A Prescription for Excess: Using Prescriptive Comity to Limit the Extraterritorial Reach of the Sherman Act
The United States aggressively pursues antitrust violations perpetrated by foreign defendants. Of the fines collected by the Department of Justice (“DOJ”) for Sherman Act violations, eighteen of the twenty largest fines have been levied against foreign corporations. Private plaintiffs, too, are able to bring private rights of action against foreign corporations under the Sherman Act. Courts adjudicate these matters involving wholly foreign conduct and parties by applying the Sherman Act extraterritorially.
The extraterritorial application of the Sherman Act has vexed courts for decades. There has been sharp disagreement among jurists as to how U.S. courts ought to apply U.S. antitrust laws abroad. As a general matter, the Sherman Act can apply extraterritorially to foreign conduct if that conduct produces substantial effects inside the United States. The Supreme Court has established judicial rules about the extraterritorial application of the Sherman Act that do not provide predictive guidance or protection for foreign defendants. The result is that foreign defendants cannot know with sufficient certainty whether their wholly foreign actions will lead either to a civil lawsuit or criminal prosecution in U.S. courts. Further, the extraterritorial application of the Sherman Act has negatively impacted foreign relations between the United States and its closest trading partners.