Document Type

Article

Publication Title

SMU Law Review

Publication Date

2003

Volume

56

First Page

2151

Abstract

(Excerpt)

The aggressive antitrust enforcement activities by the United States Department of Justice Antitrust Division against international cartels in the last decade, coupled with the increasingly global character of commercial markets, have spawned significant private antitrust treble damages litigation in American courts by foreign plaintiffs. Not surprisingly, the jurisdictional reach of the Sherman Act has been a threshold issue in these cases. While jurisdictional questions are not new to American courts, this latest round of antitrust cases has posed novel issues of subject matter jurisdiction, including the extent to which foreign plaintiffs claiming antitrust damages based on foreign transactions may sue in American courts under the Sherman Act.

Historically, the federal courts have disagreed over the extraterritorial reach of the antitrust laws. The courts have developed various tests to determine the precise scope of the Sherman Act, but these efforts have generated a body of case law that is both "confusing and unsettled." In 1982, Congress sought to clarify matters by enacting the Foreign Trade Antitrust Improvement Act of 1982 (FTAIA). Designed explicitly to limit Sherman Act jurisdiction, the FTAIA exempted certain foreign conduct from antitrust scrutiny but also made clear that when foreign transactions were involved, it was incumbent on the plaintiff to show that this conduct had a "direct, substantial and reasonably foreseeable effect" on domestic commerce. Unfortunately, the FTAIA, rather than clarifying the reach of the antitrust laws, has only heightened the confusion.

This article will (1) analyze the historic bases for exercise of subject matter jurisdiction over foreign transactions under the antitrust laws; (2) review the scope of the FTAIA and the varied judicial opinions purporting to construe it; and (3) propose an interpretative framework that is consistent with both legislative intent and long-recognized common-law limits on the power of American courts.

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