The recent decision forcing British Airways to stand trial in New York for alleged conduct in the UK has heightened uncertainties about when actions outside the US can subject a non-US company to US anti-trust claims.
Indeed, one anti-trust specialist believes BA's case was weakened by the judge's selective ruling. The decision over-simplified the issue and ignored a statute designed to clarify when US anti-trust laws should apply to conduct beyond US borders, according to Seattle-based lawyer Mark Hough.
The recent ruling stems from the case brought by UK independent Virgin Atlantic against British Airways in New York, in which Virgin claims BA violated US anti-trust laws. A major part of the complaint alleges that BA leveraged a monopoly at London/Heathrow and on routes between there and other European airports to restrict competition on the North Atlantic.
Virgin claims passengers wishing to fly from the US to Europe may prefer to fly Virgin into Heathrow, and then continue to their European destinations on BA, but that BA used its monopoly over Heathrow slots and city pairs to coerce passengers through a variety of devices into flying BA for the whole trip.
BA moved to dismiss without trial on the grounds that any monopoly it enjoyed was legally obtained. More importantly, the carrier argued any monopoly outside the US was beyond the reach of US anti-trust laws.
The judge rejected both arguments, noting that it was illegal to leverage a legally obtained monopoly in one market to injure competition in another. In other words, if BA used its dominance at Heathrow or on European city pairs to restrain competition across the Atlantic, that could violate the anti-trust laws. And it did not matter, the court said, whether that conduct occurred completely outside the US. 'The complaint alleges that British Airways has used monopolies abroad to affect commerce in the United States - a cognisable claim.'
BA's fallback position was that its trial should still be in the UK on the dual grounds that most witnesses and evidence were located there, and that it would be more convenient for everyone because both parties are UK companies.
Judge Cedarbaum conceded that most proof was probably in the UK, but she did not think that imposed a big hardship. 'After all, both parties are airlines and can easily transport witnesses and documents to whichever forum is designated.'
But the key point was the strong US interest in enforcing its own laws. The alleged violations 'have had a significant impact on customers and competition in the United States,' Cedarbaum added. Noting the unique nature of aviation, she observed: '. . . even though some of the conduct . . . occurred in the United Kingdom, there is a strong interest in having the case decided in the United States because that conduct is alleged to have had an effect here and violated the laws of this country.'
However, in her ruling Cedarbaum did not mention the Foreign Trade Anti-trust Improvements Act, which emphasises that US anti-trust laws do not apply to foreign conduct, unless it has a 'direct, substantial and reasonably foreseeable effect' on US commerce. The judge could have reached the same conclusions even had she applied the act, but Hough warns that this is a 'tricky and murky' area.
However, in her ruling Cedarbaum did not mention the Foreign Trade Anti-trust Improvements Act, which emphasises that US anti-trust laws do not apply to foreign conduct, unless it has a 'direct, substantial and reasonably foreseeable effect' on US commerce. The judge could have reached the same conclusions even had she applied the act, but Hough warns that this is a 'tricky and murky' area.
Source: Airline Business
