Chinese SOE unable to extricate itself from US antitrust litigation against vitamin C exporters

On 8 February 2013, a New York federal judge denied a motion by North China Pharmaceutical Group Corp for summary judgement in multidistrict antitrust litigation alleging a conspiracy among Chinese companies to fix the price of vitamin C. The judge’s decision illustrates the risks that Chinese parent companies (or even minority shareholders) face when doing business in the US through affiliates, and highlights the need for these parent companies to take steps to insulate themselves from facing costly and burdensome antitrust litigation in the US.

The plaintiffs in the case allege that the defendants conspired to fix the price of vitamin C and to limit the supply to the United States. NCPGC, a defendant and shareholder of one of the defendant vitamin C manufacturers, moved for summary judgment, asking the judge to dismiss the case before trial. NCPGC argued that there was insufficient evidence that NCPGC had itself participated in the conspiracy. However, District Judge Brian M. Cogan denied NCPGC’s motion, finding that there was evidence from which a jury could conclude that NCPGC may have been involved in the conspiracy to fix vitamin C prices.

The judge’s rejection of the motion to dismiss does not necessarily mean that NCPGC will be found liable for the alleged vitamin C cartel activities. But, if the court finds that a full trial is necessary against the other defendants, then NCPGC will also have to defend itself in that trial…

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