F. Hoffmann-La Roche Ltd. v. Empagran S.A.

542 U.S. 155 (2004)

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Nature of the Case

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Facts

The Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) excludes from the Sherman Act's reach much anticompetitive conduct that causes only foreign injury. It does so by setting forth a general rule stating that the Sherman Act 'shall not apply to conduct involving trade or commerce with foreign nations.' It then creates exceptions to the general rule, applicable where (roughly speaking) that conduct significantly harms imports, domestic commerce, or American exporters. Empagran (Ps) originally filed a class-action suit on behalf of foreign and domestic purchasers of vitamins under the Sherman Act and the Clayton Act. Ps alleged that Ds, foreign and domestic vitamin manufacturers and distributors, had engaged in a price-fixing conspiracy, raising the price of vitamin products to customers in the United States and to customers in foreign countries. Ds moved to dismiss the suit as to the foreign purchasers as they have never asserted that they purchased any vitamins in the United States or transactions in United States commerce, and the question presented assumes that the relevant 'transactions occurred entirely outside U. S. commerce.' The court applied the FTAIA and found none of the exceptions applicable. The domestic purchasers transferred their claims to another pending suit and did not take part in the subsequent appeal. The Court of Appeals reversed. It held that the FTAIA's general exclusionary rule applied to the case, but that its domestic-injury exception also applied. It read Ps' complaint to allege that the vitamin manufacturers' price-fixing conspiracy (1) had 'a direct, substantial, and reasonably foreseeable effect' on ordinary domestic trade or commerce, i.e., the conspiracy brought about higher domestic vitamin prices, and (2) 'such effect' gave 'rise to a [Sherman Act] claim,' i.e., an injured domestic customer could have brought a Sherman Act suit. The court held those allegations sufficient to meet the exception's requirements. The court assumed that higher prices in the Ukraine, Panama, Australia, and Ecuador, was independent of the domestic effect. But in light of the FTAIA's text, legislative history, and the policy goal of deterring harmful price-fixing activity, this lack of connection does not matter because the conduct was all part of one conspiracy. The Supreme Court granted certiorari.