Intel ruling gives DOJ food for thought on reach of antitrust law
15 September 2017. By Lewis Crofts and Richard Vanderford.
Intel's EU court ruling last week will prompt a reflection inside antitrust agencies about the global reach of enforcement, a senior US Department of Justice official said.
Andrew Finch, acting assistant attorney general of the DOJ's antitrust division, said there would be an "increasingly important conversation" over jurisdiction among enforcers as more and more countries exercise antitrust powers.
His comments follow a Sept. 6 ruling by the EU's highest court confirming that the European Commission was within its rights to include a supply deal between Intel and Lenovo in China in its 1.06 billion euro ($1.26 billion) antitrust fine against the chipmaker.
In short, the EU Court of Justice confirmed the long reach of EU antitrust law, restating that enforcers could act if the foreign conduct affects Europe.
More than 130 countries now have competition laws. As these authorities wield their power, this has raised a question: Is there a risk that companies may be punished multiple times by different regulators for the same conduct?
"That it is something that we're all going to have to look at both through the international agencies and within our own agencies about the application of that [qualified effects] test," Finch told a conference* yesterday.
The issue has increased in importance as regulators in the US and Europe have sought to crack down on global conspiracies in which cartelized components are later transformed into final products.
Finch said that while some authorities would technically be able to take action over foreign conduct, there was a question of whether they should do so.
"With the expansion of the number of jurisdictions applying their antitrust laws, possibly extraterritorially, this is going to become an increasingly important conversation," he said.
In the US, courts have been grappling with the issue of extraterritorial jurisdiction of antitrust laws for decades.
The US Foreign Trade Antitrust Improvements Act puts a brake on US antitrust enforcement outside the country. The 1982 law limits the application of US antitrust law to cases where there is a "direct, substantial and foreseeable" effect on US commerce that "gives rise to" an antitrust claim.
The scope of EU jurisdiction didn't form part of the Intel's fight before enforcers and it was only raised when judges started to review the case.
For some, this means avoiding reading too much into last week's ruling.
Jean-François Bellis, a lawyer who supported Intel in the court proceedings, told MLex the judgment shouldn't be considered the "last word" on jurisdiction.
"The commission probably did not pay attention to the fact that Lenovo was only buying chips in China. The jurisdictional overreach may have been inadvertent," Bellis, a partner at Van Bael & Bellis, said in an interview.
"It looks as if the Court of Justice felt that this relatively minor aspect of the case did not justify questioning the commission's jurisdiction," he said. "Seen in this specific context, the judgment should not be read as opening the floodgates of extraterritorial overreach in cases where the effects on the EU of the infringing conduct as a whole are only indirect."
*"Fordham Competition Law Institute, USA," Sept. 14, 2017