Legal Document Translation,
and the Use of the Foreign Compulsion
Defense in Antitrust Cases

Legal Document Translation for Antitrust Cases

We’ve blogged about the role of professional legal translation services in international antitrust cases.  Last month the US District Court for the Eastern District of New York ruled that a Chinese company that supplied Vitamin C had acted in concert to fix prices for Vitamin C. In doing so, the supplier violated United States antitrust laws, awarding the US companies (acting as plaintiffs in a class action suit) $162.3 million in damages. However, only two defendants remained, with the other having previously entered into a settlement agreement. The two remaining defendants do plan on appealing the judgment.

This decision has important implications for international antitrust law, particularly for foreign companies exporting products to the US. For starters, the sum of the verdict is significant. In accordance with the Sherman Act, the $54 million in damages was automatically tripled. But even without the Sherman Act coming into play this is a significant chunk of change. For comparison purposes, the companies who had opted to enter into a settlement agreement paid only $10.5 million.

So what does this mean for foreign companies doing business in the United States? For starters, it serves as a warning of the substantial risks involved in taking an anti-trust case to trial in a US court. This risk is amplified when the plaintiff is a US company and the defendants are foreign – especially when the foundation of the claim is that American consumers paid more for their products as a direct result of the foreign companies’ ‘conspiratorial conduct’.

Another interesting point to note is the quick turnaround time of the jury in reaching its decision – one day. The relative ease of the jury in reaching its decision should be taken with caution by foreign companies when evaluating the risks of taking a price-fixing case to trial. In fact, it is recommended that one should do so only where the defenses available are – at the very least – more likely than not to give the jury reasons to deliberate.

The one defense raised by the defendants was what is known as the foreign compulsion defense. Although the foreign compulsion is a widely recognized defense in antitrust prosecutions, it is often not a successful one. The defense essentially claims that the defendant should not be held criminally liable for anticompetitive actions they took because the action was an involuntary one. Rather, a foreign law forced him or her to engage in the unlawful practice, with the certified legal language translations of the laws being used as evidence.

This defense would most commonly arise in the setting of a US citizen who does business internationally, and was conducting business with a domestic company while in another country. If this person acted pursuant to the laws of the foreign country they were in when taking the anticompetitive business action then this can be a successful defense if the laws required such consultation with competitors as part of a mandated price-fixing statute. However, if the foreign governmental action rises no higher than mere approval, then the foreign compulsion defense will not be recognized in an antitrust action.

In order to invoke the foreign compulsion defense, it is necessary that foreign law coerced the defendant into violating American antitrust law. The defense is not available if the defendant could have legally refused to accede to the foreign power’s wishes. Thus, a business may not engage in anticompetitive business practices overseas simply because there is no statute prohibiting such conduct in that country. Instead, for the foreign compulsion defense to be available, the foreign country must have a law on the books that required the defendant to engage in the activity.

In the case at hand, the jury rejected the defendants’ foreign compulsion defense, which claimed that they should not be held liable because the Chinese Ministry of Commerce effectively required them to agree upon prices. What is particularly interesting here is that the jury’s quick decision making process seemingly indicates that they were able to easily dispose of the main defense in the case. This is in line with a growing trend in antitrust law. In fact, even the US Department of Justice is limiting its acknowledgment of this defense in its negotiating practice. As a general rule, the defense will not succeed when the facts clearly show that companies had fixed prices on the products sold within the United States, and those companies will be held liable.

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