Case Comments: International Antitrust Prosecution in America

• Jurisdiction: South Africa
• Date: 25 May 2019
• Published date: 25 May 2019
• Citation: (1999) 11 SA Merc LJ 420
• Pages: 420-428
• Author: P Terblanche

420

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(1999) 11 SA Merc LJ

International Antitrust Prosecution in America

P TERBLANCHE

University of South Africa*

The

Nippon Paper Industries

Decision

It

is widely recognised that the United States extend their antitrust laws

to foreign conduct and persons in civil claims, but a landmark decision

was delivered on 17 March 1997 when the First United States Circuit

Court of Appeals in

United States of America v Nippon Paper Industries

Co Ltd

(109 F 3d 1 (1st Cir 1997)) extended the application of s 1 of the

Monopolies and Combinations in Restraint of Trade Act (more

commonly known as the Sherman Act) (15 USC § 1 (1994)) to

criminal

conduct which occurred entirely abroad and which forms the basis of a

civil claim.

In 1995, the United States government indicted Nippon Paper

Industries on charges that they conspired with other Japanese

manufacturers during meetings held in Japan in 1990 to fix the price of

thermal fax paper imported into the United States and Canada. These

charges were part of a larger investigation of price fixing in the North

American fax-paper market in which Mitsubishi Paper Mills and New Oji

Paper Co, which had already pleaded guilty in September 1995, were

fined a total of $3.55 million The companies sold the paper in Japan to

unaffiliated trading houses on condition that the latter charge specific

inflated prices for the paper when they resell it in North America. Nippon

Paper Industries subsequently monitored the paper trail and, in order to

ensure the success of the venture, confirmed that the prices charged by

the trading houses' American subsidiaries to the American consumers

were the swollen prices that it had arranged. The indictment alleged that

these activities had a substantial adverse effect on commerce in the

United States and unreasonably restrained trade in violation of s 1 of

the Sherman Act.

The question before the Court was whether a foreign company could

be criminally prosecuted, and convicted, under the Sherman Act, which is

a federal antitrust statute, on grounds of price-fixing activities, which

took place entirely in a foreign country, simply because they were

intended to have, and did in fact have, substantial effects in the United

States. Nippon Paper Industries averred that the alleged conduct, if it

occurred at all, failed to constitute an offence under s 1 of the Sherman

Act as it took place entirely in Japan. The United States government, in

opposing this viewpoint, argued that s 1 of the Act applied criminally to

wholly foreign conduct as long as that conduct produced substantial and

* Since submitting this case note for publication, the author has accepted a post at Anglo-

American plc. The view expressed in this note are those of the author and should not in any way

be ascribed to Anglo-American plc.

(1999) 11 SA Merc LJ 420

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