F. Hoffman-LaRoche, Ltd. v. Empagran S.A.

PETITIONER: F. Hoffmann-La Roche Ltd, et al.
RESPONDENT: Empagran S.A., et al.
LOCATION: Guantanamo Bay, Cuba

DOCKET NO.: 03-724
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 542 US 155 (2004)
GRANTED: Dec 15, 2003
ARGUED: Apr 26, 2004
DECIDED: Jun 14, 2004

ADVOCATES:
Pate - argued the cause for the United States as amicus curiae urging reversal
R. Hewitt Pate, III - argued the cause for Petitioners, on behalf of the United States, as amicus curiae
Stephen M. Shapiro - argued the cause for Petitioners
Thomas C. Goldstein - argued the cause for Respondents

Facts of the case

Under the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), the Sherman Act (which regulates monopolies and attempts to unfairly raise prices) does not apply to foreign commerce unless that commerce significantly harms domestic commerce, American imports, or American exporters. In this case, several companies that purchase and resell vitamins sued several vitamin manufacturers for illegal attempts to raise prices, both within the United States and in foreign countries. The manufacturers asked the district judge to dismiss several of the vitamin purchasers from the case because they only did business in other countries and, the manufacturers argued, could therefore not bring claims under the Sherman Act. The purchasers countered that the foreign price-fixing attempts were linked to the domestic attempts and could therefore be heard under the exception to the FTAIA. The district court sided with the manufacturers. On appeal, a D.C. Circuit Court of Appeals panel reversed, finding that the price fixing schemes were independent of each other but that Congress' intent had been to prevent price-fixing both at home and abroad, and that even the foreign claims could therefore be brought under the exception to the FTAIA.

Question

Under the Foreign Trade Antitrust Improvements Act of 1982, do Sherman Act claims apply to the effects of foreign price-fixing schemes if those schemes do not have domestic effects?

Media for F. Hoffman-LaRoche, Ltd. v. Empagran S.A.

Audio Transcription for Oral Argument - April 26, 2004 in F. Hoffman-LaRoche, Ltd. v. Empagran S.A.

Audio Transcription for Opinion Announcement - June 14, 2004 in F. Hoffman-LaRoche, Ltd. v. Empagran S.A.

William H. Rehnquist:

The opinion of the Court in No. 03-724, F. Hoffman-La Roche versus Empagran will be announced by Justice Breyer.

Stephen G. Breyer:

The plaintiffs in this case are vitamin distributors from Ecuador, Panama, Australia, and the Ukraine.

They claim that vitamin manufacturers, many of whom make vitamins in Europe, formed a worldwide conspiracy to raise the price of vitamins.

The legal question before us is whether those foreign distributors, the plaintiffs, who bought their vitamins abroad, can bring a Sherman Act antitrust suit in the United States against the manufacturers complaining of their injury, which is a wholly foreign injury.

The relevant statute, which is called the Foreign Trade Antitrust Improvements Act of 1982, says that the Sherman Act, the basic antitrust statute, “shall not apply to conduct involving trade or commerce with foreign nations.”

A phrase that, in our view, fits this case and that would seem to be the end of it.

But, the Act also creates an exception and in particular, an exception for foreign-related anticompetitive conduct that creates a significant domestic harm.

The vitamin buyers say that the manufacturers' conduct falls within this exception because the conduct did create significant domestic harm in the United States, as well as creating the harm that hurt them, say, in Ecuador, and for that reason, they say they should be allowed to sue under the Sherman Act.

We do not think that the distributors' argument is good enough.

That is because we have to assume for present purposes that the foreign harm, namely higher prices in, say, Ecuador, is completely independent of the domestic harm, i.e. higher prices in the United States.

And because of that independence, we think that the distributors' claim cannot fall within the exception.

Otherwise, were we to accept their argument, the Sherman Act would apply to totally foreign activity that produced almost totally foreign harm unreasonably interfering with the rights of foreign nations to decide how they want to regulate commercial conduct within their boarders.

There is no indication in the statute or in its history that Congress intended to bring about any such result.

For these and for other reasons, we hold that the Sherman Act does not apply where the harm at issue is foreign and independent of domestic harm.

We reverse a contrary determination by the Court of Appeals and we remand the case so that the plaintiffs may raise a related but different claim, namely that the foreign harm was not independent of the domestic harm but they were interdependent that was not before us.

Justice Scalia has filed an opinion concurring in the judgment in which Justice Thomas has joined.

Justice O’Connor took no part in the consideration or decision of the case.