Trade with Foreign Nations

In section 6A of the Sherman Antitrust Act, there exists an exception to the applicability of the Act to conduct involving trade with foreign nations. The statute states that the provisions do not apply to such conduct except in a few instances. The statute will apply if the conduct has a direct, substantial, and reasonably foreseeable effect on trade or commerce which is not trade or commerce with foreign nations, or if the conduct has such an effect on import trade or import commerce with foreign nations. Thus, if domestic interstate commerce is affected by the conduct, or affects import trade with foreign nations, the provisions of the antitrust legislation apply and there is no exception.

The statute will also apply if the conduct has a direct, substantial, and reasonably foreseeable effect on export trade or export commerce with foreign nations, and is performed by a person involved in such trade or commerce. For instance, an exporter of copper who colludes with other copper exporters to create an artificially high shipping price to charge foreign national governments may very well be prosecuted under the Sherman Act, given the effect of his conduct is direct, substantial, and reasonably foreseeable.

This exception would mainly apply to an anticompetitive agreement between a resident citizen and a foreign entity to unreasonably restrain competition in the foreign entity’s local market. When the effect is felt beyond the territories of the United States, Congress has chosen to withhold prosecutorial jurisdiction from the Department of Justice. It is when the effect of the anticompetitive conduct begin to affect interstate commerce that the government is permitted to intervene and prosecute.