MOFCOM Files Brief in U.S. Vitamin C Case Urging Application of Foreign Sovereign Compulsion Defense

On April 14, 2014, the Ministry of Commerce (MOFCOM) of the People’s Republic of China filed an amicus brief in In re Vitamin C Antitrust Litigation, No. 13-4791-cv (2d Cir.), arguing that the district court erred in refusing to apply the foreign sovereign compulsion defense to protect Chinese companies sued in the litigation.

In the Vitamin C class action, plaintiffs alleged that several Chinese companies fixed the price of Vitamin C that was exported to the United States. The case was tried in early 2013, and all but two of the defendants settled before the jury rendered its verdict. The jury entered a verdict for plaintiffs in the amount of $54.1 million, which was trebled to $162.3 million before credits for settlements with other defendants. The trial defendants appealed on various grounds.

MOFCOM’s amicus brief argues that in 1997, it ordered the Chamber of Commerce of Medicines and Health Products Importers and Exporters to establish a Vitamin C subcommittee, which thereafter compelled Vitamin C manufacturers to coordinate on the price and output of Vitamin C for export. MOFCOM argues that the district court erred in failing to apply the antitrust principle that U.S. antitrust law does not apply “where a foreign sovereign compelled a private party to engage in anticompetitive conduct within that sovereign’s borders,” and in what it describes as the district court’s refusal to defer to MOFCOM’s interpretation of Chinese law. On May 23, 2014, MOFCOM asked the Second Circuit to take judicial notice of the fact that it has asked the U.S. Department of State to submit an amicus brief in support of China’s position.

The scope and applicability of the foreign sovereign compulsion defense is a key issue in light of the vast number of goods exported from China and other countries to the United States. The 2nd Circuit’s decision will be an important contribution to the jurisprudence regarding the defense.

A copy of MOFCOM’s brief is available here.