On this Fourth of July, let us think of our patriot farmers. Also our domestic glass-blowers, soap-makers, even people who produce feed for our critters. For all use potash — "mineral and chemical salts that are rich in potassium". And all of them fell victim to a 600 percent price increase that resulted from a nefarious plot between 2003 and 2008 by the — yes — (mainly Canadian and Russian) Potash Cartel.
But, you ask — can a foreign price-fixing plot by non-U.S. firms violate the Sherman Act? And if it can when does it?
The en banc Seventh Circuit last week upheld a class action complaint against the biggest potash providers on the planet. (They had 71 percent of the world-wide market in 2008.) The full court ruled 8-0 (with three judges taking no part) that the pleading met the test Congress had set for antitrust claims that involve commerce with other nations when it passed the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a. Minn-Chem, Inc. v. Agrium, Inc., No. 10-1712 (7th Cir. June 27, 2012).
The en banc-worthy part of the case related to a pretty dull issue (but an important one, dangit!) – whether "the FTAIA relates to the merits of a claim, rather than the subject-matter jurisdiction of the court". (Heavy sigh.) The Seventh Circuit held, en banc, almost a decade ago that the statute deprives courts of jurisdiction. See United Phosphorus v. Angus Chemical, 322 F.3d 942, 952 (7th Cir. 2003). This time, the court went the other way, citing newer decisions by the Supreme Court, including Morrison v. Nat'l Australia Bank Ltd., 130 S. Ct. 2869 (2010), in which the Court threw out a securities case on the merits (too Australian-y) instead of for jurisdictional reasons. Hard to disagree with that.
The rest of the opinion dealt with the strange way Congress went about writing the FTAIA. In a nutshell, the statute sets up a tough test for antitrust cases in the U.S. if they involve stuff that happened outside the U.S. — such as price-fixing that caused firms in, say, France, Vanuatu, or Paraguay to pay a supra-competitive price for goods or services. But the tough test doesn't apply (as the "chapeau" in the statute makes, uh, clear) if the bad conduct involves "import trade or import commerce". 15 U.S.C. § 6a.
Which makes sense. Because when Americans overpay for stuff, including stuff we import, that hurts us.
But what about cartel conduct that doesn't in a "direct" way cause the sending into the U.S. of stuff that has a supra-competitive price tag? Such as conspiracy-aiding acts by a "unified marketing and sales agent" for cartel members but only in countries other than the U.S. Minn-Chem, slip op. at 20.
The issue turns on what "direct", in the FTAIA phrase "direct, substantial, and reasonably foreseeable effect", means. Does it require, as the defendants urged, an "immediate" link between the bad conduct and the harm to buyers in the U.S.? Or does it just import that old tort notion of "proximate cause", as the U.S. Department of Justice believes? The latter. Id. at 22-25.