Competition Law

Australian Competition Law and Policy Discussion

China Defends Vitamin Price Fixing

Posted by Julie Clarke on 26 November 2008

The Wall Street Journal reports that the Chinese Ministry of Commerce has made a ‘friend-of-the-court’ filing in a case alleging price fixing by four Chinese vitamin C manufacturers.  The four companies involved are said to have captured the relevant market after eliminating rivals over a number of years through predatory pricing conduct.  It is alleged that they then agreed to control export quantities and raise prices.  China is defending the manufacturers, claiming ‘sovereign immunity’; for purposes of their motion to dismiss the Chinese manufacturers did not dispute the price-fixing allegations – they simply claimed that they were compelled to engage in that conduct by the Ministry.

THE DECISION

On 6 November Judge Trager, in the United States District Court for the Eastern District of New York (In Re Vitamin C Antitrust Litigation 06-mdl-1738 (DGT)), rejected a claim by by the Chinese companies to dismiss the case “on the grounds that their price fixing activities were compelled by the Chinese government.” Judge Trager noted that “The Chinese government’s appearance as amicus curiae is unprecedented’.  Judge Trager held that while the Ministry’s Brief was ‘entitled to substantial deference’ it would ‘not be taken as conclusive evidence of compulsion, particularly where, as here, the plain language of the documentary evidence submitted by the plaintiffs directly contradicts the Ministry’s position.’

Judge Trager noted that ‘the issue at this stage of the case is whether there is a factual dispute as to the alleged compulsion’ and concluded that ‘the record as it stands is simply too ambiguous to foreclose further inquiry into the voluntariness of the defendants’ actions’ and, accordingly, denied the defendants’ motion to dismiss.

The outcome of this decision will have significant implications for international competition law enforcement.

See also Kate Fazzini, ‘Antitrust Suit Proceeds Against Chinese Vitamin C Makers‘, NYLJ, 13 November 2008.

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