On January 13, 2017, the Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (the “Agencies”) issued updated Antitrust Guidelines for International Enforcement and Cooperation (“International Guidelines” or “Guidelines”). Among other changes to the prior version, issued in 1995, these Guidelines espouse a fairly aggressive, pro-enforcement view of the case law addressing limitations on the reach of U.S. antitrust law under the Foreign Trade Antitrust Improvements Act (FTAIA) aimed in particular at supporting DOJ’s international cartel enforcement agenda.
These International Guidelines supplant the 1995 “Antitrust Enforcement Guidelines for International Operations,” and depart from that version in two key areas. First, as implied by the new title, they contain a lengthy new section describing how the Agencies will undertake international investigations and interact with antitrust agencies in foreign jurisdictions. This addition is motivated by the dramatic expansion in enforcement by competition authorities around the world as well as the dramatic increase in U.S. cross-border antitrust enforcement. Second, the Guidelines contain an extensively revised discussion of the FTAIA, which defines the reach of the U.S. antitrust laws when foreign commerce is at issue. This discussion summarizes the Agencies’ pro-enforcement perspective on the extensive jurisprudence developed in the lower courts applying the FTAIA following the Supreme Court’s seminal 2004 decision in Empagran.
Many of the provisions of the International Guidelines cover the same ground as the 1995 version. The Guidelines review the relevant U.S. statutory provisions, describe the Agencies’ views on the reach of U.S. law, and summarize the circumstances when the Agencies may forbear from enforcement due to considerations of comity or the involvement of foreign sovereigns in immunizing, compelling or carrying out the conduct in question. This part of the Guidelines is broadly consistent with the content of the 1995 version, incorporating mostly editorial changes, with two exceptions.
First, the discussion of comity considerations – as to which the Agencies continue to take the view that their enforcement decisions should be given deference by the courts – is more strident in its assertion that conflicts of law will be “rare” as “more jurisdictions have adopted and enforce antitrust laws that are compatible with” U.S. law, notwithstanding varying policy approaches to cartel enforcement around the world.
Second, the Agencies’ summary of the reach of U.S. antitrust law is heavily revised to re-focus the treatment of the FTAIA (both in text and illustrative examples) on the Agencies’ view of the case law as it has evolved since Empagran, with a further emphasis on the kinds of international cartels the DOJ has been prosecuting so vigorously in the past decade. The Guidelines’ summary of these principles includes the following key points:
- “Import commerce” is excluded from the reach of the FTAIA and thus is always subject to the Sherman Act. The Agencies take a broad view of the import commerce exclusion: for example, the defendants themselves need not act as importers, and imports to the United States can amount to only a tiny fraction of the worldwide commerce involved in the alleged conduct.
- The FTAIA provides that non-import foreign commerce is within the reach of U.S. antitrust law when there is a “direct, substantial and reasonably foreseeable effect” on U.S. commerce. The Agencies take the view that the “directness” requirement is met when there is a “reasonably proximate causal nexus” between the violation and the effect, despite some case law interpreting “direct” more narrowly. The Agencies’ illustrative examples confirm their view that this requirement can be satisfied when U.S. purchasers are indirect purchasers from the alleged cartelists, such as where price-fixed products produced overseas are sold through independent non-conspiring intermediaries located outside the United States.
- The Agencies also take a pro-enforcement view of the “reasonable foreseeability” prong. They view it as presenting an objective “reasonable person” standard, under which the cartelists’ lack of knowledge or indifference as to whether products would end up in the United States does not rule out application of U.S. law.
- Likewise, the Agencies view the “substantial effect” prong as satisfied even where a small fraction of a price-fixed product ends up being sold in the United States, and even where that product is sold in the United States only as a component representing a small fraction of the cost of the product U.S. consumers purchase.
- Finally, the FTAIA requires that the effect on U.S. commerce “give rise” to a claim under U.S. law. The Agencies accept that this language requires that the adverse effect on U.S. commerce – rather than effects elsewhere in the world – be the proximate cause of the plaintiff’s antitrust injury.
The Guidelines’ new section on international investigations and cooperation provides a lengthy summary of how the Agencies may conduct investigations of conduct involving foreign activity. This summary is of general interest, but offers no new limitations on the Agencies’ conduct of their international investigations. This portion of the Guidelines explains how the Agencies will purse discovery of documents located overseas, including how they will generally seek to protect confidential information from disclosure. It also describes the Agencies’ authority to cooperate with enforcement authorities in other jurisdictions, and the mutual assistance agreements entered into with many jurisdictions in furtherance of this authority.
The Guidelines explain that, even without assent of the parties, the Agencies are free to share with foreign authorities both public information and “agency non-public information,” such as the existence of an open investigation and Staff’s views on the merits of a case or potential remedies, but will do so only when the foreign authority has agreed to treat such non-public information as confidential. By contrast, confidential information obtained from the parties to an investigation will generally be shared only pursuant to the party’s waiver of confidentiality. The Agencies favor such waivers because, in their view, they lead to “more effective, efficient investigations and better-informed, more consistent enforcement decisions.”
The Guidelines also explain that the Agencies will seek remedies that effectively address harm to U.S. commerce and consumers while avoiding conflict with remedies contemplated by foreign authorities. Thus, the Agencies will avoid addressing conduct or assets outside the United States except where necessary to effectively redress harm in the United States, they will cooperate with other authorities investigating the same conduct or transaction in the development of a comprehensive remedy package, and they may forbear from demanding a remedy if a remedy imposed in another jurisdiction effectively resolves the concern.
Finally, the Guidelines emphasize the special degree of cooperation with foreign authorities in the DOJ gathering of evidence in criminal investigations, including pursuant to Mutual Legal Assistance Treaties. They also describe a variety of other investigative tools the DOJ uses in criminal investigations having an international dimension, such as INTERPOL “Red Notices” and the potential for extradition of individuals for trial in the United States.