COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1617 United States Courts and the Optimal Deterrence of International
Cartels: Alvin K. Klevorick and Alan O. Sykes July 2007 E. Hoffmann-La Roche Ltd. v. Empagran S.A. concerned a private antitrust suit for
damages against a global vitamins cartel. The central issue in the litigation was
whether foreign plaintiffs injured by the cartel’s conduct abroad could bring suit in
U.S. court, an issue that was ultimately resolved in the negative. We take a
welfarist perspective on this issue and inquire whether optimal deterrence requires U.S.
courts to take subject matter jurisdiction under U.S. law for claims such as those in
Empagran. Our analysis considers, in particular, the arguments of various economist
amici in favor of jurisdiction and arguments of the U.S. and foreign government amici
against jurisdiction. We explain why the issue is difficult to resolve, and identify
several economic concerns, which the amici did not address, that may counsel against
jurisdiction. We also analyze the legal standard enunciated by the Supreme Court and
applied on remand by the DC Circuit, and we argue that its focus on
"independent" harms and "proximate" causation is problematic and does
not provide an adequate economic foundation for resolving the underlying legal
issues. A revised version of this paper is forthcoming in ANTITRUST STORIES from
Foundation Press, edited by Daniel Crane and Eleanor Fox. |
