July Antitrust Bulletin

July 25, 2012

Court Expands Extraterritorial Scope of U.S. Antitrust Law

On June 27, 2012, a federal appeals court issued an opinion that reversed prior precedent, extended the reach of federal antitrust law to foreign commerce in certain cases, and revived a class action brought by U.S. purchasers alleging that potash producers had operated a cartel outside the United States that had influenced the price of potash in the United States. Potash is a mineral used primarily in fertilizer. The world market for potash is highly concentrated and U.S. customers account for a high percentage of sales. In part of its opinion the court interpreted an import-related exception to the Foreign Trade Antitrust Improvements Act (FTAIA) – foreign trade or commerce that has “direct, substantial, and reasonably foreseeable” effects on U.S. domestic or import commerce – holding that “for FTAIA purposes, the term ‘direct’ means only a ‘reasonably proximate causal nexus.'” In so holding, the court explicitly endorsed the U.S. Department of Justice’s more expansive view of the foreign reach of federal antitrust law, which could give the Antitrust Division increased leverage in negotiating fines and doing volume of commerce calculations.

FTC Requirement of Full Divestiture in Acquisition of Rival Upheld

On July 11, 2012, a federal appeals court upheld a decision by the Federal Trade Commission (FTC) that Polypore’s acquisition of its main rival, Microporous Products, “was reasonably likely to substantially lessen competition” in three relevant markets and that only complete divestiture would restore competition in those markets. Both companies produce battery separators. Polypore had argued that the FTC erred by finding one market for the companies’ deep-cycle battery separators and including Microporous’s Austrian plant in the divestiture order. The court accepted the FTC’s market definition, recognized its “broad discretion in the formulating of a remedy for unlawful practices,” and concluded that the FTC “did not err.”

Supreme Court Ruling Confirms Jury’s Role in Sentencing

On June 21, 2012, the U.S. Supreme Court ruled that the Constitution’s Sixth Amendment right to a jury trial requires that the jury – rather than the judge – find any facts necessary to increase the fine imposed in a criminal case. The court used similar reasoning in a 2000 ruling that a jury must find any facts that increase the length of a prison sentence. Both rulings apply to criminal antitrust cases.

EC Offers Guidance on Joint Ventures

On June 18, 2012, the European Commission (EC) provided guidance on how it treats non-compete covenants entered into in the context of a joint venture. Additional information is available in our July 2012 EU/UK Competition Law Newsletter.