Trump Wins US Supreme Court Case in China Antitrust Case

Authors: Andrew Chung and Lawrence Hurley

WASHINGTON – The US Supreme Court on Thursday sided with the Trump administration and against China on a controversial aspect of their fraught trade relationship, throwing out a lower court ruling that allowed two Chinese vitamin C producers to avoid paying $148m (£111.5m) in damages for violating US antitrust law.

In the case that brought the trade dispute between the world’s two largest economies to the U.S. highest court, the justices ruled in a 9-0 majority that the lower court gave too much weight to Chinese government documents explaining China’s regulatory policies.

The justices sent the case back to the New York-based 2nd U.S. Circuit Court of Appeals, which in 2016 dismissed damages claims won by two U.S. companies that bought vitamin C.

Writing for the court, Justice Ruth Bader Ginsburg said that while U.S. courts should “respectfully consider” a foreign government’s interpretation of their own law, they are not “bound to give final effect to the statements of a foreign government.”

Lawyers for the U.S. and Chinese governments appeared before judges in April, with the Supreme Court taking the unusual step of allowing China to present its arguments even though it is not an official party to the case, a privilege usually reserved for the U.S. Justice Department.

Carter Phillips, China’s lawyer in the case, said the ruling means “we live to fight another day.” When the case returns to a lower court, Phillips said it will show that what the Chinese companies did was “nothing more than compliance with Chinese law.”

The price-fixing case began in 2005, when Texas-based Animal Science Products Inc. and New Jersey-based The Ranis Co Inc. accused Hebei Welcome Pharmaceutical, North China Pharmaceutical Group and other Chinese vitamin C producers of violating antitrust laws.

China asked the trial court to dismiss the charges, in part on the grounds that Chinese law forced Chinese companies to follow government-set pricing rules.

China and the United States are locked in a simmering trade dispute. President Donald Trump has accused China of unfair trade practices and threatened tariffs on up to $150 billion of Chinese goods over allegations of intellectual property theft. China has warned of retaliation.

A U.S. Justice Department spokeswoman said the administration was “pleased with the decision.”

Michael Gottlieb, a lawyer representing the U.S. companies, said his clients’ dispute over price-fixing accusations will continue.

“This decision will promote a free and open market while protecting the independence of U.S. courts,” Gottlieb added.

Jonathan Jacobson, a lawyer for the Chinese companies, expressed disappointment with the ruling but said that “we are confident that we will prevail on appeal because Chinese law clearly mandated the fixing of vitamin C prices during the relevant period, as our own (U.S.) government has clearly stated.”

A U.S. federal judge questioned the credibility of China’s claims in the case and, following a jury trial in 2013, awarded two American companies $147.8 million in damages.

In 2016, the 2nd Circuit Court of Appeals reversed that ruling, holding that when a foreign government directly participates in a case, U.S. courts are required to defer to that country’s characterization of its own legal rules.

The Supreme Court itself has not taken a position on the correct interpretation of Chinese law, but Ginsburg said questions remain about “whether Chinese law requires Chinese sellers to conduct themselves in this way.”

(Reporting by Andrew Chung; Additional reporting by Lawrence Hurley; Editing by Will Dunham)