AU Optronics Corp. (“AUO”) filed a petition for a writ of certiori in Hui Hsiung, et al. v. United States of America on March 16, 2015, seeking Supreme Court review of the Ninth Circuit’s 2014 decision that upheld the convictions of AUO and its former executives for their participation in a global cartel to fix the price of liquid crystal display (“LCD”) panels.  The United States Department of Justice, Antitrust Division, which had tried AUO and its former executives in the district court in San Francisco, filed its brief in opposition to the petition on May 15, 2015 and petitioners filed a reply on May 22, 2015.

The Department of Justice, Antitrust Division, proved at trial that the Taiwanese company AUO, its US subsidiary, and two top executives, Hsuan Bin Chen and Hui Hsiung, plotted to fix the price of LCD panels, with effects on the United States market for LCD panels.  The company was fined $500 million for criminal price-fixing.  Both former directors were sentenced to 26 months’ imprisonment and a $200,000 fine.  The Ninth Circuit declined to rehear AUO’s appeal in January 2015.

The case concerns the Foreign Trade Antitrust Improvements Act (“FTAIA”) and the reach of the U.S. antitrust laws to “foreign” conduct with direct effects on U.S. commerce.  According to the petition for cert, the questions presented in this case are “(1) whether a foreign seller’s conduct can ‘involv[e] *** import trade or import commerce’ even when the seller himself does not import any goods into the United States; (2) whether a foreign price-fixing agreement can have an effect on U.S. commerce that is ‘direct’ and ‘gives rise to’ a Sherman Act claim even when the agreement fixes prices only in foreign sales; and (3) whether foreign price-fixing agreements should be condemned as per seunlawful, instead of evaluated on a case-by-case basis under the rule of reason.”

According to AUO, the Ninth Circuit’s decision addressing these issues was in direct conflict with other circuits, including a decision by the Seventh Circuit with respect to the exact same foreign price-fixing agreement.  The Seventh Circuit’s decision is Motorola Mobility LLC v. AU Optronics Corp., a civil Sherman Act suit against AUO and other manufacturers that challenged the same price-fixing scheme prosecuted in the Ninth Circuit criminal case.  The Seventh Circuit decided that AUO was not engaged in “import trade” to the U.S. and that as a result the FTAIA barred price-fixing claims based on overseas purchases of LCD panels that were incorporated into cell phones and then sold in the United States. The Ninth Circuit took the opposite approach to this narrow interpretation of the FTAIA.  AUO asserts in its petition for certiorari that “[b]ecause application of the FTAIA to this agreement should not depend on where suit is brought, this Court should grant review to resolve these circuit splits, and this criminal case is the ideal vehicle for doing so.”

The DOJ disputed AUO’s characterization of the alleged circuit split, asserting that the Ninth Circuit’s conclusions are “correct and do not conflict with the decisions” of the Supreme Court or any other court of appeals.  Both the Seventh and Ninth Circuits are in agreement that the sales of goods into the United States constitute “import commerce” and that fixing the price of goods abroad that are used as components in products sold in the United States can have a “direct” effect on U.S. commerce for the purpose of federal antitrust laws.  According to the DOJ, the category of sales of LCD panels at issue in the Ninth Circuit appeal was not at issue in the Motorola case, because AUO and other defendants did not seek summary judgment for price-fixed panels sold and delivered to customers in the U.S., and conceded that for those sales, plaintiff could maintain an antitrust claim. For LCD panels incorporated abroad into products bound for the United States, plaintiffs in Motorolaneeded to show that price fixing had an effect on U.S. commerce – “the same showing the government had to make” in the Ninth Circuit case, the DOJ contends.

AUO’s petition for cert and the DOJ’s opposition to that petition demonstrate the level of disagreement about the reach of U.S. antitrust laws to foreign conduct that ultimately impacts U.S. commerce. If the Supreme Court does hear this case, it may lead to greater clarity on the FTAIA.