United States Courts and the Optimal Deterrence of International Cartels: A Welfarist Perspective on Empagran

Posted by D. Daniel Sokol

Alvin Klevorick (Yale Law) discusses United States Courts and the Optimal Deterrence of International Cartels: A Welfarist Perspective on Empagran.

ABSTRACT: E. Hoffmann-La Roche Ltd. v. Empagran S.A. concerned a private antitrust suit for damages against a global vitamins cartel. The central issue in the litigation was whether foreign plaintiffs injured by the cartel's conduct abroad could bring suit in U.S. court, an issue that was ultimately resolved in the negative. We take a welfarist perspective on this issue and inquire whether optimal deterrence requires U.S. courts to take subject matter jurisdiction under U.S. law for claims such as those in Empagran. Our analysis considers, in particular, the arguments of various economist amici in favor of jurisdiction and arguments of the U.S. and foreign government amici against jurisdiction. We explain why the issue is difficult to resolve, and identify several economic concerns that the amici do not address, which may counsel against jurisdiction. We also analyze the legal standard enunciated by the Supreme Court and applied on remand by the D.C. Circuit, and we argue that its focus on independent harms and proximate causation is problematic and does not provide an adequate economic foundation for resolving the underlying legal issues.