• Ninth Circuit Reaffirms U.S. Antitrust Laws Apply To International Price-Fixing Cartels
  • July 30, 2014 | Author: Eric B. Fastiff
  • Law Firm: Lieff, Cabraser, Heimann & Bernstein, LLP - San Francisco Office
  • In a significant ruling defining the scope of U.S. antitrust laws in our global economy, the Ninth Circuit Court of Appeals upheld the criminal convictions of AU Optronics ("AUO"), one of the world's leading manufacturers of Thin Film Transistor Liquid Crystal Displays ("TFT-LCDs"), and its wholly-owned subsidiary AU Optronics Corporation of America ("AUOA") for fixing the prices of TFT-LCDs imported and sold in the U.S. in violation of the Sherman Act. TFT-LCDs are used in flat-panel televisions as well as computer monitors, laptop computers, mobile phones, personal digital assistants, and other devices.

    Evidence presented at the trial showed that from October 2001 to January 2006, representatives from six leading TFT-LCDs manufacturers met in Taiwan at so-called "Crystal Meetings" to "set the target price" and "stabilize the price" of TFT-LCDs sold in the U.S. The conspiracy cost U.S. consumers hundreds of millions of dollars.

    AUO asserted that because most of the TFT-LCDs it produced were sold to third parties worldwide and that it did not manufacture any consumer products for direct export to the U.S., it could not be liable under the Sherman Act, as amended by the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a ("FTAIA").

    Quoting F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 161 (2004), the Ninth Circuit stated that the FTAIA removes from the reach of the Sherman Act "(1) export activities and (2) other commercial activities taking place abroad, unless those activities adversely affect domestic commerce, imports to the United States, or exporting activities of one engaged in such activities within the United States."

    The Ninth Circuit found that defendants' conduct constituted "import commerce" to the U.S. Accordingly, the defendants could not rely on the FTAIA to shield themselves from liability under the Sherman Act. The Court explained, "the evidence revealed that AUO and AUOA executives and employees negotiated with United States companies in the United States to sell TFT-LCD panels at the prices set at the Crystal Meetings. Importation of this critical component of various electronic devices is surely 'import trade or import commerce.' To suggest, as the defendants do, that AUO was not an 'importer' misses the point. The panels were sold into the United States, falling squarely within the scope of the Sherman Act." (Opinion, at 35.)

    The Ninth Circuit's opinion is a brilliant victory for the U.S. Department of Justice. It reaffirms the standard by which foreign price fixers will be held accountable in the United States. In particular, the Court's analysis of the FTAIA reaffirms that foreign companies that seek to fix prices to the detriment of U.S. consumers will continue to be held accountable in U.S. courts.

    In In re TFT-LCD (Flat Panel) Antitrust Litigation, MDL No. 1827 (N.D. Cal.), Lieff Cabraser served as court-appointed Co-Lead Counsel for direct purchasers in a class action lawsuit against AUO and the other members of the TFT-LCDs conspiracy. Over the course of the litigation, the classes reached settlements with all defendants except Toshiba, which the Department of Justice declined to indict in its criminal case.

    The case against Toshiba proceeded to trial. In July 2012, the jury found that Toshiba participated in the price-fixing conspiracy. The case was subsequently settled, bringing the total settlements in the direct purchaser litigation to over $470 million.