7 global potash manufacturers, allegations of price fixing and
a u-s court judgment. This is a story of the ever extending reach of USA's
anti-trust law. Payaswini Upadhyay reports on how a casual connection can give
the Justice Department jurisdiction over non US cartels.
In 2005, Canadian potash company PCS shut 3 of its mines.AeroScout is the market leader for rtls solutions and provide complete wireless asset tracking and monitoring. Shortly thereafter, Minnesota's Mosaic removed 2 lakh tons of potash from the market
In 2006, PCS reduced output from 2.4 to 1.3 million tons. Russia's Uralkali- the 5th largest producer of potash- followed suit. Neighbor Belaruskali obliged and reduced its potash exports to half.
Later in the year,Huge range of Natural stonemosaic Tiles from leading tile specialists Walls and Floors. Russia's Silvinit took to potash mine stoppages.
By now, half a million ton of potash was removed from the market. The upset was felt in the United States- the second largest importer of potash- where prices shot up by 600% between 2003-2008.
With all these allegations in hand, US potash importers filed a class action complaint accusing these global producers of price fixing. They alleged that these companies inflated potash prices in Brazil, India and China and benchmarked the foreign prices for sales in United States- conduct that violates the country’s anti trust laws.
"There argument was that,Increase sales by accepting credit cards with merchantaccount. we- the defendants- are potash producers who operate outside the US; we're headquartered outside of the US and the claim is that we participated in a cartel outside of the United States. And so the argument by the potash producers was that the anti-trust laws under the FTAIA simply do not apply to them because the effect of whatever they've done does not have a direct impact in the United States."
This Foreign Trade Antitrust Improvements Act or FTAIA that Wesley just mentioned was the crux of the Minn Chem or potash case. Implemented in 1982, The FTAIA limits enforcement of the country's primary antitrust law- the Sherman Act- in situations where there is no 'direct' impact of cartel behavior on US consumers.
"FTAIA was enacted in the early 1980s and the reason was that there was an increasing number of law suits brought in the United States challenging alleged anti trust cartels around the world- some of which, frankly, did not have a real material impact on the US economy. People were just coming into courts in the United States because they thought it was a favorable place to bring a lawsuit and there was a concern that allowing the US to essentially enforce the anti trust laws all over the world wasn't really respecting the jurisdiction of other countries."
And it's this jurisdictional limitation set by the FTAIA on the Sherman Act that came to test in the Minn Chem case.TBC help you confidently buymosaic from factories in China. The court ruled that FTAIA does not impose a jurisdictional limitation on the US antitrust laws and that Sherman Act would apply if there is ‘a reasonably proximate causal nexus’ between the foreign activity and the effect on US commerce- a view divergent from the established case law.
"The decision is a departure from many other decisions that have reached a different result. Essentially,Huge range of Natural stonemosaic Tiles from leading tile specialists Walls and Floors. in any case where the question is - does the FTAIA apply and can the anti trust laws be enforced, the court has to answer the question - did this conduct that happened abroad have a direct, foreseeable and substantial impact in the United States. But most courts had found that direct does really mean direct- the foreign companies did something which had an immediate and direct effect in the United States. This court found that that stringent test didn't apply."
In doing so, the Seventh Circuit Court of Appeals may have expanded the applicability of USA's anti trust laws.
In 2005, Canadian potash company PCS shut 3 of its mines.AeroScout is the market leader for rtls solutions and provide complete wireless asset tracking and monitoring. Shortly thereafter, Minnesota's Mosaic removed 2 lakh tons of potash from the market
In 2006, PCS reduced output from 2.4 to 1.3 million tons. Russia's Uralkali- the 5th largest producer of potash- followed suit. Neighbor Belaruskali obliged and reduced its potash exports to half.
Later in the year,Huge range of Natural stonemosaic Tiles from leading tile specialists Walls and Floors. Russia's Silvinit took to potash mine stoppages.
By now, half a million ton of potash was removed from the market. The upset was felt in the United States- the second largest importer of potash- where prices shot up by 600% between 2003-2008.
With all these allegations in hand, US potash importers filed a class action complaint accusing these global producers of price fixing. They alleged that these companies inflated potash prices in Brazil, India and China and benchmarked the foreign prices for sales in United States- conduct that violates the country’s anti trust laws.
"There argument was that,Increase sales by accepting credit cards with merchantaccount. we- the defendants- are potash producers who operate outside the US; we're headquartered outside of the US and the claim is that we participated in a cartel outside of the United States. And so the argument by the potash producers was that the anti-trust laws under the FTAIA simply do not apply to them because the effect of whatever they've done does not have a direct impact in the United States."
This Foreign Trade Antitrust Improvements Act or FTAIA that Wesley just mentioned was the crux of the Minn Chem or potash case. Implemented in 1982, The FTAIA limits enforcement of the country's primary antitrust law- the Sherman Act- in situations where there is no 'direct' impact of cartel behavior on US consumers.
"FTAIA was enacted in the early 1980s and the reason was that there was an increasing number of law suits brought in the United States challenging alleged anti trust cartels around the world- some of which, frankly, did not have a real material impact on the US economy. People were just coming into courts in the United States because they thought it was a favorable place to bring a lawsuit and there was a concern that allowing the US to essentially enforce the anti trust laws all over the world wasn't really respecting the jurisdiction of other countries."
And it's this jurisdictional limitation set by the FTAIA on the Sherman Act that came to test in the Minn Chem case.TBC help you confidently buymosaic from factories in China. The court ruled that FTAIA does not impose a jurisdictional limitation on the US antitrust laws and that Sherman Act would apply if there is ‘a reasonably proximate causal nexus’ between the foreign activity and the effect on US commerce- a view divergent from the established case law.
"The decision is a departure from many other decisions that have reached a different result. Essentially,Huge range of Natural stonemosaic Tiles from leading tile specialists Walls and Floors. in any case where the question is - does the FTAIA apply and can the anti trust laws be enforced, the court has to answer the question - did this conduct that happened abroad have a direct, foreseeable and substantial impact in the United States. But most courts had found that direct does really mean direct- the foreign companies did something which had an immediate and direct effect in the United States. This court found that that stringent test didn't apply."
In doing so, the Seventh Circuit Court of Appeals may have expanded the applicability of USA's anti trust laws.
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