Jurisdiction (Subject Matter)

• Author: International Law Group

Den Norske Stats Oljeselskap AS (Statoil) is a Norwegian oil company that owns oil and gas drilling platforms and conducts business solely in the North Sea. In December 1998, it brought an action under U.S. antitrust laws against Heeremac Vof and others.

These companies are among the handful of heavy-lift barge companies in the world which can hoist and transport off-shore drilling platforms.

Statoil alleged that defendants agreed to fix bids and allocate customers, territories, and projects between 1993 and 1997. As a result of this conspiracy, Statoil had to charge higher prices for crude oil exports to the U.S., and companies paid higher prices for heavy-lift services in the Gulf of Mexico. In December 1997, the U.S. Department of Justice had filed a criminal complaint against HeereMac who had pled guilty and paid fines of $49 million. Many companies later filed civil suits in the U.S. courts seeking redress.

The district court found that defendants' activities had little or no effect on U.S. domestic commerce, and dismissed Statoil's case for lack of subject matter jurisdiction. Statoil appealed. A majority of the U.S. Court of Appeals for the Fifth Circuit affirms.

The Sherman Act prohibits conduct that constitutes an unreasonable restraint of trade. See 15 U.S.C. Section 1. American antitrust laws, however, do not apply to non-import commerce with foreign nations unless the activity at issue has a "direct, substantial, and reasonably foreseeable effect" on domestic commerce and "such effects gives[sic] rise to a claim under" the antitrust laws. See the 1982 Foreign Trade and Antitrust Improvements Act (FTAIA) (15 U.S.C. Section 6(a)).

The Court notes that U.S. antitrust laws do not regulate the competitive conditions of other nations' economies, citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 582 (1986). The Court agrees with Statoil that the defendants' alleged anti-competitive conduct had a direct, substantial and reasonably foreseeable effect on the U.S. market. Statoil fails to show, however, that this effect on U.S. commerce "gives rise" to its antitrust claim.

"Based on the language of Section 2 of the FTAIA, the effect on United States commerce - in this case, the higher prices paid by United States companies for heavy-lift services in the Gulf of Mexico - must give rise to the claim that Statoil asserts...