Competition

• Author: International Law Group

Plaintiffs filed a class action against Christie International Plc (Christie's), a United Kingdom corporation, and Sotheby's Holdings, Inc. (Sotheby) a Michigan corporation, along with many of their local subsidiaries, directors and officers. These two companies are the world's first and second largest auctioneers of fine art, antiques, collectibles, and other items, together controlling 97% of the market. Christie's and Sotheby's hold auctions at various sites around the world, including London and New York City.

The complaint charges that the defendants agreed to fix the prices which they charged their clients for their auctioneering services. (The defendants have already settled with a class of plaintiffs who bought or sold goods in domestic U.S. auctions.) The present litigation continues with a plaintiff class that claims injury from having to pay inflated commissions to defendants in buying or selling at their foreign auctions.

The foreign class plaintiffs filed their Consolidated Amended Complaint on October 30, 2000. There are eight foreign class plaintiffs, four from the United States and four from foreign nations. They sued under sections 4 and 16 of the Clayton Act, 15 U.S.C. Sections 15, 26, alleging that the defendants violated sections 1 and 3 of the Sherman Act, 15 U.S.C. Sections 1, 3, by agreeing to fix their buyer's premiums and seller's commissions. They seek damages and injunctive relief.

The District Court dismissed plaintiffs' case for lack of subject matter jurisdiction. It read current law as allowing suit only [1] where the alleged misconduct had direct substantial and reasonably foreseeable effects in the U. S. and [2] where the domestic effects that gave rise to jurisdiction also caused the plaintiffs' alleged injuries.

The U.S. Court of Appeals for the Second Circuit rules that defendants' reading of the FTAIA does not square with the unambiguous text of the statute; it does not change the National Bank of Canada rule. The Court concludes that the defendants' alleged conduct qualifies under either prong of its test.

Before 1982, the law of the Second Circuit was that an antitrust action in federal court based on conduct directed at foreign markets had to have the "effect of" injuries to U. S. commerce that reflects the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation. See National Bank of Canada v. Interbank Card Assoc., 666 F.2d 6, 8 (2d Cir.1981). In 1982, Congress, as an amendment to the Sherman Act...