Chinese Government Focus of Vitamin C Antitrust Suit

BROOKLYN, N.Y.Did the Chinese government compel vitamin C manufacturers to raise prices in the United States?

That question may form the core of a defense in an antitrust trial in New York. The defendants Hebei Welcome Pharmaceutical Co Ltd and Weisheng Pharmaceutical Co Ltd and two affiliated companies are expected to raise the foreign sovereign compulsion doctrine.

"The doctrine is founded on the act of state doctrine principle that United States courts should preclude themselves from considering claims which would require them to review the legality of the acts of a foreign sovereign," Professor Michael Waxman of the Marquette University Law School wrote 28 years ago.

It will be an uphill battle for the defendants, who previously asked a federal judge to rule as a matter of law that they were compelled by the Chinese government to fix prices. In a 2011 ruling, U.S. District Judge Brian Cogan rejected their summary judgment motion, allowing the case to move forward.

The class-action lawsuit filed on behalf of vitamin C purchasers claims prices of vitamin C skyrocketed more than a decade ago after the defendants agreed to fix prices. 

Cogan previously said he would bar witnesses for the defense from testifying that the Chinese government compelled them to fix prices because witnesses are not permitted to make legal conclusions; instead, the judge said witnesses will have to describe what the government required them to do, Reuters reported.

"This case may have very serious ramifications for Chinese exporters selling in the United States," Vinson & Elkins attorney Robert Ritchie wrote.

The dispute reportedly dates back to 2002 when the Chinese government established an export regime for several products, including Vitamin C.

The case, In Re Vitamin C Antitrust Litigation, was expected to go to trial in Brooklyn as early as today, according to Reuters.

The antitrust lawsuit is not the first one involving price fixing of vitamin C and other vitamins. More than 11 years ago, 13 companies were ensnared in a years-long vitamin price-fixing conspiracy that resulted in more than $1 billion in fines being imposed by the European Commission.