Beef up antitrust law to fight Chinese price-fixing schemes

Chinese companies, in connection with the Chinese government, have successfully used federal courts to hide possible evidence of an illegal price fixing conspiracy that has resulted in serious harm to American manufacturers.

In a court case denied review in the Supreme Court earlier this year, China escaped punishment under American antitrust laws and, incredibly, hid behind so-called protective orders and federal court rules to seal damning evidence of misconduct. Access to these sealed documents are in the national public interest and should be reviewed by Congress and the public to determine the full extent of any possible illegality and to inform federal policies aimed at ensuring a fair playing field for United States manufacturers. 

A bit of background is in order. 

{mosads}In 2012, the International Trade Commission found that Chinese solar panel manufacturers were “dumping” solar panels in the United States by selling below cost. As a result, the ITC imposed duties in order to level the playing field for American businesses. Unfortunately, the ITC decision does not provide a remedy for American businesses already harmed by the anticompetitive conduct.

Subsequent evidence seemed to reveal that Chinese solar panel manufacturers colluded with each other and the Chinese government in order to drive American companies out of the solar panel manufacturing business. 

The fate of Energy Conversion Devices (ECD), the Michigan company that sought review in the Supreme Court, is a case in point. Once the world’s largest maker of flexible solar panels, ECD was forced into bankruptcy as a result of this illegal price-fixing scheme. ECD, in an attempt to recoup some of its losses, created a trust and filed suit in federal court to force Chinese manufacturers to pay damages resulting from an alleged price-fixing conspiracy.

US and China step up steel talks to avert trade war – Intensified discussions on alleged Chinese dumping could … https://t.co/vpXgJ7cHL8

— Cogent Advisory (@rajatdhar1) July 19, 2017

In other words, the litigants in the recent Supreme Court case tried to use American antitrust laws to compensate a U.S. manufacturer for harm suffered as a result of conduct that had already been deemed illegal by the federal government. Lower courts dismissed the ECD case and that dismissal is now final. 

But this serious issue extends well beyond the solar industry.

The United Steelworkers, for instance, told the Supreme Court that it “is keenly aware of unfair dumping and below-cost price fixing by foreign producers — a blatant violation of American antitrust law, and one that results in the loss of tens of thousands of jobs.” Collusion to set prices below cost by foreign competitors isn’t just unfair to American business and American workers; it erodes our manufacturing capacity, which is central to prosperity and security for all Americans.

An American Enterprise Institute article from 2016 about unchecked antitrust violations by Chinese companies noted, “Unlawful attempts to win monopoly status in the U.S. are no-risk endeavors.” With the Supreme Court’s decision, this will be truer than ever unless the federal government begins to enforce competition laws against Chinese companies. 

So what happens now?

Congress can make the “secret” evidence public through an oversight investigation or hearing. Congress can clarify through legislation or otherwise specify that antitrust laws are intended to cover price-fixing schemes in violation of international trade laws. Congress can encourage the Trump Department of Justice to use its current enforcement capabilities under the antitrust laws to protect American businesses from all price-fixing conspiracies, especially when such schemes also violate international trade laws. 

With the Trump administration taking a fresh look at the economic realities of international trade, there has been much in the media of late about the rebooting of America’s trade policies. Punishing blatant antitrust transgressions would seem like an easy first step in the right direction.

John McMickle, a Chevy Chase-based attorney, is a former senior counsel to the Senate Judiciary Committee for Sen. Chuck Grassley (R-Iowa) and served as a policy advisor in the Trump campaign’s Washington, D.C. office.

The views expressed by contributors are their own and not the views of The Hill.