US court bins ver­dict against 2 Chi­nese firms


Two Chi­nese drug com­pa­nies won dis­missal of a $147mil­lion an­titrust ver­dict af­ter a fed­eral ap­peals court in the United States ruled they were act­ing un­der Chi­nese law and couldn’t be held li­able in the US for fix­ing prices.

NorthChina Phar­ma­ceu­ti­cal Group Corp and its man­u­fac­tur­ing unit, He­bei Wel­come Phar­ma­ceu­ti­cal Co, shouldn’t have been forced to de­fend against claims that they con­spired to co­or­di­nate prices to cre­ate a sup­ply short­age for vi­ta­min C sold out­side China, the ap­peals court in Man­hat­tan ruled Tues­day.

A lower court failed to give enough def­er­ence to the Chi­nese gov­ern­ment’s in­ter­pre­ta­tion of its own laws and should have de­clined to con­sider the case, the ap­peals panel said.

The Shi­ji­azhuang, Chin­abased com­pa­nies “were re­quired by Chi­nese law to set prices and re­duce quan­ti­ties of vi­ta­min C sold abroad and do­ing so posed a true con­flict be­tween China’s reg­u­la­tory scheme and US an­titrust laws,” US Cir­cuit Judge Peter Hall wrote in the opin­ion.

The lower-court’s de­ci­sion to dis­be­lieve China’s claim that its laws re­quired the com­pa­nies to vi­o­late US an­titrust law was “highly in­ap­pro­pri­ate,” said Jonathan Ja­cob­son, who rep­re­sented North China Phar­ma­ceu­ti­cal and He­bei Wel­come. Tues­day’s de­ci­sion re­quires courts to “re­spect the for­mal sub­mis­sions of for­eign sov­er­eigns” on the mean­ing of their laws, he said.

Wil­liam Isaac­son, a lawyer for vi­ta­min C pur­chasers An­i­mal Sci­ence Prod­ucts Inc and Ra­nis Co, didn’t im­me­di­ately re­turn phone and email mes­sages seek­ing com­ment on the rul­ing.

US pur­chasers of vi­ta­min C filed suit in 2005 over claims they were forced to pay ar­ti­fi­cially in­flated prices for the food ad­di­tive, which is used in prod­ucts rang­ing from en­ergy drinks to live­stock feed. In March 2013, a Brook­lyn, New York, jury found the com­pa­nies li­able for vi­o­lat­ing US an­titrust law. The judge awarded $147 mil­lion in dam­ages and is­sued an or­der bar­ring the com­pa­nies from vi­o­lat­ing the lawin fu­ture.

The rul­ing prompted the Chi­nese gov­ern­ment to file briefs in sup­port of the com­pa­nies’ claim, in what the court called a “historic” first.

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