The Seventh Circuit Court of Appeals ruled that Motorola cannot recover overcharges to its non-U.S. subsidiaries that purchased price-fixed LCD panels abroad, even though finished cellphones incorporating those panels were ultimately sold in the United States. The Court held that permitting such actions would be an unjustified interference with the right of foreign nations to regulate their own economies.
Foreign LCD Panel Cartel -
Motorola and its foreign subsidiaries buy liquid crystal display (“LCD”) panels and incorporate them into mobile phones and other electronic devices that are eventually sold to U.S. consumers. Motorola filed suit under Section 1 of the Sherman Act against foreign LCD manufacturers, alleging that the prices of LCD panels were fixed in three separate types of transactions: (1) panels purchased directly by Motorola for use in products sold in the U.S., (2) panels purchased by Motorola’s foreign subsidiaries that eventually became part of products sold in the U.S. and (3) panels purchased by Motorola’s foreign subsidiaries that did not eventually become part of products sold in the U.S. In seeking relief, Motorola argued that the second and third types of price fixing transactions—accounting for 99% of Motorola’s alleged harm—injured its foreign subsidiaries and that it was entitled to recover for those injuries.
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