The World in U.S. Courts: Summer 2014 - Sherman Act/Antitrust/Foreign Trade Antitrust Improvements Act (FTAIA)
May.30.2014
The plaintiffs brought federal and state antitrust claims against Microsoft for allegedly attempting to monopolize the market for Voice-over Internet Protocol (VOIP) services for calls made between the U.S. and India. The complaint alleges that Microsoft failed to comply with Indian licensure requirements, and as a result was able to charge less than the plaintiffs to U.S. consumers seeking to place VOIP calls to India, and Indian customers seeking to place VOIP calls to the U.S.
The U.S. District Court in New Jersey concluded that the complaint failed to state a claim, finding among others a failure to allege antitrust standing and injury and the elements of a predatory pricing claim. In the alternative, the Court considered the application of the FTAIA to the claims. Most notably, it considered separately whether the allegations as to sales of VOIP services to U.S. and to Indian customers met FTAIA requirements.
As to U.S. customers, the Court did not consider the FTAIA to be implicated at all because such sales do not involve “foreign commerce” but instead merely reflect sales by a U.S. corporation to U.S. customers; it did not matter for purposes of the FTAIA that those customers were placing calls to India. By contrast, the court found that Microsoft’s sales efforts in India did implicate “foreign commerce,” The Court also found that the sales had the “direct, substantial, and reasonably foreseeable effect” on export commerce necessary for a federal antitrust claim to be brought. However, the court cited a provision of the FTAIA that limited claims in such cases only to alleged “injury to export business” in the U.S. In the case at bar, by contrast, the Court found that the injury alleged was to “foreign competitors of a U.S. exporter in a foreign market,” and concluded that such claims were therefore specifically barred.