduct so long as that conduct satisfied certain requirements. However, common law tests proved inconsistent and difficult to apply. As a result, ninetytwo years after the enactment of the Sherman Act, Congress intervened with the intent to clarify the common law by way of the Foreign Trade Antitrust Improvements Act (FTAIA). Unfortunately, congressional efforts failed. Today, as international commerce flourishes and political borders figuratively dissipate, the questions become even more difficult. Federal courts attempting to apply the FTAIA have labored over the statute’s difficult language and structure. The FTAIA bars the Sherman Act from applying to foreign conduct involving non-import commerce unless such conduct has an effect on domestic commerce and the effect gives rise to the plaintiff’s injury. Therefore, the statute distinguishes between conduct, effect, and injury. The causal link between each distinction has been the subject of much debate. In 2005, the D.C. Circuit required a proximate cause relationship between the effect and injury. Similarly, a recent decision from the Seventh Circuit required a proximate cause nexus between the conduct and effect. In doing so, the Seventh Circuit highlighted an error within the D.C. Circuit’s holding. This Note rejects the D.C. Circuit’s interpretation and argues that a but-for nexus between the effect and injury adheres more correctly to the statute’s text, legislative history, and international comity. INTRODUCTION 512 I. DEVELOPMENT OF EXTRATERRITORIAL APPLICATION OF THE SHERMAN ACT 515 A. Early Application of the Sherman Act Abroad 516 1. The Erosion of American Banana 517 * J.D. Candidate 2014, University of Florida Levin College of Law. Thank you to my family and friends who have supported me during my studies. Special thanks to the Florida Law Review for support throughout the writing process and to Professor William Page for commenting on an earlier draft of this Note. All mistakes are my own. 1 Sowell: New Decisions Highlight Old Misgivings: A Reassessment of the For Published by UF Law Scholarship Repository, 512 FLORIDA LAW REVIEW [Vol. 66 2. Alcoa and the Intended-Effects Test 518 B. The Foreign Trade Antitrust Improvements Act 521 1. Congressional Intervention: Enactment of the FTAIA 521 2. From Disregard to Confusion: Early FTAIA 523 II. THE FTAIA IN 2012: CLARITY FROM THE SEVENTH CIRCUIT 528 A. Merit-Based Limitation 529 B. Import Commerce 532 C. Directness 533 D. Significance 535 III. REINTERPRETING THE LANGUAGE OF THE FTAIA 535 A. The Opening Phrase: Exclusionary Rule and Import Commerce 537 B. Prong One of the Domestic-Injury Exception: Conduct and Effect 541 C. Prong Two of the Domestic-Injury Exception: Effect and Injury 544 IV. DETERMINING THE CORRECT STANDARD FOR PRONG TWO ...... 546 A. Proximate Causation Is an Incorrect Standard 546 B. But-For Causation Is the Correct Standard 549 CONCLUSION 552