In 1931, a group of aluminum producers-one French, two German, one Swiss, one British, and one Canadian- formed a Swiss corporation named "Alliance." Each of the producers was a shareholder of Alliance.
In 1936, the shareholders instituted a system of royalties centered on Alliance. Each shareholder was to have a fixed production quota for every share it held, but when its production exceeded the sum of its quotas, it was to pay a royalty, graduated in proportion to the excess, to Alliance. Alliance then distributed the royalties as dividends to the shareholders in proportion to their shares.
The effect was to create a cartel that controlled aluminum supplies and therefore kept prices high. Imports into the United States were included in the quotas.
The cartel ended in 1939 when the German shareholders became enemies of the French, British, and Canadian shareholders.
1. What are some of the complications that occur when U.S. courts order a foreign manufacturer to pay billions in damages for an agreement that would be acceptable under that country's competition laws?
2. Does Judge Hand see any limits placed by the U.S. Constitution on antitrust law?
3. Judge Hand's test requires that a "substantial" number of imports be affected by the anticompetitive conduct. To what measure was he referring by using that word? Would this be objectionable if only 1 percent of the U.S. market was affected?