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The Sherman Act’s Criminal Extraterritorial Reach: Unresolved Questions Raised By United States v. AU Optronics Corp

Mark Popofsky, Anthony Biagioli, Aug 30, 2011

Over the last decade, the Department of Justice's ("DOJ's") vigorous criminal antitrust enforcement-driven by amnesty for the first self-reporting company-has led numerous companies and executives to plead guilty. Indeed, over the last decade, no corporate defendant (and only a few individuals) has taken the government to trial in an international criminal antitrust cartel case. Notably, however, one company-AU Optronics, a Taiwanese display maker ("AUO")-and a number of its executives have elected to fight a cartel prosecution.  United States v. AU Optronics Corp.-scheduled to go to trial in the fall of 2011 in federal court in San Francisco-presents a rare opportunity to litigate unresolved issues respecting the antitrust laws' applicability to international cartels in the criminal context.

One set of issues involves the territorial reach of the Sherman Act in a criminal setting-in particular, whether a U.S. court has jurisdiction when the government prosecutes "mixed" conduct (part foreign, part domestic) by companies or individuals. This, in turn, raises questions about what the government may need to charge and prove: What must the government specify in an indictment respecting the impact of conduct on U.S. commerce? Is the Sherman Act's territorial reach "jurisdictional" in the sense that only the judge, and not the jury, must assess whether conduct falls within the statute's scope? Must the government charge and prove "intent" to affect U.S. commerce when, in a "domestic" cartel case, no such showing is required?

Although the defendants in United States v. AU Optronics Corp. raised these (and other) issues in moving to dismiss the government's indictment, the court (to date) has decided only a few. In denying defendants' motions to dismiss, the court held that a fairly attenuated alleged connection with the United States could establish the Sherman Act's applicability. The court also rejected defendants' arguments that, under United States v. U.S. Gypsum Co., international antitrust offenses require "intent" to restrain trade that is not required for a domestic offense. Notably, however, the court left unresolved-potentially to be confronted in a later stage of the proceeding-numerous issues, including (i) which jurisdictional test applies; (ii) whether the Sherman Act's territorial reach must be decided by judge (by a preponderance of the evidence) or jury (beyond a reasonable doubt); and (iii) whether and for what purpose must the government prove intent. Accordingly, thus far, United States v. AU Optronics Corp. may raise more questions than it answers.

 

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