Comity

Pages10-16
10 Volume 23, January–March 2017 international law update
© 2017 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com
COMITY
China’s attempt to control vitamin C
market leads to multi-national legal
discussion
Plaintif‌fs-Appellees, Animal Science Products,
Inc. and e Ranis Company, Inc., and various
U.S. vitamin C purchasers, brought a multi-
district antitrust class action against Defendants-
Appellants Hebei Welcome Pharmaceutical and
North China Pharmaceutical Group Corporation,
entities incorporated under the laws of China. In
their complaint, Plaintif‌fs alleged that Defendants
conspired to f‌ix the price and supply of vitamin C
sold to U.S. companies on the international market
in violation of Section 1 of the Sherman Act, 15
U.S.C. § 1, and Sections 4 and 16 of the Clayton
Act, 15 U.S.C. §§ 4, 1.
Beginning in the 1970s, China, as the leading
producer and exporter of vitamin C, started
implementing various export controls in order to
retain a competitive edge over other producers of
vitamin C on the world market. In 1990s, as a result
of a reduction in vitamin C prices, the Government
facilitated industry-wide consolidation and
implemented regulations to control the prices of
vitamin C exports. In 2001, China supplied 60%
of the worldwide vitamin C market.
In 2005, various vitamin C purchasers in the
United States, including Plaintif‌fs-Appellees, f‌iled
numerous suits against Defendants-Appellants.
e Plaintif‌fs alleged, that in December 2001
Defendants colluded with an entity referred to
as both, the Western Medicine Department of
the Association of Importers and Exporters of
Medicines and Health Products of China and
the China Chamber of Commerce of Medicines
& Health Products Importers & Exporters, (the
“Chamber”), and agreed to restrict their exports of
Vitamin C in order to create a shortage of supply in
the international market, all with the purpose and
ef‌fect of f‌ixing prices.
Defendants moved to dismiss the complaint
on the basis that they acted pursuant to Chinese
regulations regarding vitamin C export pricing.
Furthermore, they argued that they were required
by the Chinese Government to coordinate prices
and create supply shortage. Moreover, they argued
that the district court should dismiss the complaint
pursuant to the act of state doctrine, the doctrine of
foreign sovereign compulsion, and/or principles of
international comity.
In support of Defendants’ motion to dismiss,
the Ministry of Commerce of the People’s Republic
of China (the “Ministry’) f‌iled an amicus curiae brief
representing that it is the highest authority within
the Chinese Government authorized to regulate
foreign trade; and that the Chamber is a Ministry-
supervised entity authorized by the Ministry to
regulate vitamin C export prices and output levels.
As presented, the Chamber was an instrumentality
of the State that was required to implement the
Ministry’s administrative rules and regulations
with respect to vitamin C trade. e Ministry
also presented evidence that the Chamber created
a vitamin C Subcommittee (the “Subcommittee”)
in 1997, and a “price verif‌ication and chop” policy
(“PVC”) implemented in 2002, all with the aim
to regulate the vitamin C industry. As explained,
before 2002, only companies that were members of
the Subcommittee were allowed to export vitamin
C, and were granted an “export quota license” if its
export price and volume was in compliance with
the Subcommittee’s coordinated export price and
export quota.
e Ministry also represented that in 2002, the
Chamber implemented the PVC system, which was
in place during the time of the antitrust violations
alleged in this case. e implementation of the
PVC system was announced by an of‌f‌icial notice
(“the 2002 Notice”). e 2002 Notice gave the
right to the Chamber “to coordinate export prices
and industry self-discipline.” Under this system,
vitamin C manufacturers were required to submit
documentation to the Chamber indicating both
the amount and price of vitamin C it intended
to export. e Chamber af‌f‌ixed a “chop” to the
contract signalizing that the contract had been
reviewed and approved by the Chamber only if the
price of the contract was at or above the minimum
acceptable price set by coordination through the
Chamber.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT