Analyzing U.S. Antitrust Jurisdiction over Foreign Parties After Empagran S.A. v. F. Hoffinan-LaRoche, Ltd.

I. INTRODUCTION It is one of the quaint ironies of our democratic system that a statute intended to clarify and simplify the law has in fact undermined the possibility of establishing a clear rule of law. The Free Trade Antitrust Improvement Act of 1982 (the FTAIA)1 was, as its title suggests, enacted to bring order to the variety of approaches the federal judiciary developed for determining when U.S. antitrust laws apply to foreign parties. However, the statute has generated much confusion, particularly over the inclusion of a single provision requiring foreign anticompetitive activity to "give[] rise to a claim" in the United States.2 Although the courts have applied their best interpretive and grammatical talents in trying to make sense of this requirement, the end result has been a three-way circuit split that leaves the question of U.S. antitrust jurisdiction over foreign parties wide open. To make matters worse, the interpretive problems the FTAIA presents are not merely academic but have far-reaching ramifications in the high-stakes sphere of international law. Other countries have come to resent the nebulous provisions of the FTAIA primarily because they subject unsuspecting foreign parties to U.S. antitrust law. For example, in one case a British company operating in compliance with the laws of the United Kingdom was sued in U.S. court and subjected to treble damages for alleged violations of U.S. antitrust laws.3 Perhaps more troubling to foreign businesses is the fact that the FTAIA seems to allow foreign plaintiffs to assert U.S. jurisdiction over foreign defendants. This means that parties outside of the United States may sue each other in U.S. courts for violations of U.S. law. Inevitably this expansive jurisdiction leads to some odd results, as illustrated by one recent case in which the FTAIA permitted British plaintiffs to successfully assert U.S. jurisdiction over British defendants for alleged violations of U.S. antitrust laws occurring in the United Kingdom.4 Other nations have retaliated against this expansive and ill-defined use of U.S. antitrust jurisdiction by expanding their own jurisdiction. Many countries have enacted antitrust or competition laws to protect their economic interests,5 and most follow the U.S. example by enforcing them against parties outside of their borders. This is especially true of the European Union, which has announced that it will prosecute antitrust violations that affect the Union even if the parties do business outside its borders.6 The result has been a myriad of contradictory laws that have had some distressing effects on U.S. economic interests, as illustrated by the foiled merger of General Electric and Honeywell in 2001.7 Countries have further responded to U.S. assertions of jurisdiction by adopting "blocking statutes"8 and other laws that nullify U.S. judgments.9 These issues of extraterritorial jurisdiction have come to a head in the last two years as U.S. courts have adjudicated more suits between foreign parties arising under the vague "gives rise to a claim" requirement of the FTAIA. In resolving these problems courts have, not unexpectedly, reached very different conclusions. The Second Circuit has held that the FTAIA provides broad subject matter jurisdiction over foreign parties, while the Fifth Circuit has read the FTAIA far more narrowly. This Note examines a third interpretation recently adopted by the D.C. Circuit in Empagran S.A. v. F. Hoffman-LaRoche, Ltd.10 This decision seeks to balance the extremes presented by the Second and Fifth Circuits and adopts a middle approach that allows courts to assert jurisdiction over foreign parties only when the conduct in question results in concrete injuries to parties in the United States. This Note concludes that although this approach is not a panacea, it is superior to other approaches because it properly balances the interests of other countries against the interest of the United States in asserting jurisdiction over cartels that harm its commercial interests. …