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The Foreign Trade Antitrust Improvements Act, 15 U.S.C.S. § 6a, has been interpreted, for reasons of international comity (that is, good relations among nations), to limit the extraterritorial application of U.S. antitrust law. Sections 6a(1)(A) and (2) provide that the Sherman Act shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless such conduct has a direct, substantial, and reasonably foreseeable effect on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations, and also, in either case, unless the effect on import trade or domestic commerce gives rise to a claim under federal antitrust law. It is essential to understand that these are two requirements. There must be a direct, substantial, and reasonably foreseeable effect on U.S. domestic commerce—the domestic American economy, in other words—and the effect must give rise to a federal antitrust claim. The first requirement, if proved, establishes that there is an antitrust violation; the second determines who may bring a suit based on it.
Motorola, the plaintiff-appellant, and its ten foreign subsidiaries, buy liquid-crystal display (LCD) panels and incorporate them into cellphones manufactured by Motorola or the subsidiaries. The suit accuses foreign manufacturers of the panels of having violated section 1 of the Sherman Act, 15 U.S.C. § 1, by agreeing with each other on the prices they would charge for the panels. Those manufacturers are the defendants-appellees. A partial summary judgment was granted in favor of the defendants (which include Samsung, Sanyo, and several other foreign companies besides AU Optronics), thereby extinguishing most of Motorola’s case. Motorola appealed.
Was Motorola’s suit barred by 15 U.S.C. §§ 6a(1)(A), (2)?
The court held that the Foreign Trade Antitrust Improvements Act, 15 U.S.C.S. § 6a(1)(A) and (2), barred Motorola’s price-fixing claim against manufacturers of LCD panels that were incorporated into cellphones manufactured by Motorola’s foreign subsidiaries and then sold to Motorola for resale in the U.S. There was no basis to treat Motorola and its subsidiaries as a single enterprise, and Motorola was therefore an indirect purchaser that lacked a claim under federal antitrust law. Motorola waived any argument that it could base damages on the effect of the manufacturers' pricing of the panels on the cost to the parent of cellphones incorporating those panels, as it argued only that its subsidiaries overpaid for the panels.