Earlier this month, a district court decided another post-Empagran case: In re Monosodium Glutamate Antitrust Litigation, 2005 WL 1080790 (D. Minn). The case arose from a world-wide cartel of MSG manufacturers, many of whom had already been participants in the Lysine cartel. The price fixing and volume allocation led to higher prices for MSG in the U.S. (= domestic harm) and abroad (= foreign harm). Price movements among various geographies are correlated, because MSG is a fungible commodity. The plaintiffs purchased MSG directly from the defendants in transactions that occurred outside of the U.S. (for example, a Swedish firm buying MSG from a Japanese defendant). Thus, the stage was set for an application of the FTAIA after Hoffman-La Roche v. Empagran.

Under the FTAIA, a plaintiff must first show that the defendant’s conduct had a “direct, substantial, and reasonably foreseeable effect” on U.S. commerce, §(1). In the MSG case, this was not an issue, the cartel affected U.S. prices for MSG significantly. Second, in order to satisfy §(2), “a plaintiff [must show] that its foreign injury arose from the domestic effect of the defendant’s conduct.” (Id., 3). Here, the court correctly translated the awkward “domestic harm must give rise to the plaintiff’s claim” concept into a causality requirement. The defendants argued that

the “gives rise” language in §(2) requires that Plaintiffs show that they were injured directly and immediately by the effect on U.S. commerce. (Id., 3).

Plaintiffs, on the other hand argued that

Defendants could not have maintained their international price fixing cartel“ and therefore Plaintiffs would not have suffered their foreign injury without the adverse effects on United States commerce. (Id., 4).

The court sided with the plaintiffs and found that they had alleged “a sufficient link between the domestic effect caused by the Defendants’ anti-competitive conduct and Plaintiffs’ injury.” (Id., 5). The court went on to discuss policy considerations, and here is where it gets interesting. Judge Magnuson explicitly limits the comity considerations that were of paramount importance in Empagran to situations of independent foreign harm.

[T]he policy concerns reflected in Empagran are not present in this case, where Plaintiffs allege that the foreign harm they suffered was inextricably related to the anti-competitive conduct’s effect on domestic commerce. (Id., 6).

In cases of dependent foreign harm, deterrence is the overriding concern. Here, the court follows the arguments laid out by Connor and others.

As it relates to an international cartel, United States antitrust sanctions are ineffective at deterring anti-competitive conduct in the United States if they merely approximate the cartel’s profits in the United States. To ensure that international cartels are truly deterred and deprived of the fruits of their illegality, United States antitrust laws must also apply to foreign injury. (Id., 7).

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