Carbon and Alloy Steel: Commission Hearing on Dismissal of Antitrust Claims

SteelOn April 20, 2017, the Commission heard oral arguments in Certain Carbon and Alloy Steel Products, Inv. No. 337‑TA-1002, in connection with its review of Judge Lord’s Initial Determination dismissing complainant U.S. Steel’s antitrust claims. The arguments largely focused on the applicability of antitrust standing requirements for cases brought under federal antitrust laws to antitrust-based complaints brought under Section 337.

  1. Background

The primary issue before the Commission is whether the antitrust standing requirement for federal district court actions brought by a private party applies to antitrust-based Section 337 investigations. Federal antitrust standing requires a showing of injury to competition that stems from the alleged anticompetitive conduct. In its complaint, U.S. Steel did not allege that it had antitrust standing, and instead argued that antitrust standing does not apply to ITC proceedings. Judge Lord disagreed and issued an Initial Determination dismissing the antitrust claims and holding that the antitrust standing requirement applies to Section 337 investigations. We previously covered the Initial Determination in a prior post. The Commission is now reviewing Judge Lord’s dismissal of U.S. Steel’s antitrust claims, and conducted the April 20 hearing in furtherance of its review.

Oral hearings before the Commission in Section 337 investigations are rare, and the Commission utilized the format it follows for Title VII hearings. The format involved opening statements from the parties, followed by a series of panels that answered questions from the Commissioners. The panels consisted of counsel for complainant U.S. Steel, counsel for respondent Bao Steel, and attorneys from the Commission’s Office of Unfair Import Investigations (OUII), respectively. The hearing lasted roughly six hours. While other federal agencies were encouraged to submit comments, no federal agencies briefed the issues or appeared at the hearing. Members of the United Steel Workers attended the hearing in support of U.S. Steel, but did not testify.

  1. Substance of the Hearing

During the hearing, U.S. Steel argued that the antitrust standing requirement applicable in private antitrust actions in federal court is not applicable in Section 337 proceedings. Instead, because Section 337 was intended to protect domestic industries, demonstrating injury to a U.S. industry and U.S. workers is sufficient to bring an antitrust claim at the ITC, and proof of injury to competition is not required.

Respondent Bao Steel, a major Chinese steel producer, argued that the antitrust standing requirement does apply to Section 337 proceedings. It argued that, because antitrust claims arise under the Sherman Act, the corresponding precedent — including the requirement for antitrust standing — applies to antitrust-based claims asserted at the ITC. OUII agreed that the antitrust standing requirement applies to Section 337 actions brought by private parties. However, OUII contended that, when an antitrust action is self‑initiated by the Commission, a showing of antitrust standing is not required. OUII maintained that, in a self-initiated antitrust-based Section 337 investigation, the Commission’s role was akin to that of the Federal Trade Commission or Department of Justice in antitrust actions brought by those agencies, where antitrust standing is not required. OUII explained that, in such self-initiated actions, the Commission would not institute unless it had already determined that it was in the public interest to go forward with the asserted antitrust claim.

  1. Next Steps

The Commission originally included three causes of action in this investigation: antitrust, trade-secret misappropriation, and false designation of origin (see our prior post regarding institution of the investigation). U.S. Steel withdrew its trade secret-misappropriation claim in February. The false-designation claim, which had been dismissed by Judge Lord, has been remanded back to the judge for a hearing. There is no set date for the Commission’s decision regarding the judge’s dismissal of the antitrust claim. The target date for completion of the entire investigation is currently scheduled for April 18, 2018.