Court to Decide Reach Of U.S. Antitrust Laws

Facing a conflict between the spread of global trade and the reach of American law, the Supreme Court said Monday that it would decide whether foreign firms that fix prices abroad can be sued in U.S. courts under this nation’s strict antitrust laws.

A broad business coalition urged the high court to block such lawsuits from proceeding. Otherwise, they predicted a “tidal wave of litigation” in American courts by globe-trotting lawyers who could take advantage of the strong penalties meted out here.

Under U.S. price-fixing laws, victims are awarded damages that are three times their actual losses.

The firms that sought the aid of the Supreme Court have already been convicted of a massive conspiracy to fix prices for vitamins. Hoffman-La Roche, a Swiss company, and BASF, a German firm, agreed in 1999 to pay a record U.S. criminal fine of nearly $900 million for conspiring to set prices for bulk vitamins.

While the conspiracy was hatched abroad, its effect was felt by American consumers, the government said. Hundreds of food products were affected, and their makers were forced to pay higher prices. The European companies also settled civil suits for more than $2 billion, their lawyers said in the legal briefs.

In the latest round of litigation, firms in Australia, Ukraine, Ecuador and Panama who said they paid too much for bulk vitamins have sued the Swiss and German firms, and they brought their suit in a federal court in Washington.

Although a trial judge initially threw out the suit, the U.S. Court of Appeals cleared it to proceed earlier this year. Because this “overarching worldwide conspiracy” to fix prices affected commerce in the United States, American courts have reason to hear such lawsuits here and hopefully deter future violations, the appeals court said in a 2-1 decision.

Lawyers for the foreign firms called this conclusion a stretch. The foreign price-fixers were being sued by other foreign buyers for purchases made outside the United States. Since both the perpetrator and victim were overseas, the U.S. courts have no jurisdiction to hear the lawsuits, they said.

“We don’t see any U.S. connection in these suits. This is just global forum shopping,” said Robin S. Conrad, an attorney for the U.S. Chamber of Commerce. She said the lawyers who brought the suit here did so simply because they think they can win more money from an American jury, she said.

But a lawyer who worked on the suit said some of the European firms have U.S. subsidiaries. Moreover, allowing such suits would help deter price fixers, he said. “This was a global conspiracy, and it had a direct effect on U.S. commerce,” said Paul T. Gallagher, a lawyer for the plaintiffs.

The Bush administration is likely to join the case and call for restricting the reach of American antitrust laws. Earlier this year, its lawyers urged the full U.S. appeals court to reconsider its conclusion, but that effort failed on a 4-3 vote.

The high court is set to hear the case, Hoffmann-La Roche vs. Empagran, in April and issue a ruling by late June.