Call Me, Maybe? The Seventh Circuit's Call in Motorola Mobility

INTRODUCTION Global supply chains are prolific throughout modern business, provide unique business advantages in a globalized economy, and should be protected to some degree by American antitrust law. A supply chain is defined as a "network created amongst different companies producing, handling and/ or distributing a specific product." (1) In its most basic form, a supply chain encompasses each step from the supplier to the final consumer in the production of a good or in the administration of a service. (2) Globalization or the use of a global supply chain refers to the practice of "sourcing, manufacturing, transporting and distributing products outside of your native country." (3) Global supply chains have become an integral part of current business practice, specifically in the technology market. (4) For example, in producing the iPhone 6, Apple uses displays from South Korea, cameras from Japan, chips from Taiwan, and manufacturing facilities in China. (5) American businesses that utilize global supply chains are at a high risk of being the victim of anticompetitive activity by foreign cartels. Many businesses that hope to remain competitive in the globalized economy have begun to expand abroad. (6) A common organizational strategy involves the establishment by a domestic parent company of a foreign subsidiary that acts as a link in the parent's global supply chain. (7) Generally, this allows the parent to more efficiently manufacture a product, ease distribution, or gain some other business advantage. (8) However, an issue arises when the foreign subsidiary is the victim of anticompetitive conduct abroad. Does a domestic company have a cause of action against a foreign cartel who violates the Sherman Act? This is the issue at the heart of Motorola Mobility v. AU Optronics and similar cases: whether anticompetitive activity abroad which affects a domestic company's foreign subsidiaries can give rise to an antitrust claim in the United States under the Sherman Act and the Foreign Trade Antitrust Improvements Act (FTAIA). (9) Motorola Mobility, Inc. v. AU Optronics Corp. (10) involved a domestic technology company, Motorola Mobility (Motorola) that utilizes a global supply chain to manufacture and distribute electronic devices, including cellular phones. (11) The defendants, AU Optronics Corp. (AU Optronics), sold LCD panels to Motorola and its foreign affiliates to be incorporated into Motorola's phones. (12) Motorola alleged that the defendants engaged in anticompetitive conduct by taking part in a global price-fixing conspiracy that resulted in the price of the LCD panels rising to an unsustainable point. (13) The District Court granted summary judgment for the defendants, holding that Motorola had failed to satisfy the FTAIA. Motorola appealed the judgment to the Seventh Circuit. The Seventh Circuit affirmed the District Court's grant of summary judgment but subsequently vacated its opinion and granted rehearing. Upon rehearing, the Seventh Circuit again affirmed the District Court's holding in favor of AU Optronics. This Note seeks to establish that the Seventh Circuit should have held in Motorola Mobility that the FTAIA's "direct ... effect" requirement is satisfied when a foreign subsidiary suffers a harm due to anticompetitive activity abroad and there exists a reasonably proximate causal nexus between that harm and the domestic effect in the United States. Furthermore, the "gives rise to" requirement of the FTAIA sufficiently accounts for concerns of international comity and, under the facts of this case, causes Motorola's claim to fail. Part I explores the history of the Sherman Antitrust Act and its international application before and after the FTAIA, beginning with American Banana Co. v. United Fruit Co. and extending through Hartford Fire Ins. Co. v. California. Part II describes the statutory language of the FTAIA. Part III discusses the consensus of the circuits that, after Arbaugh v. …