Roche Holding AG, Aventis SA, BASF AG and more than a dozen other alleged participants in global cartels that fixed vitamin prices must face claims from non-US customers that may amount to billions of dollars, a US appeals court said.
The court revived lawsuits by Australian, Ukrainian and South American customers that had been dismissed because the purchasers didn't buy the vitamins in the US The panel said US antitrust law allows damage claims by foreign customers to deter price fixing by global conspiracies that damage US commerce.
"This is a multibillion-dollar decision in all likelihood," said Paul Gallagher, an antitrust lawyer who represented Empagran SA and Nutricion Animal SA.
Roche, the world's largest vitamin producer, Aventis and three other drugmakers agreed in 1999 to pay US$1.17 billion to settle claims they fixed prices in the US$20 billion-a-year US market.
"There is likely to be as many transactions and as much volume at stake for the claims relating to the foreign plaintiffs' transactions," said Gallagher, whose clients include Australia's Brisbane Export Corp and Winddridge Pig Farm, which purchased vitamins for feed.
US District Judge Thomas F. Hogan, who approved the 1999 settlement, dismissed foreign customers' claims, saying they weren't covered by US antitrust law. The appeals court disagreed.
"Disallowing suits by foreign purchasers injured by a global conspiracy because they themselves were not injured by the conspiracy's US effects runs the risk of inadequately deterring global conspiracies that harm US consumers," the US Court of Appeals for the District of Columbia Circuit ruled.
Without such suits, price fixers would decide to offset losses from US damage suits by keeping profits from foreign sales, the court said. "The US consumer would only gain, and would not lose, by enlisting enforcement by those harmed by the foreign effects of the global conspiracy," the three-judge panel said in a 2-1 decision.
The decision is likely to be reviewed by the Supreme Court because it conflicts with other appeals courts on whether foreign plaintiffs may sue in US courts to recover damages for overseas price fixing, said Herbert Hovenkamp, an antitrust expert at the University of Iowa law school.
"This is kind of the ugly American in antitrust where we are exporting our values," Hovenkamp said. He said the ruling "puts us in the position of economic policeman for the world. We come in this body of law that says if you are unhappy with your antitrust law just use ours."
Hovenkamp questioned if Congress intended to allow such lawsuits when it passed the 1982 Foreign Trade Antitrust Improvements Act.
"Congress was really concerned about protecting American businesses and American consumers," he said. "Congress has not been in the habit in recent years of giving lawsuits to foreign groups of plaintiffs for purely foreign injuries."
The DC Circuit split on the question of congressional intent. Judge Harry Edwards wrote for the majority that "Congress intended for subject matter jurisdiction to exist over the conduct of an international cartel that had an effect on domestic commerce, even if the plaintiff's claim does not arise from that domestic effect."
Judge Karen Henderson dissented, saying "the more natural reading" of the law "is the narrow one adopted by the district court" and the 5th US Circuit Court of Appeals.
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