This paper – which can be read here – begins by summarising the background to the case. In short, since the 1970s, when China began its transition to a market economy, the Chinese government has maintained export controls in the Vitamin C market in order to maintain a competitive edge over producers from other countries. In part due to the regulatory activities of the Chinese government, Chinese companies control about 60% of the worldwide Vitamin C market. A class of vitamins’ purchasers alleged that the defendant Chinese vitamins companies conspired to fix the price of vitamin C sold to U.S. companies, in violation of Section 1 of the Sherman Act.
Rather than contest the facts, the defendants enlisted the aid of the Ministry of Commerce of the People’s Republic of China (“MOFCOM”) which submitted an amicus curiae brief in the district court asserting that defendants’ output reduction agreements were directed by MOFCOM itself and were mandatory. Two main questions arose from this: (i) whether a court is “bound to defer” to a foreign government’s legal statement as a matter of international comity; (ii) if the answer to (i) was in the negative, whether the defendants’ were compelled by Chinese law to engage in collusion or not. In addition to the lower courts arriving at different answers to these questions, there is also a circuit split arising from an old decision regarding the value of a 1918 declaration by the Russian Bolshevik government concerning one of its decrees. As such, the Supreme Court must decide whether a court should treat as conclusive a nation’s statement to U.S. courts on the correct interpretation of its own law.
The author identifies three main problems with departing from international comity in this case:
- Theoretical Problems – It would imply holding that the Chinese government is wrong about the interpretation of its own laws.
- Practical Problems – It would place the Chinese companies in the position of being told by a foreign regulator that they must do x, and then being told by a U.S. court that the foreign regulator misunderstood its own domestic law and that they should not have done x. At a minimum, an entity that follows the command of a foreign regulator should have a good faith reliance defence to charges that it acted improperly. But if such a good faith defence is allowed, why should the courts allow a challenge to the foreign regulator’s interpretation of its own law for purposes of the comity doctrine?
- Political Problems – Declining to defer to a foreign government’s interpretations of its own laws when unambiguously expressed before an U.S. court also creates the potential for serious political problems. The comity doctrine directs a solicitous judicial deportment with respect to foreign countries – even if those foreign countries may be providing incorrect or inaccurate information.
In short, he considers that the ultimate question is whether an entity that complies with a foreign government’s interpretation of its own laws should be held liable under U.S. antitrust law – and argues that it should not.