China loses antitrust case in top US court

Andrew Chung and Lawrence Hurley

The US Supreme Court has sided with the Trump administration and against China on a disputed aspect of their fraught trade relationship, throwing out a lower court ruling that had allowed two Chinese vitamin C makers to escape $US148 million in damages for violating American antitrust law.

In a case that brought the trade conflict between the world's two largest economies before the top US court, the justices ruled 9-0 that the lower court gave too much deference to Chinese government filings explaining China's regulatory policy.

The justices sent the case back for reconsideration by the New York-based 2nd US Circuit Court of Appeals, which in 2016 threw out the damages won by two American companies that buy vitamin C.

Writing for the court, Justice Ruth Bader Ginsburg said that while US courts should give "respectful consideration" to a foreign government's interpretation of its own law, they are not "bound to accord conclusive effect to the foreign government's statements."

Lawyers for the US and Chinese governments faced off in April before the justices. The Supreme Court took the unusual step of letting China present arguments even though it is not an official party in the case, a privilege typically reserved for the US Justice Department.

The price-fixing case dates back to 2005 when Texas-based Animal Science Products Inc and New Jersey-based The Ranis Co Inc accused Hebei Welcome Pharmaceutical and North China Pharmaceutical Group and other Chinese vitamin C makers of antitrust violations.

China intervened in the case, asking the trial court to dismiss the allegations in part because its laws had forced Chinese companies to comply with government-mandated pricing regimes.

Michael Gottlieb, a lawyer representing the American companies, said that his clients' fight over the price-fixing allegations will continue.

"The decision will promote free and open markets, while protecting the independence of the US courts," Gottlieb added on Thursday.

Jonathan Jacobson, a lawyer for the Chinese companies, expressed disappointment with the ruling but said that "we are confident of prevailing on remand because Chinese law clearly compelled price-fixing of vitamin C during the relevant period, as our own (US) government has made clear".

A US federal judge questioned the credibility of the Chinese submissions in the case and, after a 2013 jury trial, awarded the two American companies $US147.8 million in damages.

The New York-based 2nd US Circuit Court of Appeals overturned the judgment in 2016, saying that when a foreign government directly participates in a case, American courts are obligated to defer to that country's characterisation of its own laws.

The Supreme Court itself did not weigh in on the correct interpretation of Chinese law, but Ginsburg said questions remained over "whether Chinese law required the Chinese sellers' conduct".

The US Justice Department and a lawyer representing China in the case had no immediate comment.