US Court Rejects Immunity Arguments In Vitamin C Antitrust Lawsuit

Chinese

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A United States Federal District Court has declined to dismiss price-fixing claims against Chinese vitamin C manufacturers on act of state, foreign sovereign compulsion, and international comity grounds. See In re Vitamin C Antitrust Litigation, 06-mdl-1738, United States District Court for the Eastern District of New York (Trager, J.). In denying the defendants’ motion to dismiss, the court paved the way for further proceedings and discovery in this landmark antitrust class action against Chinese defendants.

The complaint was filed in 2004 on behalf of a purported class of purchasers. It alleges that China’s leading vitamin C manufacturers, including Hebei Welcome Pharmaceutical Co. Ltd., Jiangsu Jiangshan Pharmaceutical Co., Ltd., Northeast Pharmaceutical Group Co. Ltd., and Weisheng Pharmaceutical Co. Ltd. conspired to fix the price for Vitamin C. According to the complaint, the Chinese manufacturers “had captured approximately 60 percent of the worldwide market for vitamin C” by 2001, following the settlement of price-fixing charges by European and Japanese manufacturers and a subsequent fall in prices.

The allegations focus on the activities of a Chinese trade association, the Chamber of Commerce of Medicines and Health Products Importers & Exporters (“Chamber”).[1]  According to the complaint, the defendants agreed together with other Chinese producers to restrict output and set target prices at meetings of relevant division of this trade association in December 2001 and December 2003.

In 2007, the defendants moved for dismissal on grounds that that their alleged price-fixing activities were compelled by the Chinese government. The defendants contended that the Chamber is an organization created by the Chinese government and that the association and its members were acting pursuant to government directives to coordinate export prices. Accordingly, the defendants contend that their conduct was immune from challenge in U.S. courts under the “act of state,” “foreign sovereign compulsion,” and “international comity” doctrines.

The act of state doctrine, in appropriate conditions, precludes U.S. courts from examining the validity of the official acts of a foreign sovereign in its own territory, even if such acts violate U.S. law. The foreign sovereign compulsion doctrine recognizes that a defendant trying to do business under conflicting legal regimes may violate one country’s laws, while complying with laws of another country in which it is conducting business. Under the international comity doctrine, a court usually abstains from exercising jurisdiction when there is a “true conflict between domestic and foreign law.”

The Chinese Ministry of Commerce (“MOFCOM”) took the unprecedented step of submitting an amicus (“friend of the court”) brief in support of the defendants’ motion to dismiss. According to MOFCOM’s brief, the Chinese government was directly involved in organizing and maintaining the Vitamin C cartel and effectively compelled the Chinese exporters, as a condition for obtaining necessary export licenses, to fix the price for vitamin C. MOFCOM asserted that the Chamber “act[s] in the name, with the authority, and under active supervision, of the Ministry,” thus performing “a governmental function so authorized under Chinese law.” This is the first time the Chinese government has come before a U.S. court to present its views, underscoring the importance of this case to the Chinese government. The defendants contended that the MOFCOM amicus brief authoritatively demonstrated that any collusive conduct was mandated by the Chinese government.

The plaintiffs contested the existence of government compulsion in the defendants’ setting vitamin C prices and argued that the Chinese companies’ price agreements were voluntary. The plaintiffs questioned the authenticity and authoritativeness of certain exhibits to the MOFCOM brief as well as the accuracy of their translations. The plaintiffs were able to raise doubts as to these issues because, through limited discovery, they were able to show that other documents in the record provided a basis to argue that the defendants had instigated the alleged cartel activities.

In denying the motion to dismiss, the court emphasized the “vigorous” factual dispute between the parties concerning the origin and existence of any government compulsion as a factor distinguishing precedents cited by defendants for the dismissal of the claims on foreign sovereign compulsion or act of state grounds. The court noted the expert testimony by one of plaintiffs’ experts that the official instrument authorizing the creation of the “Vitamin C Subcommittee”[2] within the Chamber would not necessarily mean that a cartel could exist only with governmental approval,, since “an organization not expressly allowed would be prohibited” under Chinese law. (See Opinion at 18-19.) The court noted that the implication that it is “difficult to differentiate between a cartel that was voluntarily formed by its members, who then had to seek governmental approval, and a cartel that was mandated by governmental fiat.” (See Opinion at 19.) The court also highlighted MOFCOM’s suggestion that private citizens that “act in certain circumstances as government agents” can “complicat[e] the question of compulsion.” (See Opinion at 29-30.) The court found that the “record at this stage of the case” did not clearly establish whether the defendants were “performing government function,” “acting as private citizens pursuant to a government directive,” or “acting as unrestrained private citizens.” The record was thus “simply too ambiguous to foreclose further inquiry into the voluntariness of the defendants’ actions.” (See Opinion at 31.)

Several aspects of the court’s reasoning are particularly noteworthy.

First, the court declined to accept the official position of MOFCOM as dispositive of the question of foreign compulsion, stressing that the “plain language of the documentary evidence submitted by the plaintiffs directly contradict[ed] the Ministry’s Position. (See Opinion at 25.)

Second, the court acknowledged (but did not address) the legal question of whether a scenario “of defendants making their own choices and then asking for the government’s imprimatur” would qualify as “government compulsion” to support the defendants’ asserted defenses. Instead, the court focused on the factual dispute involving the alleged compulsion.

Third, the opinion illustrates the challenges for U.S. courts in accurately determining substantive questions of Chinese law. The opinion noted MOFCOM’s admission that regulatory practices are less transparent in China than in many other jurisdictions. Other passages reflect the difficulties of framing phrases in a proper context when they are translated literally from Chinese documents. . Foreign companies operating in China frequently complain of the lack of transparency and ambiguity of Chinese legal and regulatory practices. In this case, the lack of transparency has disadvantaged Chinese defendants in a U.S. court.

Fourth, the case reflects the changing role of Chinese trade associations and chambers of commerce in the course of China’s continuing economic reforms. In recent years, the Chinese government has adopted several measures aimed at encouraging both quasi-governmental trade associations and independent industry groups to assume the roles (and antitrust compliance burdens) of their Western counterparts. The claims at issue in this action, however, arise from an earlier phase in China’s economic reform, and this further complicates the factual record in this case.

Ultimate resolution of these defenses will have to await the production of further evidence in the case. Discovery will proceed in the case, and these issues likely will not be addressed again until a review of a motion for summary judgment or trial on the merits.
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[1]  A chamber of commerce in China is not the voluntary, non -governmental entity that it is in the United States. In China, chambers of commerce have played a role in the shift from a command economy to a market economy. In some instances, Chinese chambers of commerce have moved into the role of the state-owned exporting entities when those entities have stopped performing that function. (See Opinion at 13.) A division of the Chamber, the Western Medicine Department of the Association of Importers and Exporters of Medicine and Health Products of China (“Western Medicine Department”) was the involved in these activities.

[2]  The Chamber apparently established its Vitamin C Subcommittee in 1998 to be responsible for “coordinating the Vitamin C export market, price and customers of China, to improve the competitiveness of Chinese Vitamin C produce in the world market and promote the healthy development of Vitamin C export to China.” (See Opinion at 14 for discussion of establishment of Vitamin C Subcommittee.) It appears that the Vitamin C Subcommittee focused on Vitamin C pricing and output issues before the Chamber’s Western Medicine Department was operational.

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美国法院驳回了在对中国公司提起的维生素C反垄断诉讼中
中国公司基于主权豁免提出的抗辩 
 

美国的一家联邦地区法院拒绝了中国维生素C生产商以国家行为（act of state）、外国主权强制(foreign sovereign compulsion)以及国际礼让(international comity)为依据提出的要求驳回对其提出的价格操纵指控的请求。 见维生素C反垄断诉讼，06-mdl-1738，纽约东部地区美国地区法院（主审法官Trager, J.）。法院拒绝了被告中国公司要求驳回本案的请求，这就为进一步审理此项针对被告中国公司的具有里程碑意义的反垄断集体诉讼案且双方进一步披露与本案有关的证据铺平了道路。

此桩诉讼是一群自称有同样诉求的美国维生素C购买人于2004年提起的，诉状中声称包括河北维尔康制药有限公司、江苏江山制药有限公司、东北制药集团股份有限公司和威圣制药有限公司在内的中国大型维生素C生产商共谋操纵维生素C的价格。此项指控称，在解决了欧洲和日本的维生素C生产商提出的操纵价格的指控且其后价格又下降后，截止2001年中国的维生素C生产商“已占据了全球维生素C市场约百分之六十的份额”。

本案中的指控主要是针对中国的一家行业协会，即中国医药保健品进出口商会（下称该“商会”）[1] 的活动提出的，指控中声称，被告中国公司与中国其他的维生素C生产商在2001年12月和2003年12月召开的该行业协会相关部门的两次会议上一致同意限制产量并确定了目标价格。

2007年被告中国公司以它们的所谓价格操纵活动是根据中国政府的指令进行的为由请求法院驳回本案。被告中国公司申辩说，该商会是中国政府设立的一个组织，该协会及其成员是按中国政府的指令协调出口价格的。因此被告中国公司认为，根据“国家行为”、“外国主权强制”以及“国际礼让”原则，它们的行为就不应受到美国法院的审查。在某些适当的情况下，“国家行为”原则使美国法院不能审理外国主权国家在自己的领土内采取的官方行动的合法性，即使该等行动违反美国法律。“外国主权强制”原则承认，一位想在两种相互冲突的法律制度下做生意的被告可能违反一个国家的法律但却符合它做生意的另一个国家的法律。根据“国际礼让”原则，在“国内法和国外法之间确实存在真正的冲突”时，法院通常会不行使管辖权。

为了支持被告中国公司提出的驳回本案的请求，中国商务部（“商务部”）采取了一个史无前例的步骤，向美国法院提交了一份“法庭之友意见”（amicus brief）。商务部在这份意见中称中国政府直接参与了组织和维持维生素C联盟，实际上是它迫使中国出口商操纵维生素C的价格，并将其作为获得必要的出口许可的条件。商务部声称该商会是“以商务部的名义、根据商务部的授权并在商务部的积极监督下”采取行动的，因此是履行了“中国法律授权的政府职能”。这是中国政府首次向一家美国法院陈述其观点，这充分显示了本案对中国政府的重要性。被告中国公司认为商务部的这份法庭之友意见令人信服地表明它们的任何所谓共谋行动都是根据中国政府的指令进行的。

原告对被告中国公司声称在维生素C定价行动中存在政府强制提出异议，认为中国公司的价格协议是自愿的。原告还对商务部意见中提供的某些证据的可靠性和权威性及其翻译的准确性提出了异议。原告能对这些问题提出疑问是因为它们通过双方有限的证据披露已经能表明记录中的另一些文件提供了证明被告中国公司自主发起这些所谓的联盟活动的依据。

在拒绝被告中国公司要求驳回本案的请求时，法院特别指出原告和被告间在是否真有政府强制以及此种强制来自何处这个问题上存在“明显的”事实分歧，认为这是本案不同于被告中国公司为了以 “外国主权强制”或“国家行为”为由要求驳回对它们的指控而举出的判例的一个因素。法院特别提到原告一位专家提出的专家证词，这位专家在证词中指出授权在该商会内部成立“维生素C分会” [2] 的官方文件并不一定意味着一个价格联盟只有获得政府认可才能存在，因为根据中国法律“未获得明确允许的组织将会被禁止”。（见意见第18-19页。）法院特别指出这句话的言外之意是“很难区分什么是由其成员先自愿成立然后再寻求政府批准的价格联盟，什么是根据政府命令成立的价格联盟。” (见意见第19页。)法院还特别提到商务部暗示 “在某些情况下担任政府代理人” 的普通公民可能 会“使强制这个问题更加复杂”。（见意见地29-30页。）法院裁定根据“本案现阶段的记录”还不能明确地认定被告中国公司是否“履行了政府职能”，是“以普通公民的身份根据政府的指令采取行动”还是“以不受限制的普通公民的身份采取行动”。因此，现有的记录“确实过于模棱两可，不能据此事先就排除对被告中国公司的行动是否是出于自愿作进一步的调查”。 （见意见第31页。）

本案中法院提出的理由有下列几个方面特别值得注意：

首先，法院拒绝承认商务部采取的官方立场对解决外国强制这个问题具有决定性的作用，着重指出“原告提交的证明文件的清楚明白的语言直接驳斥了商务部的立场”。（见意见第25页。）

第二，法院承认（但是尚未讨论）存在下面这个法律问题，即“被告先自己作出决定然后再请求政府认可”这样的办事程序能否使它们的行动成为“政府强制”行动，从而可作为被告所作的辩护的依据。法院只是将注意力集中于与所谓强制有关的有争议的事实上。

第三，法院的意见显示美国法院在准确确定中国法律的实体问题时遇到了难题。法院的意见中也提到中国商务部也承认监管方法在中国不及其他许多地方那么透明。意见中另一些段落反映出要在适当的上下文中将中文文件直译成英语时遣词造句的困难。在中国经营的外国公司经常抱怨中国执法和监管方法的不透明与不明确。在本案中，此种不透明使被告中国公司在美国法院处于不利地位。

第四，本案反映了在中国现仍在进行的经济改革中中国行业协会和商会所发挥的作用发生的变化。近年来中国政府采取了若干措施鼓励准政府性质的行业协会及独立的产业集团承担西方国家类似组织的作用（以及遵守反垄断法的责任）。但是，本案中法院正在审理的指控起源于中国经济改革的早期，这就使本案中的事实记录进一步复杂化。

法院要等本案提出进一步的证据后才会对被告中国公司提出上述辩护作出最终判决。本案双方将相互披露证据，法院可能要等到简易判决或庭审阶段对事实证据进行审查时才有可能处理上述争议。 


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[1]  中国的商会不像美国的商会那样是一个自发组建的非政府组织。在中国，商会在中国经济从计划经济向市场经济转变的过程中发挥了一定的作用。在某些情况下中国的商会在原有的国有出口组织不再发挥作用时代替了这些组织原来的作用（见意见第13页）。该商会的一个部门，即中国医药保健品进出口商会西药部（下称“西药部”）参与了该等活动。

[2]  很明显该商会1998年设立维生素C分会是为了让该分会负责“协调中国的维生素C出口市场、价格和客户，提高中国的维生素C产品在世界市场上的竞争力，促进中国维生素C出口的健康发展。”（如想了解维生素C分会设立的详情，请见意见第14页。）看来维生素C分会的主要工作是在该商会的西药部能正常运作之前处理维生素C的定价和产量问题。

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