UNITED STATES COURTS AND THE OPTIMAL DETERRENCE OF INTERNATIONAL CARTELS: A WELFARIST PERSPECTIVE ON EMPAGRAN
Correspondence: * John Thomas Smith Professor of Law and Professor of Economics, Y ale University. E-mail: Alvin.Klevorick{at}yale.edu
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 that the amici do not address, which may counsel against jurisdiction. We also analyze the legal standard enunciated by the Supreme Court and applied on remand by the D.C. 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.
Professor of Law, Stanford University. E-mail: asykes@law.stanford.edu. We thank Daniel A. Crane, Eleanor M. Fox, Oona A. Hathaway, and Laurence T. Sorkin for helpful comments and Michelle Messer (Yale Law School Class of 2007) and Jonathan T. Schmidt (Yale Law School Class of 2006) for excellent research assistance. This paper is forthcoming in Antitrust Stories from Foundation Press, edited by Daniel A. Crane and Eleanor M. Fox, and this article appears by kind permission of the Foundation Press. Copyright 2007 by Alvin K. Klevorick and Alan O. Sykes.