By Brent Kendall
A federal appeals court in the U.S. on Wednesday threw out
antitrust claims by phone maker Motorola Mobility that sought
damages from Asian electronics companies for alleged price fixing
on liquid-crystal-display panels.
Some LCD makers have previously pleaded guilty to criminal
price-fixing charges brought by the U.S. Justice Department, but
they disputed civil claims by Chicago-based Motorola that it paid
too much for LCD phone screens because of the cartel activity.
The legal community and U.S. antitrust enforcers were watching
the case closely because it was a potential test for the reach of
U.S. antitrust law in global commerce. Most of the LCD panels at
issue in the case were made in Asia and delivered to Asian
subsidiaries of Motorola before they were built into phones later
shipped to the U.S.
On Wednesday, the Seventh U.S. Circuit Court of Appeals said
Motorola's claims didn't belong in the U.S. legal system.
"Motorola's foreign subsidiaries were injured in foreign
commerce--in dealings with other foreign companies--and to give
Motorola rights to take the place of its foreign companies and sue
on their behalf under U.S. antitrust law would be an unjustified
interference with the right of foreign nations to regulate their
own economies," Judge Richard Posner wrote for the court.
The appeals court's decision replaces an earlier, broadly
written ruling issued against Motorola in March.
The reasoning in the court's earlier ruling had alarmed the
Justice Department, which warned in a subsequent court brief of
possible harm to its ability to prosecute overseas price fixers who
hurt U.S. consumers. The new court ruling appeared to be more
narrowly tailored to address the government's concerns.
John Terzaken of law firm Allen & Overy said the department
appeared to get "exactly the result it was looking for." Mr.
Terzaken is a former Justice Department antitrust lawyer.
A spokeswoman for Motorola Mobility said, "We disagree with the
ruling and are reviewing next steps."
"We are pleased that the Seventh Circuit recognized the
importance and propriety of the United States' efforts to protect
U.S. consumers from price-fixing cartels operating outside the
United States," a Justice Department spokesman said.
Robert Wick, a Covington & Burling lawyer who represented
the LCD makers, said the court's ruling meant Motorola would have
to assert its claims under foreign law.
"The court's opinion basically says that Motorola can't have it
both ways," Mr. Wick said. "Motorola can't be a foreign company for
purposes of manufacturing phones, but a U.S. company when it comes
to asserting antitrust claims."
Defendants in Motorola's civil case included Samsung Electronics
Co., Sharp Corp. and LG Display Co.
Sharp pleaded guilty in 2008 and was sentenced to pay a $120
million fine for fixing prices on panels sold to companies
including Motorola. LG Display pleaded guilty and agreed to pay
$400 million for LCD price fixing, but criminal charges in its case
made no mention of Motorola. The Justice Department has said
Samsung was a co-conspirator in LCD price fixing, but the company
cooperated early on with U.S. investigators and wasn't charged.
Write to Brent Kendall at brent.kendall@wsj.com
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