Trade Cases

ITC Judge Rules Against Antitrust Claim in Section 337 Case

November 17, 2016

The U.S. International Trade Commission delivered a surprising decision in the US Steel Section 337 case against China. In its complaint, US Steel alleged that China was violating antitrust laws in a “conspiracy to fix prices and control output and export volumes, the threat or effect of which is to restrain or monopolize trade and commerce in the United States.” US Steel also alleged that China stole trade secrets and evaded import duties through mislabeling products and circumvention. The judge in the case, after reviewing U.S. antitrust laws, ruled that the antitrust claims cannot be pursued under Section 337 although the remaining two claims can proceed.

Because the decision is unusually complicated, Judge Dee Lord, offered a summary of her decision in layman’s language which is reprinted below.

“For many years, the United States steel industry has complained of unfair trade practices by manufacturers of Chinese steel. While such practices have resulted in the imposition of high tariffs on certain Chinese steel products, U.S. Steel seeks additional remedies. The complaint by U.S. Steel in this case attempts to use section 337 of the Tariff Act of 1930 to block all Chinese carbon and alloy steel from coming into the United States. One of the grounds that U.S. Steel relies on is the allegation that the Chinese steel industry violates U.S. antitrust laws.

“The parties accused of antitrust violations; who are the manufacturers of Chinese steel, have moved to dismiss the complaint. They say that the Chinese steel industry has not violated the antitrust laws as those laws have been interpreted and applied for the past 30 or 40 years by United States courts. Under antitrust law as currently applied in federal courts, it has become very difficult for a private party like U.S. Steel to bring an antitrust suit against its competitors. U.S. Steel accepts this but says the law under section 337 should be different than in federal courts. The dispute between U.S. Steel and the Chinese steel industry shows the conflict between section 337, which is intended to protect American industry from unfair competition, and U.S. antitrust laws, which are intended to promote competition for the benefit of consumers, even if such competition harms competitors.

“The decision below concludes that the antitrust law that applies in federal courts must be applied in the same way under section 337. This result is required by the decisions of the United States Court of Appeals for the Federal Circuit, which are binding under section 337. Under the reasoning of these decisions, U.S. Steel’s antitrust complaint against the Chinese steel industry cannot continue.

“Anyone who reads this decision should understand that ending the antitrust claim does not overlook or minimalize U.S. Steel’s grievances. The decision results from the process for resolving legal disputes, which involves finding applicable law and applying it to the facts presented by the parties. Having tried diligently for an extended period of time to do just that— find the applicable law and apply it to the facts—my conclusion is that section 337 as it stands cannot provide the relief that U.S. Steel is seeking. Those with the power to change the laws can bring about a different result; my job is to apply the law faithfully, as I find it.”

US Steel responded to the decision by the ITC with “shock and disappointment.”

Said US Steel in a statement: “United States Steel Corporation is shocked and disappointed by ALJ Lord’s Order No. 38, granting the Chinese respondents’ motion to terminate the antitrust claims in the historic 337 case.

“This case was filed in April, initiated in May, with discovery ongoing for months now including the retention and identification of experts. Six months after the ITC unanimously decided to initiate this case, including the antitrust claim, ALJ Lord has taken an unusual turn. We are reviewing the Order and assessing our options, including petitioning the ITC for review.”

A hearing on the remaining issues in the 337 investigation is scheduled to begin on Monday, July 31, 2017 and conclude by August 4, 2017. There remains a possibility that Judge Lord’s decision could be overturned by the six-member commission.