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Standards of Extraterritoriality of US Antitrust Law: Applying the US Supreme Court’s Analysis in RJR Nabisco to Foreign Component Cartels

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2020, (30), pp.227-262
  • DOI : 10.31839/ibt.2020.07.30.227
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : June 26, 2020
  • Accepted : July 31, 2020
  • Published : July 31, 2020

PARK, SEONUK 1

1가천대학교

Accredited

ABSTRACT

In a globalized market where supply chains grow longer, many products or components of those products are manufactured around the globe and all come together through layers of distribution to create the final product that ends up in the consumer’s hand. As a result, some of those parts may have been subject to a foreign cartel’s anticompetitive conduct, such as price-fixed costs. U.S. Congress enacted the Foreign Trade Antitrust Improvements Act (FTAIA) to have clarification of the Sherman Act’s scope. However, the ambiguity of the FTAIA has created considerable confusion among circuit courts. This uncertainty stems from courts’ differing interpretations of the application of the FTAIA in the context of foreign component cartel activity. Current law cautions against the extraterritorial application of federal statutes as reflected in the recent Supreme Court decision, RJR Nabisco v. European Community, which is instructive on the extraterritoriality and scope of other federal laws, including U.S. antitrust laws. The Seventh Circuit’s interpretations in Motorola are most in accord with the reasoning of the Supreme Court. The presumption against extraterritoriality is a principle that applies to all federal statutes and must be applied to each separate provision of a statute. Courts must look to the same two-step analysis outlined in RJR Nabisco, to determine the statute’s reach when the claim is a private right of action by a foreign plaintiff for recovery from foreign injury. The presumption is likely rebutted on the substantive provision if the effect meets the “direct, substantial, and reasonably foreseeable” requirement, however, the absent a domestic injury, the effect will not give rise to the plaintiff’s claim, barring recovery. American legal and precedent trends have implications for our legislation. The Korean Supreme Court presented only an abstract standard in judging whether or not to apply the Monopoly Regulation and Fair Trade Act (Korean competition law) in an international air cargo fuel surcharge cartel case, and thus failed to secure legal stability and clarity. The Korean Supreme Court and the Korean Fair Trade Commission, need to consider the restrictive effectiveness criteria that US courts use in judging extraterritorial application of the US antitrust law. In order to develop future policies related to fair trade and foreign trade, it is necessary to analyze the laws of the US antitrust law, which have been developed through precedents, based on the principles of effect theory and presumption against extraterritoriality of federal law.

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