How to Block Cartel Formation and Price Fixing: Using Extraterritorial Application of the Antitrust Laws as a Deterrence Mechanism

Abstract

This article examines the nature of the effect of the U.S. Supreme Court's Empagran decision through the lens of the global vitamins cartel, using legal and economic analysis and also empirical data to describe the effect. The article commences with a discussion of the analytic approach adopted by the courts prior to the Empagran decision, with a focus on the issues of the degree to which effects on domestic commerce are necessary in order for U.S. courts to obtain jurisdiction over a matter involving foreign plaintiffs and the role of comity in the determination of jurisdiction. The article next describes the Empagran story from a legal perspective, discussing the various positions taken by the courts below and the Supreme Court, in the context of not only the issues of economic effects and comity, but also the role of foreign plaintiff private antitrust suits in deterring international cartels. The article then examines the empirical evidence related to the vitamins cartel at the heart of the Empagran matter, describing empirical research done by Author Connor and others. This research suggests a fundamental and important link between a cartel's activity here and abroad, as well as the importance of domestic antitrust enforcement on cartel recidivism. The article proposes a methodology that would harmonize the needs for vigorous antitrust enforcement to deter international cartel activity and reduce recidivism with comity issues obviously at the forefront of the Court's concerns in Empagran.