A recent decision from the Seventh Circuit, Motorola v. AU Optronics Corp., provided much-needed clarification on the scope of the Foreign Trade Antitrust Improvements Act (“FTAIA”). Specifically, the court’s decision clarifies that U.S. companies who conduct purchasing and manufacturing operations in foreign commerce are subject to the strictures of the FTAIA just like any other company. The court’s decision also has potentially important implications for the feasibility of state law indirect purchaser claims going forward.

BACKGROUND -

Enacted in 1982, the FTAIA governs the Sherman Act’s application to foreign activity. Pertinent here, the FTAIA removes from the Sherman Act’s reach all commercial activity taking place abroad, unless the activity has a “direct, substantial, and reasonably foreseeable effect” on U.S. or import commerce, and such effect “gives rise” to a claim under the Sherman Act. Only after both elements are satisfied will a Sherman Act claim based on foreign activities be recognized.