A federal appellate court on Wednesday threw out antitrust claims by telephone maker Motorola Mobility that sought damages from Asian electronics companies for alleged price fixing on liquid-crystal-display panels.
Some LCD makers have previously pleaded guilty to criminal price-fixing charges brought by the Justice Department, however they disputed civil claims by Chicago-based Motorola which it paid an excessive amount of for LCD phone screens with the cartel activity.
The legal community and U.S. antitrust enforcers were watching the case closely given it would be a potential test for the reach of U.S. antitrust legislation in global commerce. Most of the LCD panels at issue in the event were stated in Asia and delivered to Asian subsidiaries of Motorola before these were built in phones later shipped to the U.S.
On Wednesday, the Seventh U.S. Circuit Appeals court said Motorola's claims didn't belong inside the U.S. legal system.
"Motorola's foreign subsidiaries were injured in foreign commerce-in dealings with foreign companies-and give Motorola rights to take the site of the foreign companies and sue for the children under U.S. antitrust legislation can be an unjustified interference with all the right of foreign nations to control their particular economies," Judge Richard Posner wrote to the court.
The appeals court's decision replaces an earlier, broadly-written ruling issued against Motorola in March.
The reasoning inside court's earlier ruling had alarmed the Justice Department, which warned in the subsequent court brief of possible problems for being able to prosecute overseas price fixers who hurt U.S. consumers. The modern court ruling seemed to be more narrowly tailored to handle the government's concerns.
John Terzaken of attorney Allen & Overy said the department gave the impression to get "precisely the result it absolutely was trying to find." Mr. Terzaken is often a former Justice Department antitrust lawyer.
A Motorola Mobility spokeswoman said, "We disagree while using the ruling and therefore are reviewing next steps."
The Justice Department didn't immediately respond to a request comment.
Robert Wick, a Covington & Burling lawyer who represented the LCD makers, said the court's ruling meant Motorola must assert its claims under foreign law.
"The court's opinion basically says that Motorola can't contain it for both," Mr. Wick said. "Motorola are not a foreign company for reason for manufacturing phones, but a U.S. company with regards to asserting antitrust claims."
Defendants in Motorola's civil case included Samsung Electronics Co., Sharp Corp. and LG Display Co.
Sharp pleaded guilty in 2008 and was sentenced to cover a $120 million for fixing prices on panels sold to companies including Motorola. LG Display pleaded guilty and consented to pay $400 million for LCD price fixing, but criminal charges in their case made no mention of Motorola. The Justice Department has said Samsung would have been a co-conspirator in LCD price fixing, though the company cooperated early with U.S. investigators and wasn't charged.
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