Full opinion text
MEMORANDUM DECISION AND ORDER COGAN, District Judge. Plaintiffs have filed suit against Chinese vitamin C manufacturers, alleging that they engaged in an illegal cartel to fix prices and limit supply for exports, including those to the United States. The four main defendants are Hebei Welcome Pharmaceutical Co. Ltd. (“Hebei Welcome” or “Welcome”), Aland (Jiangsu) Nutraceutical Co., Ltd. (“Jiangsu Jiangshan” or “JJPC”), Northeast Pharmaceutical Co. Ltd. (“NEPG” or “Northeast”) and Weisheng Pharmaceutical Co. Ltd. (“Weisheng”) (collectively “defendants”). Plaintiffs bring this putative class action under Section 1 of the Sherman Act and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 4, 16. Plaintiffs seek treble damages and injunctive relief against all defendants except for Northeast, against whom only injunctive relief is sought. Defendants do not dispute that the cartel agreements at issue violate the antitrust laws save for one primary defense: that they were compelled by the Chinese government to fix prices. They have filed a motion for summary judgment based upon that defense and the related doctrines of comity and act of state. The three doctrines upon which defendants rely recognize that a foreign national should not be placed between the rock of its own local law and the hard place of U.S. law. However, that concern is insufficient to protect defendants from their acknowledged violation of the antitrust laws because, here, there is no rock and no hard place. The Chinese law relied upon by defendants did not compel their illegal conduct. Although defendants and the Chinese government argue to the contrary, the provisions of Chinese law before me do not support their position, which is also belied by the factual record. I decline to defer to the Chinese government’s statements to the court regarding Chinese law. Accordingly, defendants’ motion for summary judgment is denied. (1) BACKGROUND By November 2001, defendants, who faced much lower manufacturing costs than their foreign competitors, had captured over 60% of the worldwide market for vitamin C. China’s share of vitamin C imports to the United States rose from 60% in 1997 to over 80% by 2002. Around this time, a number of foreign competitors discontinued or reduced production. It is not disputed that defendants fixed prices and agreed on output restrictions. Defendants are members of the Chamber of Commerce of Medicines and Health Products Importers and Exporters (“the Chamber”). Many of the agreements at issue were reached at meetings of the Chamber and appear to have been, at the very least, facilitated by the Chamber. Defendants, however, contend that the Chamber is a government-supervised entity through which the Chinese government exercises its regulatory authority over vitamin C exports and that all of the agreements at issue were compelled by the Chinese government. After plaintiffs filed suit, defendants moved to dismiss the complaint, invoking the foreign sovereign compulsion defense, the act of state doctrine and the doctrine of international comity. The Ministry of Commerce of the People’s Republic of China (“The Ministry”), which is the highest authority in China authorized to regulate foreign trade, filed an amicus brief in support of defendants’ motion, explaining the Chinese government’s regulation of vitamin C exports. The Ministry “formulates strategies, guidelines and policies concerning domestic and foreign trade and international economic cooperation, drafts and enforces laws and regulations governing domestic and foreign trade, and regulates market operation to achieve an integrated, competitive and orderly market system.” The Ministry is equivalent to a cabinet level department in the United States. According to the Ministry, defendants’ actions were compelled by the Chinese government. Judge David G. Trager denied defendants’ motion to dismiss, finding the record, at that time, to be “simply too ambiguous to foreclose further inquiry into the voluntariness of defendants’ actions.” In re Vitamin C Antitrust Litig., 584 F.Supp.2d 546, 559 (E.D.N.Y.2008). With the benefit of some discovery, plaintiffs had offered evidence suggesting that defendants’ agreements may have been voluntary. In addition, Judge Trager was concerned with the possibility that the cartel and purportedly compulsive governmental regulations at issue had been established at the behest of defendants and the Chinese government had simply given its “imprimatur.” Defendants now move for summary judgment on their three related defenses. Although the initial complaint in this suit was filed in January 2005, the operative complaint for the purposes of the instant motion covers the time period from December 1, 2001 through December 2, 2008. (2) CHINESE LAW I. China’s Economic Transition and the Establishment of the Chambers In 1978, China began to transition from a planned economy to a “socialist market economy.” During the planned economy era, the control of foreign trade was centralized under the Ministry and all foreign trade was conducted through state-owned import and trade companies according to state trade plans. After some reforms in the mid-1980’s led to aggressive forms of competition, the government imposed new administrative controls, which involved the establishment of the various China Chambers of Commerce for Import and Export (“Chambers”), including the Chamber. According to defendants’ Chinese law expert, Professor Shen Sibao, the formation of the Chambers was part of China’s “important national policy which requires Chinese exporting companies to ‘unite and act in unison in foreign trade.’ ” The authority to regulate import and export commerce was eventually transferred from the state-owned trading companies to these Chambers. When the Chambers were created, they were staffed with personnel transferred directly from the government. The Chambers were given both governmental functions, which had previously been performed by the Ministry, and private functions. The governmental functions included, inter alia, responding to foreign anti-dumping charges and industry “coordination.” The private functions of the Chambers included organizing trade fairs, conducting market research and “mediating” trade disputes. II. 1996 Interim Regulations The first governmental directive cited in the Ministry’s brief is the Interim Regulations of the Ministry on Punishment for Conduct of Exporting at Lower-than-Normal Price (“1996 Interim Regulations”), which were promulgated on March 20, 1996. The 1996 Interim Regulations, which applied to all export products produced in China, address the Ministry’s power to punish enterprises for exporting at “lower-than-normal” prices. Potential punishments include “a notice of criticism” and monetary fines. According to the regulations, a normal price includes the costs for producing the product as well as “reasonable profit.” The Ministry could request the Chambers to investigate alleged violations of the regulations. The 1996 Interim Regulations also note that “[a]ll export enterprises shall ... follow the coordination by various chambers of commerce for import and export trade, and set export prices which are suitable in countries to which the goods are exported.” Although not raised by either party, according to a recent decision by the World Trade Organization (“WTO”), the 1996 Interim Regulations were formally repealed on September 12, 2010. WTO, Panel Report, WT/DS394/R, WT/DS395/R, WT/ DS398/R, China — Measures Related to the Exportation of Various Raw Materials (July 5, 2011) (“WTO Panel Report”), ¶ 7.1029 (citing Order No. 2 of 2010 (promulgated by the Ministry on Sept. 12, 2010)). However, in this proceeding before the WTO (“WTO Proceeding”), China asserted that it “ceased to impose ... penalties [under the 1996 Interim Regulations]” as of May 28, 2008 when “verification and chop,” which required export contracts to receive an official seal, was repealed. Id. ¶ 7.1031. III. 1996 Conference and Report In early 1996, the Ministry held a conference and issued a report addressing problems in the vitamin C industry. Although China’s vitamin C industry had rapidly expanded, the industry faced a number of problems including: (1) “violations of export administration regulations” and “the lack of strong administration and coordination of exports”; (2) a glut of capacity and Chinese vitamin C producers; (3) “disorderly” and fierce export competition that resulted in companies “blindly cutting prices”; and (4) threats of foreign anti-dumping suits. To combat these problems, the report recommended restricting production in order to “preserve price,” barring expansion of production capacity and consolidating the numerous vitamin C producers. IV. 1997 Notice and 1997 Charter In November 1997, the Ministry and the State Drug Administration (“SDA”) promulgated the Notice Relating to Strengthening the Administration of Vitamin C Production and Export by [the Ministry] and [SDA] (the “1997 Notice”). The purpose of the 1997 Notice was “to rectify the operational order and optimize the operational team of Vitamin C export, realize the scale-operation on export, improve the competitiveness of our Vitamin C products in the international market, promote the healthy development of Vitamin C export and maintain the interest of our country and enterprises .... ” The regulatory scheme under the 1997 Notice had three primary components. First, the 1997 Notice required export licenses, which were granted by the government based on certain qualifications, including prior production output. Second, the Ministry set export quotas for the total volume of vitamin C that could be exported and export quotas for each individual company. Third, the 1997 Notice generally directed the Chamber to “improve the coordination on Vitamin C export[,] ... supervise [the implementation of the 1997 Notice], and timely report to [the Ministry] about the relevant issues and problems.” To meet these goals, the Chamber was required to establish the Vitamin C Subcommittee (the “Subcommittee”). All exporting enterprises were required to participate in the Subcommittee and to “subject themselves to the coordination of the [the Subcommittee].” The Subcommittee was directed to, inter alia, establish a mandatory minimum export price. Under the 1997 Notice, “the Ministry itself did not decide what specific prices should be,” leaving that to the Subcommittee. Only enterprises that followed the coordinated price and volume quotas would receive export licenses. For violations of the “relevant provisions” of the 1997 Notice, including “competing at low price and reducing price through any disguised means,” enterprises could be punished through a reduction of their export quotas and even complete revocation of their export licenses. In October 1997, the Subcommittee enacted a charter (the “1997 Charter”) in accordance with the charter of the Chamber and the 1997 Notice. According to the 1997 Charter, the Subcommittee was organized around certain tenets, including “complying with laws of the country, implementing and executing the state policies and regulations on foreign trade [and] maintaining orderly export of Vitamin C products .... ” The Subcommittee was to perform “coordination, direction, consultation, service and supervision & inspection functions over its members. It bridges and ties the enterprises and the government.” Under the 1997 charter, the Subcommittee was supposed to, inter alia, supervise the implementation of export licenses, advise the Ministry on export quotas and “coordinate and administrate market, price, customer and operation order of Vitamin C export.” According to the 1997 Charter, “[o]nly the members of the Sub-Committee have the right to export Vitamin C” and to obtain a “Vitamin C export quota.” In return, members of the Subcommittee were obligated to “comply with various directives, policies and regulations with respect to foreign trade, comply with the Charter and regulations of [the Subcommittee] and to implement Sub-Committee’s resolution.” Specifically, the members were required to “[s]trictly execute export coordinated price set by the Chamber and keep it confidential.” For violations of the 1997 Charter or any resolution issued by the Subcommittee, a member could be punished through a warning, open criticism and even revocation of its membership. In addition, the Sub-Committee would “suggest to the competent governmental department, through the Chamber, to suspend and even cancel the Vitamin C export right of such violating member.” On March 21, 2002, the Ministry abolished the 1997 Notice and other regulations, [i]n order to adapt to the new situation of our country’s opening-up to the outside world, to further establish and improve the legal system of the socialist market economy, to earnestly perform the promises of our country’s entry to the WTO, to accelerate the transformation of the functions of the government and to improve the level of administration .... Only a few months earlier, the Ministry had issued regulations (“the 2002 Regulations”), which repealed, as of January 1, 2002, another directive that had subjected vitamin C and other products to export licensing and export quotas beginning on December 29, 1992 (the “1992 Interim Regulations”). V. 2002 PVC Notice and the Institution of Verification and Chop Shortly after abolition of the 1997 Notice, the Ministry and the General Administration of Customs (“Customs”) issued a notice on March 29, 2002 establishing an export regime referred to as “Price Verification and Chop” (the “2002 PVC Notice”). The 2002 PVC Notice became effective on May 1, 2002. Thirty categories of products, including Vitamin C, were now subject to “Price Verification and Chop., by the chambers, and [were] no longer subject to supervision and review by customs.” “Following the adjustment made under [the 2002 PVC Notice], the relevant chambers” were required to submit to Customs, by April 20, 2002, “information on industry-wide negotiated prices.” According to the Ministry, under verification and chop, Customs would only permit export if the relevant contract was reviewed by the Chamber and received a “chop,” which is a special seal that the Chamber would affix to the contract indicating its legality (and, more importantly, the absence of which would indicate its illegality.) The 2002 PVC Notice explains that: [the Ministry] and [Customs] have made the decision to adjust the catalogue of export products subject to price review by customs for year 2002, in order to accommodate the new situations since China’s entry into WTO, maintain the order of market competition, make active efforts to avoid anti-dumping sanctions imposed ..., promote industry self-discipline and facilitate the healthy development of exports. According to the 2002 PVC Notice, “[t]he adoption of PVC procedure shall be convenient for exporters while it is conducive for the chambers to coordinate export price and industry self-discipline.” The 2002 PVC Notice also provides that “[g]iven the drastically changing international market, the customs and chambers may suspend export price review for certain products with the approvals of the general members’ meetings of the sub-chamber (coordination group) and filing with [Customs]” (hereinafter “Suspension Provision”). VI. 2003 Announcement On November 29, 2003, the Ministry issued a new directive, effective January 1, 2004, that continued the verification and chop system (the “2003 Announcement”). This was done “[i]n order to maintain the order of foreign trade and create a fair trade environment and in response to the demands of the industries engaging in export and import, as well as on the basis of the coordination by relevant industrial associations .... ” According to the 2003 Announcement, “[e]ach [Chamber] shall ... strictly observe the Procedures for Implementing the Verification and Chop System on Export Commodities” (“2003 Procedures”), which are attached to the 2003 Announcement. The 2003 Procedures, which explain the verification and chop process in greater detail, state: exporters shall deliver ... the export contracts ... to the relevant Chambers for verification before Customs declaration. If it is verified that the contracts are correct, the Chambers shall fill in the Verification and Chop Form of [the relevant Chamber] and affix the counter-forgery V & C chop at the designated block of the V & C Form and to the export contacts at the blocks where prices and quantities are specified, and then deliver them back to the exporters. ‡ ‡ public announcements [for such industry-agreements] are made .... The Chambers shall verify the submissions by the exporters based on the industry agreements and in accordance with the relevant regulations promulgated by [the Ministry] and [Customs].... The relevant Chambers shall file the industry agreements with [the Ministry] and [Customs] within 10 days after the (Emphasis added). If a contract did not have a chop, Customs would not accept the contract and the goods could not be exported. Enterprises that forged the chop were to “be punished by the [Chambers] according to relevant rules.” The 2003 Procedures also contain a provision addressing non-members, which provides that “[f]or V & C Applications made by non-member exporters, the Chambers shall give them the same treatment as to member exporters.” VII. 2002 Charter On June 7, 2002, after the 2002 Notice became effective, the Subcommittee approved a revised charter (the “2002 Charter”). The 2002 Charter describes the Subcommittee as “a self-disciplinary industry organization jointly established on a voluntary basis by those [Chamber] members which conduct import and export of vitamin C.” According to the 2002 Charter, the purposes of the Subcommittee are: to observe the state laws, regulations and the Articles of Association for [the Chamber], to coordinate and guide the Vitamin C import and export business as well as related activities, to provide consultation and services to its members and relevant governmental departments, to maintain the normal working order of vitamin C import and export operations, to ensure fair competition, to protect the national interest and the legal rights and interests of its members, and to promote the healthy development of the vitamin C import and export trade. The 2002 Charter also provides that: “The Subcommittee shall coordinate and guide vitamin C import and export business activities, promote self-discipline in the industry, maintain the normal order for vitamin C import and export operations, and protect the interests of the state, the industry and its members” According to the 2002 Charter, “obligations” of members include “[i]mplement[ing] the resolutions and agreements of the Subcommittee” and “[a]ccept[ing] the coordination of the Subcommittee.” Although the 2002 Charter is, in many respects, similar to the 1997 Charter, there are some differences. Most notably, the 1997 Charter never states that the Subcommittee was established on a “voluntary basis.” In addition, unlike the 2002 Charter, the 1997 Charter provides that “[o]nly the members of the Sub-Committee have the right to export Vitamin C” and to obtain a ‘Vitamin C export quota.” These differences between the two charters make sense given that, under the 2002 PVC Notice and 2003 Announcement (collectively the “2002 Regime”), membership in the Subcommittee was no longer required in order to export vitamin C. The penalty provisions in the two charters also differ. Although the 1997 Charter provided that “[t]he Sub-Committee will suggest to the competent governmental department, through the Chamber, to suspend and even cancel the Vitamin C export right of such violating member,” this provision is absent from the 2002 charter. In addition, although the 1997 Charter and the 2002 Charter both provide that the Subcommittee can discipline members through public criticism, a warning or termination of membership, because nonmembers can export under the 2002 Regime, revocation of membership would not necessarily have the same effect under the 2002 Regime. The 2002 Charter also includes an enforcement provision that is not included in the 1997 Charter. The 2002 Charter provides that “[i]n order to monitor the implementation of industry self-disciplinary agreements, coordination plans, or industry resolutions, upon approval by relevant members, the Subcommittee can collect a security deposit in the specified amount for breach of agreement.” Finally, although the Subcommittee includes both representatives from the Chamber and representatives from the members, the 2002 Charter appears to require majority voting by the members alone to take any action. VIII. May 2002 Agreement On May 25, 2002, less than two weeks before the 2002 Charter was passed, the Subcommittee met to discuss revising the 1997 Charter. At this meeting, the Subcommittee agreed that that “[a] company, without being a member of the VC Chapter, can export VC (but the export quantity needs to be confirmed by other companies)” (hereinafter the “May 2002 agreement”). The May 2002 agreement, however, is not reflected, in any way, in the 2002 Charter. IX. Repeal of Verification and Chop Although not raised by either party, according to the WTO Panel Report, it appears that the 2003 Announcement was formally repealed on May 26, 2008. WTO Panel Report, ¶¶ 7.1013, 7.1056-1057 (citing Communication ([Ministry] and [Customs] (2008) No. 33, May 26, 2008)). X. Charter of the Chamber The Chamber’s own charter (the “2003 Chamber Charter”) contains language similar to that found in the Subcommittee’s 2002 Charter. The Chamber describes itself as “a national-wide and self-disciplined social entity voluntarily organized by [importers and exporters of] medicines and health products.” According to the 2003 Chamber Charter, the objectives of the Chamber are [inter alia] to “coordinate and guide the import and export of medicines and health products ... maintain the order of foreign trade, defend fair competition, secure interests of the state and the trade [and] safeguard lawful rights and interests of member organizations.” Potential penalties for violations of the 2003 Chamber Charter, “coordination regulations or the Chamber’s directives” mirror those found in the 2002 Charter. With regard to vitamin C, other literature issued by the Chamber along with the 2003 Chamber Charter indicates that the Chamber’s Pharmaceutical Department has a number of responsibilities, including “helping] the government to manage the import and export of some products, such as Vitamin C ____” and “coordinating] and managing]” various sub-chambers, including the Vitamin C sub-chamber. XI.Relationship between the Ministry and the Chamber Three sources address the relationship between the Ministry and the Chamber: (1) “[The Ministry] Measures for Social Organizations, Measure for Administration over Foreign Trade and Economic Social Organizations,” dated Feb. 26, 1991 (“1991 Measures”); (2) the “Notice of [the Ministry] regarding Printing and Distribution of Several Regulations for Personnel Management of Chambers of Commerce for Importers and Exporters,” dated September 23, 1994 (“1994 Notice”); and (3) the 2003 Chamber Charter. Pursuant to the 1991 Measures, the Ministry has a supervisory role over organizations “established with coordination and industry regulation functions.” This supervisory role includes responsibility for the “daily management” of the organizations, which the 1991 Measures define to include examining the structure, personnel and budget of the organizations and formulating the salaries and benefit plans for the organizations. The 1991 Measures also state that “[s]ocial organizations established with coordination and industry regulation functions as authorized by the [the Ministry] must implement the administrative rules and regulations relating to foreign trade and the economy.” The 1994 Notice, and the regulations annexed thereto, specify that: (1) “[t]he candidates for the senior positions of the chamber are recommended by [the Ministry] (or recommended by over 1/3 of the chamber’s member companies and approved by [the Ministry]) and then elected or dismissed by the general meeting of members”; (2) the Chamber’s employees are to be chosen primarily from member organizations or the competent authorities in charge of foreign trade; (8) the Chamber’s headcount of employees must be verified and approved by the Ministry and then by the Ministry of Civil Affairs; and (4) the Ministry must verify and approve the Chamber’s budget for total employee salaries. The 2003 Chamber Charter and accompanying literature also address this relationship, stating that the Chamber implements the government’s policies, regulations and “authorization,” and “accepts the guidance and supervision of the responsible departments under the State Council.” In addition, mirroring the requirements set out in the 1994 Notice, the 2003 Chamber Charter provides that “the candidates for the president, vice-presidents and secretary-general [of the Chamber] may be recommended by the competent authorities, or be recommended jointly by more than one third of members and approved by the competent authorities.” XII. WTO and Public Trade Documents In public statements to the WTO and the United States government, the Chinese government has made representations regarding its regulation of exports generally as well as its specific regulation of vitamin C exports. See Report of Dr. Paula Stern (“Stern Report”) (identifying such statements). In certain documents, China represented that, as of January 1, 2002, it gave up “export administration ... of vitamin C.” In one document, under the heading “any restrictions on exports through non-automatic licensing or other means justified by specific product under the WTO Agreement or the Protocol,” China represented that “[f]rom 1 January 2002, China gave up export administration of ... vitamin C.” WTO, Transitional Review under Art. 18 of the Protocol of Accession of the People’s Republic of China, G/C/W/438 (2002); see also Stern Report at 7 (citing WTO, Statement by the Head of the Chinese Delegation on the Transitional Review of China by the Council for Trade and Goods, G/C/W/441 (2002), which states, under the heading “[n]on-automatic export licensing requirements under WTO agreement and accession commitments,” that “[f]rom January 1, 2002, China gave up export administration of ... vitamin C.”). These WTO documents were not before Judge Trager at the motion to dismiss stage. XIII. The Ministry’s Statements in the Instant Litigation Concerning “Self-Discipline” In an additional statement submitted on summary judgment (the “2009 Statement”), the Ministry describes the Chinese “system of self-discipline.” According to the 2009 Statement: [The system of ‘self-discipline’] has a long history in China and has been well known to, and complied with by, Chinese companies. Self-discipline does not mean complete voluntariness or self-conduct. In effect, self-discipline refers to a system of regulation under the supervision of a designated agency acting on behalf of the Chinese government. Under this regulatory system, the parties involved consult with each other to reach consensus on coordinated activities for the purpose of reaching the objectives and serving the interest as set forth under Chinese laws and policies. Persons engaged in such required self-discipline are well aware that they are subject to penalties for failure to participate in such coordination, or for non-compliance with self-discipline, including forfeiting their export right. According to the Ministry, vitamin C exporters were governed by self-discipline regulation, the objectives of which were “to maintain orderly export, safeguard the interests of the country as a whole and avoid self-destructive competition.” The 2009 Statement also discusses the Ministry’s delegation of authority to the Chamber regarding self-discipline. XIV. 1998 Opinions In discussing the notion of “self-discipline prices”, Professor Shen and a number of commentators cite to an August 1998 directive issued by the State Economic and Trade Commission (“SETC”) entitled “Opinions On Self-Discipline Pricing For Certain Industrial Products” (“1998 Opinions”). Wang Xiaoye, The Prospect of Anti-Monopoly Legislation in China, 2002 Wash. U. Glob. Stud. L.Rev. 201, 208-09; Shen Report ¶ 70. The 1998 Opinions, which only involved domestic prices, “demanded that the producers of certain industrial products observe the minimum price limits set by their respective trade associations.” Wang Xiaoye, 2002 Wash. U. Glob. Stud. L.Rev. at 208; see also Scott Kennedy, The Price of Competition: Pricing Policies and the Struggle to Define China’s Economic System, The China Journal No. 49, 19 (Jan. 2003). The minimum prices were based on a product’s average costs in the industry. Kennedy, The China Journal No. 49, 19; see also Wang Xiaoye, 2002 Wash. U. Glob. Stud. L. Rev. at 209. (3) ACTIONS OF CHINESE MARKET PARTICIPANTS I. The 1997 Regime Between the promulgation of the 1997 Regime and April 2001, the Subcommittee held a number of meetings where defendants reached agreements on price and export quotas. These meetings were attended by officials from both the Chamber and the Ministry. In 1997, the price of vitamin C was $4.4/kg. At some point, defendants set the minimum price at $5.3/kg and the price rose to at least $5/kg. However, between May 2000 and December 2001, there was a “price war,” which resulted in export prices dropping to less than $2.8/kg. This appears to have been caused by an expansion in China’s production capacity that stemmed from an apparent “misunderstanding” at a 1999 Subcommittee meeting. In December 2000, the minimum export price was $5.1/kg. However, as it appears that none of the defendants were following that price, defendants agreed to “nullify” that price and submitted this agreement to the Ministry “for approval.” At a Subcommittee meeting in April 2001, the attendees discussed a drop in the price and the recent expansion in China’s production capacity. At one point during the meeting, the representative from the Ministry informed the members that: Even though VC is not a resource product, it has been strictly regulated since 1997. Regarding the effects of current regulations, generally speaking, the regulation has not been very successful. [The Ministry] attaches importance to the establishment and development of the Chamber, and requires sub-committees to act proactively. Enterprises need to obey the industry agreements and industry rules. When enterprises are maximizing their profits, they also need to consider the interest of the state as a whole. At the meeting, the manufacturers agreed to reduce the minimum export price from $5.10/kg to ,$3.20/kg, presumably in accordance with the agreement at the December 2000 meeting. The minutes go on to state that: “However, because the manufacturers have not agreed on the enforcement mechanisms of the verification and chop system, it remains a major question whether this price limit can be enforced effectively.” II. Transition to the 2002 Regime In September and November 2001, the Ministry learned that the European Union was considering bringing an anti-dumping suit against the Chinese vitamin C manufacturers. This information was forwarded to the Chamber. On one document, handwritten notes, apparently from Ministry officials, state: (1) “[p]lease review and get prepared”; (2) “please review and address it”; and (3) “[p]lease investigate this matter.” On November 16, 2001, the Chamber held a meeting with defendants. At the meeting, defendants, “by way of hand voting,” agreed to raise the “coordinated export price” to $3/kg starting on January 1, 2002. Defendants also agreed to limit the total export volume for 2002 to 35,500 tons (with each company receiving individual export volume allocations) and to not expand their production capacity. Defendants’ agreement was “aimed at enhancing the self-discipline of the industry.” In December 2001, the Chamber convened another meeting amongst defendants to discuss implementing this agreement. Not only is there no affirmative evidence of compulsion in the documents discussing this agreement, but these documents also suggest, on their face, that this agreement was voluntary. One states, for example, that the participants “concluded that Chinese Vitamin C manufacturers are absolutely capable of realizing the self-discipline of the industry” because (1) China has lower gross costs; (2) “production of Vitamin C in China is highly centralized in four manufacturers and thus, it is relatively easy to reach unison within the industry”; (3) supply is in balance with demand and price declines are psychological; and (4) there is strong growth in demand for Vitamin C as an “irreplaceable product.” Another states: [a]nalysis from persons within the industry was that the enterprises were able to sit down together at this particular time because VC prices had reached rock bottom, and no one could sustain a further slide; the next reason was, because the country had opened up the commercial products business from a free competition aspect the enterprises were impelled and had no choice but to seek industry self-regulation. Similarly, a summary of the December 2001 meeting from Chamber’s website notes that: through efforts by the Vitamin C SubCommittee of [the Chamber] ... domestic manufacturers were able to reach a self-regulated agreement successfully, whereby they would voluntarily control the quantity and pace of exports to achieve the goal of stabilization while raising export prices. Such self-restraint measures, mainly based on ‘re-striding quantity to safeguard prices, export in a balanced and orderly manner and adjust dynamically’ have been completely implemented by each enterprises’ own decisions and self-restraint, without any government intervention. Beginning on May 1, 2002, vitamin C was listed as a product requiring price reviews by China’s Customs and a seal of pre-approval by the [Chamber], which has provided powerful oversight and safeguards for the implementation of self-restraint agreements among domestic manufacturers. (Emphasis added). Some documents discussing the November and December 2001 meetings imply that verification and chop was used to enforce the parties’ agreement. However, none of these documents clearly state that defendants’ agreements restricting output were enforced through verification and chop. In fact, the document quoted above explicitly refers to “price reviews.” III. The 2002 Regime A. Meetings and Agreements Between the beginning of 2002 and the filing of the initial complaint on January 26, 2005, the Subcommittee held numerous “coordination” meetings where defendants reached agreements regarding price and output. There were also a number of Subcommittee meetings where no agreements were reached. B. Evidence of Voluntariness Similar to the record regarding the November 2001 agreement, the relevant documents contain no affirmative evidence of compulsion and, a number of these documents, on their face, suggest voluntariness. For example, one documents notes: In 2003, it is expected that the export quota management system will be kept and continue to play a positive role. But, because the international market has turned for the better considerably when compared with the situation in early 2002, the willingness and actual effectiveness of various manufacturers to cooperate will be lower than the days when the market had a difficult time. (Emphasis added). Similarly, a speech made two days after the instant suit was filed states: These VC enterprises, mediated by the [Chamber], took measures [in 2004] to limit production to protect price and to ensure a ‘soft-landing’ of the price plunge, but in the long run, such allegiance is vulnerable and will easily succumb to the temptation of profit and before the test of time. C. Minimum Price According to defendants’ interrogatory answers and the deposition testimony of Wang Qi, a JJPC executive, beginning in May 2002, the minimum price was $3.35/kg throughout the relevant period. However, there is other evidence indicating that, at certain times, higher minimum prices were in effect or no minimum price was in place. An official notice issued by the Chamber in early 2003 indicates that, at the time, there was no minimum price in effect for Vitamin C (or, possibly, that verification and chop had been suspended). Although the notice lists minimum prices for two other products subject to verification and chop, the minimum price field for vitamin C is blank. Later in the spring of 2003, defendants set a minimum price above $3.35/kg and violated it without punishment. After the price of vitamin C rose in the spring of 2003 to around $15/kg, the price began to rapidly drop. Although defendants agreed at a June 2003 Subcommittee meeting to set a “floor price” of $9.20/kg, this price was not followed; within a few weeks, every manufacturer was quoting prices below this “floor” price. At a meeting in July 2003, the $9.20/kg price was cancelled and the verification and chop price was restored to $3/kg. It should also be noted that Ning Hong, the primary person at NEPG responsible for negotiating vitamin C prices with American customers, made a number of statements at his deposition suggesting that defendants were rarely, if ever, required to follow the minimum price under verification and chop. Additionally, there is other evidence indicating that NEPG made sales below the minimum price in May and June 2002 and that defendants consistently sold below the minimum price during substantial portions of 2005 and 2006. D. Weisheng’s Violation of June 20Q4 Shutdown Agreement On May 12, 2004, the Subcommittee held a meeting to coordinate an upcoming June production stoppage that defendants had previously agreed to undertake. However, at the meeting, Weisheng announced that it would not participate in the production stoppage. According to Kong Tai, the general manager of JJPC, Weisheng “unilaterally tore up the agreement” for the planned June shutdown. “[U]sing the pretext of conducting a trial run,” Weisheng announced it would stop production on an old production line, but not on its “new 15,000-ton production line, where ... a trial run had been formally launched” four days earlier. “As a result, the agreement fell apart and plans for ceasing production in June were canceled.” On May 24, 2004, Welcome, Northeast and JJPC met and decided on a new shutdown agreement, which appears to have hinged on whether Weisheng would also participate. At a May 28, 2004 internal JJPC meeting, Kong Tai suggested that the possibility of Weisheng participating “was not great.” Similarly, an undated NEPG document doubted whether defendants could execute the agreed June shutdown as planned and noted that if the agreement were not followed “the impact on the market will be very serious.” On June 15, 2004, defendants attended a “VC regulation meeting.” According to a monthly report prepared by Wang Qi, “[a]t this meeting, Weisheng ... re-proposed the agenda for quoting while stopping production, because their production line had problems.” (Emphasis added). Defendants’ employees asserted, at their depositions, that the Chamber called this meeting, penalized Weisheng for its actions and required Weisheng to agree to the shutdown plan reached at the June 15 meeting. According to Feng Zhen Ying, an employee of Weisheng, when Weisheng initially refused to participate in the shutdown, Weisheng was “penalized by the [Chamber],” which did not allow Weisheng to run its new production lines, even for dry trial runs. According to Wang Qi, when Weisheng failed to follow the original agreement, “the allocation of their quotas were delayed.” Feng Zhen Ying also testified that although “Weisheng had a different opinion about the proposed production shutdown” “under the mandatory requirement of the [Chamber, Weisheng] eventually went along” and shut down production. He asserted that “it was mandated by the government that all manufacturers have to shut down together.” Similarly, Wang Qi testified that, “the [Chamber] forced Weisheng to come up with a new plan, with a plan for stoppage .... [a]nd forced Weisheng to express ... consent to this stoppage of production.” None of the documentary evidence, however, supports this testimony- It should also be noted that, at his deposition, Wang Qi admitted that the original shutdown agreement that Weisheng breached did not contain “any clear provisions for penalty.” This apparently led someone (perhaps Wang Qi himself) to conclude that subsequent production shutdown agreements should include “very clear cut [penalty] conditions.” Relatedly, Wang Qi also testified that, at the time of Weisheng’s breach, the Chamber had never considered how to address violations of its “mandatory instructions.” Even after defendants agreed to the new shutdown agreement following Weisheng’s breach, defendants were still predicting fierce price competition and even thought that it was possible that prices would fall below costs. IV. Post-Filing Evidence There are numerous documents in the record created by defendants after the initial complaint in this case was filed on January 26, 2005. These documents indicate that defendants continued to reach agreements in the post-filing period. According to minutes from an April 19, 2005 meeting, at the meeting, Qiao Haili stated that: “[t]he recent antitrust lawsuit is unprecedented, but we shall not suspend the coordination mechanism of the VC industry in our country. If we fail to coordinate, the price will drop and we will face more fearful consequences: the falling price will further trigger antidumping lawsuits .... ” Plaintiffs suggest that a fact-finder could conclude that the post-filing documents were crafted (or, at the very least, that the actions described in the documents were taken) to support defendants’ litigation position. Both the timing of these documents and the substance of certain documents could support such an inference. The above notwithstanding, some evidence from this period still warrants brief discussion. A. Potential Change in Chinese Law Although the record does not contain any governmental directives issued after the 2003 Announcement, one post-filing document suggests that the Chinese law governing vitamin C exports changed after the filing of the instant suit. According to the minutes of a November 16, 2005 Subcommittee meeting, at the meeting, Qiao Haili stated that: “Recently Premier Wen Jiabao had an instruction on the enhancement of industrial self-regulation. The Secretary 2d Bureau under the State Council had conducted an analysis aiming at VC, which also asked for resolving the legal status issue of the industrial self-regulation.” Neither Premier Wen Jiabao’s “instruction” nor the Secretary’s analysis is part of the record. B. Evidence of Voluntariness Despite the credibility questions surrounding all of the post-filing documents, it should be noted that certain post-filing documents continue to suggest voluntariness. For example, after defendants set a minimum price and agreed to a production shutdown at a May 2005 meeting, Wang Qi’s notes remark that, “due to the damage caused by Weisheng last year, it is still an open question as to what extent the consensus made at the meeting will be implemented. We should have a sober estimate of the situation.” Also, a December 2005 NEPG report concerning marketing and sales strategy states: “Strengthen self-regulation in the VC industry, but don’t rely completely on the ‘gentlemen’s agreements’ of the [Chamber].” C. Evidence Regarding the Chamber Compelling Agreements in the First Instance Defendants contend that two post-filing documents evidence the Chamber directing the parties to agree on coordinated production shutdowns. Neither document, however, clearly supports that proposition. First, defendants point to the minutes of a November 16, 2005 meeting, which defendants assert indicate that “that Qiao Haili of the Chamber was to follow up and determine with the ‘Chairman of the Chamber’ ‘[w]hether we should have a production shutdown.’ ” Although the minutes note that, at the meeting, Qiao Haili stated that the question of whether to conduct a shutdown should be discussed at a followup meeting, the minutes do not clearly state that the Chairman of the Chamber would decide this question. Moreover, a November 16, 2005 document authored by Wang Qi discussing the meeting casts doubt on defendants’ interpretation of the minutes. This document suggests that JJPC had the ability not to join proposed shutdown if it so desired and explicitly states that the Chamber “once again put forward the suggestion of coordinated termination of production.” (Emphasis added). Second, defendants cite to a September 2006 internal NEPG report, which states that “various VC manufacturers in China will successively suspend production.” This document, however, does not address what, if any, role the Chamber played in the formation of this shutdown agreement. D. Minimum Price As noted earlier, there is evidence of defendants making substantial sales below the minimum price during 2005 and 2006. E. Use of Verification and Chop to Enforce Output Restrictions Defendants cite to minutes from a December 2005 meeting indicating that defendants would inspect each other to ensure compliance with a production shutdown agreement and that “[i]f production is not suspended in accordance with the schedule, the Chamber of Commerce will stop issuing export verification and approval seals until the enterprise suspends its production.” There is also other post-filing evidence indicating that verification and chop was used to enforce output restrictions. Ning Hong testified that the Chamber would allocate a certain number of chops to each company and that the company could not exceed that amount. There are also post-filing documents that discuss using “the method of issuing export pre-authorization stamps in order to restrict the export volume.” V. Export Quotas According to their interrogatory answers, defendants were subject to export quotas at various times since 1997. However, defendants’ answers are not entirely consistent as to when such quotas were imposed. Although no export quotas appear to have been in place in 2003, 2004 or 2005, export quotas were apparently re-instituted in June 2006. (4) INTERPRETING FOREIGN LAW AND DEFERENCE TO STATEMENTS BY FOREIGN GOVERNMENTS Under Federal Rule of Civil Procedure 44.1, “[determination of a foreign country’s law is an issue of law.” Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 92 (2d Cir.1998); see also Kim v. Co-op. Centrale Raiffeisem-Boerenleebank B.A., 364 F.Supp.2d 346, 349 (S.D.N.Y.2005). In determining foreign law, courts “may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.” Fed.R.Civ.P. 44.1. Disputes among experts regarding foreign law do not create issues of fact. Rutgerswerke AG and Frendo S.p.A. v. Abex Corp., No. 93-cv-2914, 2002 WL 1203836, at *16 (S.D.N.Y. June 4, 2002). When a foreign government submits a statement regarding its law, courts have taken different approaches as to the weight that should be afforded to such statements. Prior to the enactment of Rule 44.1, the Supreme Court held that such statements should be considered “conclusive.” United States v. Pink, 315 U.S. 203, 220, 62 S.Ct. 552, 86 L.Ed. 796 (1942) (accepting as conclusive declaration from Russian government that nationalization decree was intended to have extraterritorial effect); see also Agency of Canadian Car & Foundry Co. v. American Can Co., 258 F. 363, 368-69 (2d Cir.1919) (finding statement from Russian government that individual was authorized to act on behalf of government in entering assignment and release was “binding and conclusive in the courts of the United States against that government”). However, more recent authorities, including the Second Circuit and the Justice Department, have moved away from the view that a foreign government’s position on its own law is conclusive and precludes any further inquiry. The Justice Department’s current position on this issue is that: As a general matter, the Agencies regard the foreign government’s formal representation that refusal to comply with its command would [give rise to the imposition of penal or other severe sanctions] as being sufficient to establish that the conduct in question has been compelled, as long as that representation contains sufficient detail to enable the Agencies to see precisely how the compulsion would be accomplished under local law. The Agencies may inquire into the circumstances underlying the statement and they may also request further information if the source of the power to compel is unclear. 1995 Antitrust Enforcement Guidelines for International Operations (promulgated by the Dept, of Justice, April 5, 1995) (“Antitrust Guidelines”), at § 3.32 & n. 94, available at http://www.justice.gov/atr/public/ guidelines/internathtm (last visited Sept. 1, 2011). More importantly, in a recent decision, the Second Circuit held “that a foreign sovereign’s views regarding its own laws merit — although they do not command— some degree of deference.” Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (“Pertamina”), 313 F.3d 70, 92 (2d Cir.2002) (adopting the Indonesian’s government’s position regarding the ownership, under Indonesian law, of majority of funds in dispute, but reaching a contrary position regarding a portion of the funds). In denying defendants’ motion to dismiss, Judge Trager, relying on Karaha Bodas, concluded that the Ministry’s amicus brief was “entitled to substantial deference, but would not be taken as conclusive evidence of compulsion,” particularly given that the plain language of the documentary evidence submitted by plaintiffs directly contradicted the Ministry’s position. Judge Trager also noted that, unlike Karaha Bodas, both Pink and American Can were decided prior to the promulgation of Rule 44.1. Defendants contend that I should not follow Karaha Bodas because it did not discuss Pink or American Can. Defendants also point out that the defendant’s brief in Karaha Bodas did not cite to either case and never even argued that “conclusive” deference was required. I disagree. Karaha Bodas is the law of the Circuit, particularly given that, as Judge Trager noted, one subsequent panel has explicitly relied on Karaha Bodas on this issue. See Villegas Duran v. Arribada Beaumont, 534 F.3d 142, 148 (2d Cir.2008), vacated on other grounds, - U.S. -, 130 S.Ct. 3318, 176 L.Ed.2d 1216 (2010). Also, as Judge Trager noted, Karaha Bodas was decided after the promulgation of Rule 44.1. Cf. Riggs Nat. Corp. & Subsidiaries v. C.I.R., 163 F.3d 1363, 1368 (D.C.Cir.1999) (citing Rule 44.1 and analogous Tax Court rule and noting the court’s “hesitant[ance] to treat an interpretation of law as an act of state [under the act of state doctrine], for such a view might be in tension with rules of procedure directing U.S. courts to conduct a de novo review of foreign law when an issue of foreign law is raised”). Furthermore, although Karaha Bodas may accord less deference to a foreign government’s statement than the Justice Department’s position, this is merely a question of degree. Karaha Bodas and the Justice Department’s position, which explicitly takes Pink into account, see Brief for the United States as Amicus Curiae Supporting Petitioners, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., (No. 83-2004), 1985 WL 669667, at *23 (“Matsushita Amicus Br.”) (“the [foreign] government’s assertions concerning the existence and meaning of its domestic law generally should be deemed ‘conclusive.’ United States v. Pink, 315 U.S. 203, 220, 62 S.Ct. 552, 86 L.Ed. 796 (1942)”) (emphasis added), both acknowledge that a foreign government’s statement is not entitled to absolute and conclusive deference in all circumstances and that further inquiry behind that statement is permissible. It must be noted that, for certain issues, the governmental directives contain language that contradicts the position taken 'by the Ministry and neither the Ministry nor Professor Shen address the problematic language. In such circumstances, I must consider the plain language of the governmental directives. Although I would consider the notion that an interpretation suggested by the plain language of a governmental directive may not accurately reflect Chinese law, I cannot ignore such plain language without some explanation as to why it should be disregarded. (5) DEFENDANTS’ DEFENSES I. Comity ‘Comity,’ in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws. Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 40 L.Ed. 95 (1895). As Judge Trager’s opinion noted, often-cited decisions by the Ninth and the Third Circuits adopted various factors for courts to consider in determining whether to assert extraterritorial jurisdiction in an antitrust suit. Timberlane Lumber Co. v. Bank of America, N.T. and S.A., 549 F.2d 597, 614 (9th Cir.1976); Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1297-98 (3d Cir.1979). However, the Supreme Court has not adopted these tests and their continuing validity (or at the very least their proper application) is unclear after the Supreme Court’s decision addressing comity in Hartford Fire Ins. Co. v. California, 509 U.S. 764, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1993), an antitrust suit against British reinsurers. “The only substantial question in [Hartford Fire was] whether ‘there [was] in fact a true conflict between domestic and foreign law.’ ” Id. at 798, 113 S.Ct. 2891 (citation omitted). The Court concluded that no such conflict exists when a defendant can comply with both United States and foreign law, “even where the foreign state has a strong policy to permit or encourage [the conduct that violates American law].” Id. at 799, 113 S.Ct. 2891. The Court found no such conflict with British law as the defendants were not “required ... to act in some fashion prohibited by the law of the United States” and there was no claim “that their compliance with the laws of both countries is otherwise impossible.” Id. The Court declined “to address other considerations that might inform a decision to refrain from the exercise of jurisdiction on grounds of international comity.” Id. It is thus not clear that a comity analysis is still permitted in the absence of the type of true conflict envisioned by Hartford Fire. See Filetech S.A.R.L. v. France Telecom, 978 F.Supp. 464, 478 (S.D.N.Y.1997) (holding, in antitrust suit, that a true conflict under Hartford Fire is a threshold requirement for any comity analysis), vacated on other grounds, 157 F.3d 922 (2d Cir.1998). However, even assuming that it were, any such analysis would focus exclusively on Timberlane’s other factors and would not consider China’s encouragement and approval of defendants’ price-fixing. As one commenter who strongly supports Timberlane’s expansive comity analysis has conceded, after Hartford Fire, “litigants are free to make comity arguments relying on the other factors outlined in the cases and the Restatements, but may not rely upon the conflict between national policies, unless the conflict rises to the level of outright compulsion.” Spencer Weber Waller, Antitrust and American Business Abroad (2009) § 6:21; see also Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839 (9th Cir.1996) (limiting comity analysis to remaining Timberlane factors after finding no conflict with foreign law or policy because the Korean design registration system at issue was not compelled by the Korean government). Unless defendants’ price-fixing was compelled by the Chinese government, dismissal on comity grounds would not be justified. Once Timberlane’s first factor is excluded from consideration, the instant case essentially becomes no different than any other worldwide price-fixing conspiracy by foreign defendants that includes the United States as one of its primary targets. Although this case could affect foreign relations, these foreign policy concerns stem directly from the degree of conflict between Chinese and American laws and policies. II. Foreign Sovereign Compulsion A. Overview The defense of foreign sovereign compulsion ... focuses on the plight of a defendant who is subject to conflicting legal obligations under two sovereign states ... [and] recognizes that a defendant trying to do business under conflicting legal regimes may be caught between the proverbial rock and a hard place where compliance with one country’s laws results in violation of another’s. 584 F.Supp.2d at 551. Although the Supreme Court in Hartford Fire did not explicitly discuss the foreign sovereign compulsion defense (“FSC defense”) as a distinct doctrine or absolute bar to antitrust liability, the Court recognized that abstention on comity grounds may be warranted where compulsion creates a true conflict. Other courts have recognized compulsion as a distinct defense or as a “[a] corollary to the act of state doctrine,” Timberlane, 549 F.2d at 606 (reasoning that “corporate conduct which is compelled by a foreign sovereign” is treated as “if it were an act of the state itself.”). In addition to fairness concerns, the FSC defense also acknowledges comity principles by accommodating the interests of equal sovereigns and giving due deference to the official acts of foreign governments. Antitrust Guidelines § 3.32. The fact that a foreign government compels certain activity ordinarily indicates that the activity implicates its “most significant interests.” Matsushita Amicus Br. at *21. Relatedly, the FSC defense also recognizes “that compelled conduct often raises foreign policy concerns that are primarily the province for the Executive Branch.” Brief for the United States as Amicus Curiae Supporting Appellants, Matsushita, 1985 WL 669663, at *14-15; see also Matsushita Amicus Br. at *19. The burden of proof for the FSC defense is on defendants. Matsushita Amicus Br. at *22; cf. Bigio v. Coca-Cola Co., 239 F.3d 440, 453 (2d Cir.2000) (addressing act of state doctrine). According to the Justice Department, for the FSC defense to apply, the defendant must face “the imposition of penal or other severe sanctions” for refusing to comply with the foreign government’s command. Antitrust Guidelines § 3.32. The Justice Department has also recognized the FSC defense to be applicable where refusal to comply with the command of a foreign sovereign would be futile. “Of course, the [FSC] defense is not available for conduct going beyond what the foreign sovereign compelled.” Weber Waller, Antitrust and American Business Abroad § 8:23 n. 6; see also Mannington Mills, 595 F.2d at 1293 (“One asserting the defense must establish that the foreign decree was basic and fundamental to the alleged antitrust behavior and more than merely peripheral to the overall illegal course of conduct”); cf. United Nuclear Corp. v. General Atomic Co., 96 N.M. 155, 629 P.2d 231, 259 (1980) (explaining that even if defendant was compelled to par