By Jonathan Stempel
NEW YORK (Reuters) – A divided U.S. appeals court on Tuesday threw out a price-fixing lawsuit against two Chinese companies that make vitamin C, a case that spotlighted trade tensions between the United States and China.
Dismissing the 16-1/2-year-old case was justified because of a “true conflict” between Chinese and U.S. antitrust laws, and the potential impact on foreign relations, the 2nd U.S. Circuit Court of Appeals in Manhattan said.
The 2-1 decision is a defeat for Texas-based Animal Science Products Inc and New Jersey-based Ranis Co, which claimed they were overcharged for vitamin C by Hebei Welcome Pharmaceutical Co and North China Pharmaceutical Group Corp.
In 2016, the appeals court voided a $147.8 million jury verdict the American companies had won in Brooklyn three years earlier, saying it must defer to China’s view that its laws required fixing prices and quantities of vitamin C exports.
But the U.S. Supreme Court in 2018 ordered a second look, saying federal courts owed only “respectful consideration” to foreign governments’ interpretations of their own laws.
The Trump administration supported the American companies in that case.
Circuit Judge William Nardini wrote for Tuesday’s majority that despite the U.S. interest in punishing foreign companies’ anticompetitive conduct, the government could address its concerns with China through diplomatic channels and trade talks.
“While the stakes are high for both countries,” Nardini wrote, “the United States’ concern with extraterritorial enforcement of a private civil judgment under its antitrust laws is substantially diminished in these circumstances.”
Jonathan Jacobson, a lawyer for the Chinese companies, said dismissal “was the only proper outcome given that the companies could not comply with both sets of laws.”
The plaintiffs’ lawyers did not immediately respond to requests for comment.
U.S.-China trade relations soured under Trump, who accused China of unfair practices and sanctioned some technology companies.
Tensions are still rising, with the Biden administration tightening Chinese firms’ access to U.S. technology and banning some imports from China’s Xinjiang region. The White House is conducting a full review of its China trade policies.
The case is Animal Science Products Inc et al v Hebei Welcome Pharmaceutical Co et al, 2nd U.S. Circuit Court of Appeals, No. 13-4791.
(Reporting by Jonathan Stempel in New York; Additional reporting by David Lawder in Washington; Editing by Lisa Shumaker)
