On March 27, the New York Court of Appeals (New York's
highest state court), held that the state's antitrust law does
not have extraterritorial reach in Global Reinsurance Corp. v.
Equitas Ltd. Accordingly, the court held that the plaintiff,
the United States subsidiary of Global Reinsurance Corporation,
could not assert claims under New York's Donnelly Act against a
U.K corporation (Equitas) for alleged anticompetitive conduct that
had occurred in the London reinsurance market.
As plaintiff alleged in its complaint, in the early 1990s it
purchased reinsurance for certain non-life risks from several
Lloyd's of London syndicates. After losses on the
plaintiff's business began to mount, the syndicates sought to
reduce their subsequent exposure by agreeing to cede
plaintiff's business to Equitas, an entity that, according to
the plaintiff, took a much more "hard-nosed approach" to
the handling of its claims than the syndicates had when
individually assessing plaintiff's claims. Plaintiff contended
that the syndicate's creation of Equitas constituted unlawful
joint action, actionable under the Donnelly Act.
As the Court explained, to state an antitrust claim under the
Donnelly Act, Global was required to allege both concerted action
by two or more entities and market-wide anticompetitive effects (as
opposed to individual harm to the plaintiff, which is
insufficient). Plaintiff's claims, however, at most alleged a
conspiracy having anticompetitive effects in the London reinsurance
market, the Court held, and "plaintiff, although alleging
individual injury in New York, has not alleged harm to competition
in this country." Accordingly, because New York's
relationship to the action was "only by reason of the
circumstance that plaintiff's purchasing branch happens to be
situated [in New York]," the Court concluded that
plaintiff's claims were "not redressable under New
York's antitrust statute." Notably, in reaching this
conclusion, the Court explained that even the federal antitrust
laws fail to reach anticompetitive conduct having effects solely
outside the United States, and that this limitation on the Sherman
Act, imposed by Congress, "would be undone if states remained
free to authorize 'little Sherman Act' claims that went
beyond it." For this reason, the Court held that Global
Reinsurance's claims had to be dismissed, and reversed the
lower court ruling that had permitted plaintiff's action to
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