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 The 2nd U.S. Circuit Court of Appeals in New York said the case
should not have gone to trial after China, in a "historic act,"
formally advised that its laws required the vitamin C makers to
violate the Sherman Act, a U.S. antitrust law.
Writing for a 3-0 panel, Circuit Judge Peter Hall said the Brooklyn
judge who presided over the March 2013 jury verdict should have
deferred to China's interpretation of its own laws, regardless of
the country's motives.
Hall said principles of international comity, and the "stark
differences" between the U.S. and Chinese legal and economic
regulatory schemes, meant the judge should not have asserted
jurisdiction.
"Recognizing China's strong interest in its protectionist economic
policies and given the direct conflict between Chinese policy and
our antitrust laws, we conclude that China's interests outweigh
whatever antitrust enforcement interests the United States may have
in this case," Hall wrote.
The decision is a defeat for Animal Science Products Inc, a
Nacogdoches, Texas-based livestock supplement company, and Ranis Co,
an Elizabeth, New Jersey-based food company.
They accused Hebei Welcome Pharmaceutical Co and North China
Pharmaceutical Group Corp of conspiring to fix prices and supply of
Vitamin C from December 2001 to June 2006.
The plaintiffs said the anticompetitive conduct boosted the
supplement's prices in a then-$500 million global market to as high
as $15 per kilogram from about $2.50.
In court papers, China's Ministry of Commerce said trial judge Brian
Cogan's approach to the case "deeply troubled the Chinese
government," which sent a diplomatic note to the U.S. State
Department.
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The ministry said Cogan should have respected its "authoritative"
view of applicable law, as he "unquestionably" would have done had a
U.S. regulator been involved.
William Isaacson, a lawyer for the plaintiffs, did not immediately
respond to requests for comment.
Jonathan Jacobson, a lawyer for the Chinese companies, said: "We are
gratified by the decision. The decision puts new energy into the
important doctrine of international comity, and reflects a sound
balance of antitrust principles and those of international
relations."
The appeals court ruled nearly 20 months after hearing oral
arguments.
The case is In re: Vitamin C Antitrust Litigation, 2nd U.S. Circuit
Court of Appeals, No. 13-4791.
(Reporting by Jonathan Stempel in New York; Editing by Alan Crosby)
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