Motorola's Asian Supplier Price-Fixing Lawsuit Questioned by US Court

A US appeals court appeared sceptical of mobile phone maker Motorola Mobility's attempt to sue several Asian suppliers for price-fixing, signalling a possible blow to the reach of US antitrust law overseas.

At a Chicago hearing on Thursday, a three-judge panel of the 7th US Circuit Court of Appeals questioned whether the allegations had enough connection to the United States to be heard in US courts.

Motorola Mobility, a unit of China's Lenovo Group Ltd, sued the suppliers in Chicago federal court in 2009, saying some of its subsidiaries had overpaid for liquid crystal display screens because of a conspiracy in Asia. Some screens entered the US market, the lawsuit said.

Judge Richard Posner, a member of the appeals panel, questioned the consistency of the company's legal positions.

"For tax purposes, you treat the foreign subsidiaries as separate, but for antitrust purposes, you treat them as part of Motorola," Posner said.

Motorola Mobility lawyer Thomas Goldstein said the company should be able to sue under US law because a former Chicago-based parent negotiated its supply contracts.

Lenovo bought Motorola Mobility in October for $2.91 billion (roughly Rs. 17,900 crores) from Google, which had bought it in 2012. Motorola Mobility says it paid the LCD makers more than $5 billion (roughly Rs. 30,792 crores) from 1996 to 2006.

Defendants named in the lawsuit are AU Optronics Corp, Chunghwa Picture Tubes Ltd, HannStar Display Corp, LG Display Co Ltd, Samsung Electronics Co Ltd, Samsung SDI Co Ltd, Panasonic Corp unit Sanyo, Sharp Corp and Toshiba Corp.

The appeals court ruled against Motorola Mobility in March but agreed to hear the case again after the Obama administration said the ruling threatened its ability to prosecute global price-fixing.

The US Justice Department, whose investigation of global LCD price-fixing led to more than $1.3 billion (roughly Rs. 8000 crores) in criminal fines, asked the court to find that the conspiracy directly affected US commerce.

The governments of Belgium and Japan filed briefs criticizing the reach of US antitrust law and urging the court to rule for the suppliers.

The appeals court could issue a decision any time.

The case is Motorola Mobility v. AU Optronics Corp, et al, 7th US Circuit Court of Appeals, No. 14-8003.

© Thomson Reuters 2014