Court Considers Measure of Damages in California CLRA Case for Deceptive “Made in USA” Claims
A federal jury in the Central District of California has awarded $2.36 million in damages to a consumer class, finding that R.C. Bigelow Inc., without limitation, violated the Consumer Legal Remedies Act and misrepresented that the company’s tea products as were “Manufactured in the USA 100% American Family Owned” and “America’s Classic.”
Here, consumers initiated a class action lawsuit against the tea company, alleging that its branding, packaging and advertising is deceptive because it expressly and/or implied states that its tea is wholly manufactured in America. The consumers further alleged that the products are comprised solely of foreign-sourced tea. They claimed that had they known the truth about the tea that they would not have made the same purchasing decisions.
In July 2023, the court certified a class comprised of all purchasers in California of at least one box of Bigelow tea containing the label at issue between 2017 and 2023.
The class action lawsuit argued that the teas at issue are made from tea leaves that are derived from a plant that are not grown or processed in the United States and are grown in places such as Sri Lanka and India.
The issues before the jurty at trial included whether the company engaged in unfair competition and unfair or deceptive acts under the CLRA, whether the company breached its express warranty that the products were “Manufactured in the USA,” whether the company made the allegedly false statement knowingly or recklessly, and damages.
Despite the company argued that the labels were intended to reference the company’s U.S.-based blending and packaging facilities, the tea bags were manufactured in the United States, and the company owned a tea plantation in the U.S. However, the court found that the teas in question are grown and processed overseas, mostly in China, India, and Sri Lanka. The court further found that the teas undergo processing outside of the U.S. that “transformer” them from raw leaves into a consumable product. Thus, the court found that teas to be processed abroad.
The court held that the tea’s “[m]CLRA in the USA 100%” label was “literally false” because the great majority of the company’s tea is imported from overseas.
Following trial, the jury awarded a class of California tea purchasers $2.36 million in compensatory damages. No punitive damages were awarded.
A damages expert for the class attributed 11.3% of the company’s sales to the purported false label, asserting that consumers overpaid for the tea by $3.26 million. The expert testified that he conducted a study of hundreds of tea buyers and purportedly found that some of those surveyed were willing to pay more for a product that included phrases such as “Manufactured in USA 100% American-Family Owned.”
Takeaway: “Made in USA” representations are heavily policed by the Federal Trade Commission. The “Made in USA Labeling Rule” requires, in part, that for a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim, the product must be “all or virtually all” made in the U.S.; (i) final assembly or processing of the product must occur in the United States; (ii) all significant processing must occur in the U.S.; and (iii) all or virtually all ingredients or components must be made and sourced in the U.S. Additionally, the product should contain no – or negligible – foreign content. Stte attorneys general and private plaintiffs also aggressively pursue deceptive U.S. origin claims. More and more frequently, related representations become the subject of consumer class action demand letters and litigation pertaining to violation of the California Consumer Legal Remedies Act, amongst other applicable legal regulations. Importantly, here, the measure of damages for a “Made in the USA” claim was the likely increase in price attributable to eth alleged false representation of origin. This case underscores the importance of manufacturers and marketing that incorporate U.S. origin claims into their advertising, marketing and/or packaging to consult with a seasoned FTC attorney to limit liability exposure for failing to comply with applicable legal regulations, including, but not limited to, state and federal “Made in U.S.A.” requirements, and California’s CLRA.
FTC Review Rule Lawyer on What Marketers Need to Know About the FTC Final Rule on the Use of Consumer Reviews and Testimonials
The FTC’s Rule on the Use of Consumer Reviews and Testimonials went into effect on October 21, 2024 and addresses deceptive and unfair conduct involving consumer reviews and testimonials. You can also review the FTC’s other guidance on reviews and testimonials, including FAQs relating to the agency’s Endorsement Guides.
Here are 10 things that marketers must be aware of concerning the Rule in order to avoid liability exposure, including the initiation of regulatory investigations. Consult with an FTC review and testimonial lawyer if you or your company have received an access letter, a civil investigative demand (CID) or if you are interested in discussing the implementation of preventative compliance measures.
The Rule authorizes courts to impose civil penalties for knowing violations and is important because fake, false or otherwise deceptive reviews and testimonials have, according to the agency, polluted the marketplace. There is no private right of action under the Rule.
There is a difference between a consumer review and a testimonial. A consumer review is a consumer’s evaluation, or a purported consumer’s evaluation, of a product, service, or business that is submitted to and published on a website or platform dedicated in whole or in part to receiving and displaying such evaluations. So, consumer reviews could appear, for example, on a site dedicated to consumer reviews or on product pages of retailer websites. A testimonial, one type of endorsement, is an advertising message that consumers are likely to believe reflects the opinions, beliefs, or experiences of a consumer or celebrity who has purchased, used, or otherwise had experience with a product, service, or business. Testimonials can appear in a variety of contexts, such as in television or radio ads, on a company website, in Internet ads, or in social media.
Note: Most consumer reviews are not consumer testimonials, and most consumer testimonials are not consumer reviews. However, if a business pays for or gives incentives for consumer reviews of its business, products, or services, then those incentivized reviews would also be considered consumer testimonials under the Rule.
In some instances the lack of a Rule violation could still violate the FTC Act. See, e.g., Endorsement Guides.
Can your business ask for reviews only from customers whom you think are happy with the products/services? The Rule does not contain a specific prohibition against such conduct. However, this practice could violate the FTC Act. See, e.g., Endorsement Guides 16 C.F.R 255.2(d) and (e)(11).
Example: A marketer contacts recent online, mail-order, and in-store purchasers of its products and asks them to provide feedback to the marketer. The marketer then invites purchasers who give very positive feedback to post online reviews of the products on third-party websites. Less pleased and unhappy purchasers are simply thanked for their feedback. Such a practice may be an unfair or deceptive practice if it results in the posted reviews being substantially more positive than if the marketer had not engaged in the practice. If, in the alternative, the marketer had simply invited all recent purchasers to provide feedback on third-party websites, the solicitation would not have been unfair or deceptive, even if it had expressed its hope for positive reviews.
The Rule does not prohibit giving incentives for reviews, as long as there is not an express or implied requirement that the reviews have to express a particular sentiment. Remember that failing to disclose incentives could be a violation of the FTC Act. See, e.g., Endorsement Guides 16 C.F.R 255.5(a) and (b)(6)(ii).
Note: A business does not violate the provision by offering a consumer an incentive for a review that it merely expects to be positive. Just because a business expects that an incentivized review will be positive does not mean there is either an express or implied requirement that it needs be positive to obtain the incentive. However, such a practice could violate the FTC Act. See, e.g., Endorsement Guides 16 C.F.R 255.2(d) and (e)(11).
Note: The Rule does not prohibit your business from offering compensation to a consumer to remove or change a review. However, paying consumers to change or remove truthful negative reviews may violate the FTC Act as an unfair or deceptive act or practice, because it may wind up distorting or otherwise misrepresenting what consumers think about your business or its products/services. See, e.g., Endorsement Guides 16 C.F.R 255.2(d).
Note: Also, individual consumers would not be violating the Rule by accepting money in exchange for posting a 5-star review. Section 465.4 only applies to the businesses that provide compensation or other incentives, not to the consumers who accept them.
Your business cannot pay incentives for 5-star reviews on third-party review platforms, even if you ask the reviewers to add a disclosure about the incentive. Such conduct would violate Section 465.4. This section applies whether the reviews appear on your website or third-party review platforms. Section 465.4 only applies to consumer reviews. Hired influencers are providing testimonials, which are covered under other parts of the Rule.
Additionally, you cannot suggest to consumers that their reviews must be positive (or negative) in order to obtain a promised incentive – even if you do not say so explicitly. For example, you would be implying that reviews have to be positive if you said: “Tell us how much you loved your visit to John’s Tavern and get a $5 coupon” or “Tell your friends about all the fun you had at Bob’s Arcade for a chance to win prizes.”
The Rule does not prohibit your business from offering compensation to a consumer to remove or change a review. However, paying consumers to change or remove truthful negative reviews may violate the FTC Act as an unfair or deceptive act or practice, because it may wind up distorting or otherwise misrepresenting what consumers think about your business or its products. See, e.g., Endorsement Guides 16 C.F.R 255.2(d).
The Rule does not prohibit offering incentives to consumers for taking take down their negative reviews. However, offering such incentives could be an unfair practice in violation of the FTC Act. See, e.g., Endorsement Guides 16 C.F.R 255.2(d).
The Rule prohibits businesses from implying that a review has to be positive in order for consumers to get an incentive for the review. You cannot suggest to consumers that their reviews must be positive (or negative) in order to obtain a promised incentive – even if you do not say so explicitly.
Example: You would be implying that reviews have to be positive if you said: “Tell us how much you loved your visit to Ray’s Tavern and get a $5 coupon” or “Tell your friends about all the fun you had at Jennifer’s Pottery Shack for a chance to win prizes.”
Advertising agencies, public relations firms, review brokers and reputation management companies are potentially liable under the Rule. For example, they could be liable under Section 465.2(a) if they write, create, or sell a fake or false consumer review, consumer testimonial, or celebrity testimonial. They could potentially be liable under Section 465.4 if they provide compensation or other incentives conditioned on the writing or creation of consumer reviews expressing a particular sentiment. They could also potentially be liable under Section 465.7(a) if they engage in review suppression or under Section 465.8 if they misuse fake or false indicators of social media influence.
The Rule does not cover when and how influencers should disclose their relationship to a brand. The Rule’s disclosure requirements relate to certain situations involving company insiders. But failing to disclose relationships between influencers and brands could violate the FTC Act. FTC staff has guidance about such disclosures to help businesses and influencers avoid violations.
Brokers of fake reviews would generally fall under Section 465.2(a)’s prohibition against selling a consumer review, given that such brokers are generally being paid to provide fake reviews.
If you host consumer reviews of products/services that you sell, you should be concerned about whether the reviews submitted are fake or false. However, you may not face liability under the Rule for such reviews, assuming you did not write or purchase them. Section 465.2(d) of the Rule provides an exception for reviews that appear on a website or platform when the business is doing nothing more than hosting consumer reviews.
Note: The Rule’s exemption for mere review hosting may apply to a business that solicits review submissions or aggregates star ratings. That exemption applies to mere consumer review hosting, even if the business prompts review submissions or aggregates star ratings. The exemption for review hosting does not apply to consumer reviews that a business features in its advertising or marketing materials. When featured in that context, consumer reviews become testimonials and the exemption for review hosting does not apply.
Note: A business that hosts reviews on its retail website be liable if it wrote or created fake or false reviews or if it purchased consumer reviews that it knew or should have known were false.
Note: A business can be liable under the Rule for hosting false testimonials on its website. Testimonials are, by definition, advertising or promotional messages. A business that puts testimonials on its own website is disseminating them and is not merely “hosting” them. If those testimonials are fake or false, the business could be liable.
If your business sells its products/services on its website and routinely emails every purchaser and asks them to post a consumer review, one of those purchasers happens to be an employee of your business, and if that employee sees such an email and writes a false review, you may not be responsible for it. Section 465.2(d) of the Rule provides an exception for reviews that resulted from a business making generalized solicitations to purchasers to post reviews about their experiences with a product, service, or business.
If your business hires influencers to review your products/services, are those reviews covered by the Rule? Under the Rule, a hired influencer’s social media post touting a product/service would be considered a celebrity testimonial, not a review. Your business could be liable under Section 465.2(b) if it knew or should have known that any such influencers misrepresented that they used or had experience with the product/service or misrepresented their experiences with it.
Note: Businesses should look for red flags indicating that a testimonial is likely fake or false, and they should act accordingly if such a flag is present. For example, if someone gives a testimonial and then asks for the product/service, a business should question whether the testimonialist used the product/service.
When should a business know that it is buying reviews that are fake or false? The Rule does not impose a general duty for businesses to investigate whether each consumer review of its products/services is/are fake or false. However, sometimes there may be clear indications that purchased reviews are likely to be fake or false, in which case failing to investigate may trigger liability under the “should have known” standard. For example, let’s say that a business hires a third party to generate reviews by providing free samples of its products/services to consumers. The business would likely be on notice that resulting reviews are likely fake or false if, for example, the reviews appear so quickly after purchase that it is doubtful they reflect real experiences with the product/service, an unusually large number of reviews appear in a very short period of time, or they refer to the wrong product/service.
Your business is in compliance with the Rule if it asks insiders to write reviews of your products/services, so long as they disclose their relationships to the company in the reviews. However, the disclosures must be “clear and conspicuous.” Also, if the reviews materially increase the average star rating of a product/service, the business could be violating the FTC Act even with such disclosures, because consumers might see only the star rating and not look at the individual reviews. See, e.g., Endorsement Guides 16 C.F.R 255.5(b)(6)(ii).
When a disclosure is required, it has to be “clear and conspicuous.” The definition of that term says that the disclosure needs to be “unavoidable.” What does “unavoidable” mean? “Unavoidable” is an objective standard that turns on whether consumers could have avoided the disclosure. The Rule’s “clear and conspicuous” definition says that a disclosure is avoidable when “a consumer must take any action to see it.
Can a hashtag be a “clear and conspicuous” disclosure? If so, can it be a short one like “‘#Ad”? Maybe. Depending upon their wording and appearance, hashtags can be clear and conspicuous disclosures for purposes of the rule. Whether “#Ad” would be adequate depends on the specific context. For testimonials in social media, it could work at the beginning of a text-only post, as readers are more likely to see it there, but it may be too easy to miss in a video post. In general, disclosures can indeed be short and simple. The only provision for which the “clear and conspicuous” definition is relevant is Section 465.5, which addresses the failure to disclose insider relationships. An adequate disclosure could be the testimonialist’s description of a product as “my company’s” or “my wife’s company’s.”
Note: Would using a platform’s built-in disclosure tool make the disclosure clear and conspicuous? Not necessarily. Some of these tools may generate inadequate disclosures that are fleeting, too hard to read because of poor contrast or small size, or placed in locations too easy to miss.
Takeaway: In conjunction with the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, the FTC aggressively investigates and enforces false and misleading review practices and testimonials. The Rule on the Use of Consumer Reviews and Testimonials prohibits certain practices identified as unfair or deceptive in the updated Endorsement Guides. Unlike the Endorsement Guides, violations of the Rule carry specific consequences (for example and without limitation, civil monetary penalties). The Guides address a broader range of conduct than the Rule and set forth general principles relating to the use of endorsements/testimonials in advertising.
Marketers and agencies should consult with experienced digital marketing counsel and implement written compliance and training policies.
Competition Currents | April 2025
In This Issue1
United States | Mexico | The Netherlands | Poland | Italy | European Union
United States
A. Federal Trade Commission (FTC)
1. FTC staff reaffirms opposition to proposed Indiana hospital merger.
On March 17, 2025, the FTC advised the Indiana Department of Health to deny the merger application of Union Hospital, Inc. (Union Health) and Terre Haute Regional Hospital, L.P. (THRH). According to the FTC’s comment letter, this second attempt to merge under a proposed certificate of public advantage (COPA) has the same anticompetitive harms as their original application. The FTC warned that the merger poses substantial anticompetitive risks, such as higher healthcare costs for patients and lower wages for hospital workers. In September 2024, the FTC issued a similar letter opposing the same parties’ proposed COPA, which the parties later withdrew in November 2024.
2. FTC launches joint labor task force to protect American workers.
A newly established Joint Labor Task Force as of Feb. 26, 2025, consisting of the FTC’s Bureau of Competition, Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning, will focus on identifying and prosecuting deceptive, unfair, and anticompetitive labor-market practices that negatively impact American workers. The task force will also work on developing information-sharing protocols between the FTC’s bureaus and offices to exchange best practices for investigating and uncovering such practices, as well as promoting research on harmful labor-market issues to guide both the FTC and the public. The FTC chairman created the Joint Labor Task Force to streamline the agency’s law-enforcement efforts and ensure labor issues are prioritized in both consumer protection and competition-related matters.
3. FTC approves final order requiring building service contractor to stop enforcing a no-hire agreement.
The FTC, on Feb. 26, 2025, has finalized a consent order that mandates Planning Building Services and its affiliated companies to cease enforcing no-hire agreements. In January 2025, the FTC filed a complaint against Planned Building Services, Inc., Planned Security Services, Inc., Planned Lifestyle Services, Inc., and Planned Technologies Services, Inc., collectively known as Planned Companies (Planned). The complaint claimed that the companies used no-hire agreements to prevent workers from negotiating for higher wages, better benefits, and improved working conditions. Under the final consent order, Planned must stop enforcing no-hire agreements, both directly and indirectly, and must not inform any current or potential customer that a Planned employee is bound by such an agreement. The order also requires Planned to eliminate no-hire clauses from their customer contracts and notify both customers and employees that the existing no-hire agreements are no longer enforceable.
B. U.S. Litigation
1. D’Augusta v. American Petroleum Institute, Case No. 24-800 (U.S. Mar. 31, 2025).
On March 31, 2025, the U.S. Supreme Court refused to take up a putative class action alleging that the governments of Russia, Saudi Arabia, and the United States entered into an anticompetitive agreement in 2020 to cut oil production. According to the lawsuit, the multinational agreement arose during the height of the COVID-19 pandemic, when oil prices declined substantially due to decreased demand. In dismissing the case, the Ninth Circuit held that any alleged agreement between foreign nations and the U.S. government were matters of foreign policy and therefore outside of the judicial branch’s jurisdiction. As is tradition, the U.S. Supreme Court did not issue a separate opinion explaining its reasons for refusing to consider the appeal.
2. Dai v. SAS Institute Inc., Case No. 4:24-cv-02537 (N.D. Cal. Mar. 24, 2025).
On March 24, 2025, the Honorable Judge Jeffrey S. White dismissed allegations brought against SAS Institute, Inc., the creator of an artificial intelligence algorithm that others allegedly used to fix hotel prices. According to the complaint, subsidiary IDeaS Inc. licensed SAS’s software to various hotel chains, whom plaintiffs claim used the algorithm to set increased room rates nationwide. While Judge White did not issue an opinion regarding the remaining defendants’ pending motions to dismiss, he stated that at least with respect to SAS, there is no allegation or proof of a direct contract between SAS as a parent company and these hotel chains, and the mere fact that SAS’s software allegedly “powered” the anticompetitive activity was not enough to make it a defendant.
3. State of Tennessee v. National Collegiate Athletic Association, Case No. 3:24-cv-00033 (E.D. Tenn. Mar. 24, 2025).
Also on March 24, a federal district judge in the Eastern District of Tennessee approved the settlement of a class action that four states and the District of Columbia brought against the National Collegiate Athletic Association (NCAA). The states brought the suit on behalf of their respective colleges and universities to challenge the NCAA’s rule that prohibited those schools from marketing potential name, image, and likeness (NIL) compensation to prospective athletes as part of the school’s recruitment. According to the settlement, the NCAA will cease enforcing its existing rules that prevent athletes from learning about or negotiating potential NIL contracts as part of college recruitment.
4. Davitashvili v. Grubhub, Inc., Case No. 23-521 and 23-522 (2d Cir. Mar. 13, 2025).
On March 13, 2025, a divided Second Circuit held that while food delivery service Uber Technologies Inc. could force customers to arbitrate “the arbitrability” of their antitrust claims, a court would decide if fellow defendant and competitor Grubhub Inc.’s antitrust claims were subject to the arbitration. The appeals arise out of allegations that both Uber and Grubhub require restaurants to agree not to sell food at lower prices than those offered on their platforms, which plaintiffs claim resulted in increased prices to consumers. According to the court, the differing results arise in part because Uber’s terms of service more clearly state that the question of whether antitrust suits are subject to the arbitration clause is itself a question that is left to the arbitrator, whereas Grubhub’s terms of service fail to sufficiently require an arbitrator to determine questions of arbitrability. In a dissenting opinion, the Honorable Judge Richard J. Sullivan disagreed with the majority’s conclusion that claims against Grubhub were “unrelated” to consumers’ use of the app, noting that “what gave Grubhub the market power to commit the alleged antitrust violations” was the very fact that consumers used the app.
Mexico
SCJN endorses COFECE’s fine against Aeromexico; emails were key in the decision.
The Second Chamber of the Supreme Court of Justice of the Nation (SCJN) has ratified the investigative powers of the Federal Economic Competition Commission (COFECE), concluding more than five years of litigation Aeromexico initiated.
The airline had challenged a fine of MEX 88 million ($4.21 million) that COFECE imposed in 2019 for colluding to manipulate airline ticket prices on several routes, affecting more than 3 million passengers. The Second Chamber ultimately confirmed the sanction.
In this and other cases, much of the evidence against Aeromexico was obtained through surprise verification visits, a key tool of COFECE. These visits allow access to the offending companies’ offices to collect crucial physical and electronic evidence that may otherwise be destroyed. During one of these visits, COFECE found emails between airline executives, where, using nicknames, codes, and false email addresses, they allegedly conspired to manipulate prices.
Aeromexico argued before the SCJN that these emails were “private communications” and, therefore, could not be used as evidence. However, the Second Chamber determined that these communications are not protected by the right to privacy and can be used to investigate and sanction monopolistic practices that affect consumers, especially when it comes to commercial communications between companies or their personnel.
The Netherlands
A. Dutch ACM Statements
1. ACM provides guidance for car dealership concentrations.
The Dutch competition authority (ACM) has issued a detailed guideline outlining its approach to assessing mergers and acquisitions within the car dealership sector. This guideline aims to provide clarity to the industry by offering a step-by-step overview of the information car dealerships must submit and the analyses they must conduct when filing merger notifications. The objective is to ensure an efficient and precise evaluation process for both the ACM and the companies involved.
To minimize administrative burdens on businesses, the guideline introduces threshold values. Companies operating below these thresholds need only provide a straightforward market share analysis. For companies exceeding these thresholds, further procedural steps are outlined. This approach is designed to support companies in complying with notification requirements efficiently.
2. ACM may investigate possible violations under the Digital Markets Act.
The ACM now has the authority to investigate compliance with the Digital Markets Act (DMA). This European legislation, in effect since May 2023, aims to foster competition in digital markets and provide better protection for consumers. The DMA imposes obligations on major digital platforms, known as “gatekeepers.” Key obligations for gatekeepers include offering fair terms in app stores, providing businesses free access to their own data, and ensuring interoperability between apps and hardware. The ACM will work closely with the European Commission (“EC”) through joint investigative teams to address these matters.
The ACM is authorized to investigate complaints from businesses facing access issues with these platforms and collaborates with the EC, which holds exclusive enforcement powers under the DMA. Since the Dutch implementation law took effect March 10, 2025, the ACM has gained investigative authority. The ACM encourages businesses to report any difficulties encountered with gatekeepers.
3. ACM investigates the acquisition of Ziemann Nederland by Brink’s and is advocating for a ‘call-in power.’
The ACM has initiated an investigation into the recent acquisition of Ziemann Nederland by Brink’s, a leading player in the Dutch cash-in-transit sector. As a result of the takeover, Ziemann will exit the Dutch market, heightening the ACM’s concerns regarding reduced competition.
Brink’s has stated that the acquisition did not require prior notification to the ACM as the turnover thresholds were not met. However, the ACM is now examining whether the transaction may breach competition laws, including the prohibition on abusing a dominant market position. Furthermore, the ACM is advocating for a ‘call-in power,’ which would enable it to investigate smaller acquisitions that may have adverse effects, even if they fall below the turnover thresholds. Such a measure would enhance the ability to address market power and its associated risks, both at the national and European levels.
B. Dutch Court Decision
Dutch Supreme Court to rule on follow-on claims from a single, continuous breach of European competition law.
The central issue in this case concerns the determination of the applicable law for claims seeking damages resulting from a single and continuous infringement of the European cartel prohibition under Article 101 TFEU, known as follow-on claims. The dispute involves cartel damages stemming from an international cartel of airlines that coordinated prices for fuel and security surcharges between 1999 and 2006. The EC has previously issued fines to the airlines involved, while claims-vehicles Equilib and SCC are seeking compensation on behalf of the affected parties.
Both the lower court and the court of appeals ruled that Dutch law applies to these cartel damage claims under the Unjust Act Conflicts Act (WCOD). The court of appeals held that a single and continuous infringement gives rise to one damages claim per injured party, regardless of the number of transactions that party undertakes. It also noted that the WCOD contains a gap in cases where multiple legal systems could govern a single-damages claim. The court suggested that this gap may be addressed by allowing a unilateral choice of law, in line with Article 6(3) of the Rome II Regulation.
The case is now before the Supreme Court, which is questioning whether the concept of a “single and continuous infringement” should be defined under European Union law or whether this determination is left to the member states’ national laws. The Supreme Court is considering referring a preliminary question to the Court of Justice of the European Union (CJEU). The proposed question seeks to establish whether EU law, particularly the principle of effectiveness, mandates that a single and continuous infringement be treated as a single wrongful act resulting in one damage-claim per injured party, or whether member states are permitted to classify each transaction as separate damages claim.
Poland
A. UOKiK Continuous Enforcement Actions Against RPM Agreements
In the March edition of Competition Currents, we reported on the continued interest of the President of the Office of Competition and Consumer Protection (UOKiK President) in resale price maintenance (RPM) agreements, and the actions taken in the last year. UOKiK’s scrutiny of RPM remains strong and in recent weeks, UOKiK has taken further enforcement actions.
1. Fines imposed on Jura Poland and retailers for coffee machine resale price maintenance.
The UOKiK President has imposed fines exceeding PLN 66 million (approx. EUR 16 million/USD 18 million) on Jura Poland and major electronics retailers for engaging in a decade-long price-fixing scheme regarding Jura coffee machines. Additionally, a top executive at Jura Poland faces a personal fine of nearly PLN 250 thousand (approx. EUR 60 thousand/USD 65 thousand).
According to the UOKiK President, Jura Poland, the exclusive importer of Jura coffee machines, colluded with its retail partners to maintain minimum resale prices, preventing consumers from purchasing them at lower prices. The agreement covered both online and in store sales and extended to promotional pricing and bundled accessories.
Evidence gathered through on-site inspections revealed that Jura Poland was actively monitoring compliance, pressuring retailers to adhere to fixed prices under the threat of supply restrictions or contract termination. The scheme’s communication channels included emails, phone calls, messaging apps, and SMS messages.
The anti-competitive arrangement reportedly lasted from July 2013 to November 2022. The UOKiK President imposed fines of PLN 30 million (approx. EUR 7.1 million/USD 7.7 million) on the owner of one retailer, and of PLN 12.2 million (approx. EUR 2.8 million/USD 3.1 million) on Jura Poland. The other retailers received fines ranging from PLN 6.5 million (approx. EUR 1.5 million/USD 1.6 million) to PLN 10.5 million (approx. EUR 2.5 million/USD 2.7 million).
The decision is not yet final and can be appealed to the Court of Competition and Consumer Protection.
2. UOKiK investigates alleged collusion in agricultural machinery sales.
The UOKiK President has launched two antitrust investigations into potential collusion in the sale of agricultural machinery. The first investigation is focusing on major brands in the industry. The second investigation concerns the Claas brand. Allegations of market sharing and price fixing, which may lead to higher costs for farmers, have been made against 15 companies and two executives.
The UOKiK President suspects that dealers were assigned exclusive sales territories, restricting farmers from purchasing machinery outside the designated areas. Customers who attempted to buy from other dealers may have been redirected or offered less favorable prices. Additionally, businesses allegedly exchanged pricing information to discourage cross-regional sales.
If the UOKiK proceedings confirm competition-restricting agreements, the companies could face fines of up to 10% of their annual turnover, while managers risk penalties of up to PLN 2 million (approx. EUR 479 thousand/USD 517 thousand). Under Polish law, anticompetitive provisions in agreements are invalid. Entities suffering harm as a result of an anticompetitive agreement may also seek damages in civil court.
B. UOKiK imposes fines for obstruction of investigation and dawn raids
Companies failing to cooperate with the UOKiK President may face severe penalties. Under Polish law, non-disclosure of the required information may result in penalties of up to 3% of the company’s annual turnover. Sanctions for procedural violations during proceedings, particularly for obstructing or preventing the conduct of an inspection or search, may be imposed on managers, with a financial penalty of up to 50 times the average salary (approx. PLN 430,000/EUR 103,000/USD 109,000).
Last month, the UOKiK President issued three decisions, imposing a total of PLN 1.1 million (approx. EUR 263,000/USD 284,000) in fines.
Another case concerned suspected bid-rigging in the supply of cooling and ventilation equipment. M.A.S. executives refused to grant UOKiK access to the work phones and email accounts of two employees involved in the case. One employee’s data was submitted with a two-month delay, while the other’s was never provided. As a result, the UOKiK President issued two decisions with fines: PLN 350,000 (approx. EUR 84,000/USD 90,000) on M.A.S. and PLN 50,000 (approx. EUR 12,000/USD 13,000) on its CEO. The fine imposed on M.A.S. was relatively high, amounting to approximately 2% of the company’s turnover, while the maximum possible fine was 3%.
Italy
Italian Competition Authority (ICA)
1. Update of turnover thresholds for concentration notifications.
On March 24, 2025, the ICA increased the first of two cumulative turnover thresholds that determine when preventive notification of concentrations becomes mandatory. This threshold, which concerns the total national turnover generated by all companies involved in a transaction, was raised from EUR 567 million to EUR 582 million. The second threshold, which requires at least two of the involved companies to individually generate a national turnover of EUR 35 million, remains unchanged.
2. New guidelines on applying antitrust fines.
On March 10, 2025, following a public consultation, ICA adopted new guidelines on fines, aimed at enhancing the deterrent effectiveness of its sanctioning activities. The innovations include:
the introduction of a minimum percentage, equal to 15% of the sales value, for price-fixing cartels, market allocation, and production limitation cartels;
the possibility of increasing the sanction by up to 50% if the responsible company has particularly high total worldwide turnover relative to the value of sales of the goods or service subject to the infringement, or belongs to a group of significant economic size;
the possibility of further increasing the fine based on the illicit profits the company responsible for the infringement made; and
the consideration of mitigating circumstances in a case of adopting and effectively implementing a specific compliance program, as well as introducing the so-called “amnesty plus,” i.e., the possibility of further reducing the fine if the company has provided information ICA deems decisive for detecting an additional infringement and falling within the scope of the leniency program.
3. New guidelines on antitrust compliance.
On March 10, 2025, ICA adopted new guidelines on antitrust compliance. In particular, the ICA has introduced:
a maximum reduction of penalties up to 10% – instead of the previous 15% – reserved for compliance programs that have proven to be effective (i.e. if the application is submitted before ICA launches an investigation);
a reduction of up to 5% -instead of 10%- in the case of compliance programs that are not manifestly inadequate, adopted before ICA launches an investigation, provided that the program is adequately integrated and implemented within six months;
a reduction of up to 5% for companies with manifestly inadequate programs or for programs adopted newly after the start of the investigation only in cases where substantial changes have been made after the proceeding’s initiation;
no reduction for companies that repeatedly infringed and that had already benefited from a reduction of the fine for a previous compliance program. Moreover, no reduction will be granted to a repeat offender, already having a compliance program, involved in a subsequent proceeding.
4. ICA investigates Rete Ferroviaria Italiana S.p.A.and Ferrovie dello Stato Italiane S.p.A. for potential abuse of dominant position.
On March 18, 2025, ICA launched an investigation against Rete Ferroviaria Italiana S.p.A. (RFI) and Ferrovie dello Stato Italiane S.p.A. (FS) for an alleged abuse of dominant position, in violation of Article 102 TFEU. According to ICA, access to the national railway infrastructure has been slowed down, and in some cases obstructed, impeding the new high-speed passenger transport operator, SNCF Voyages Italia S.r.l. (SVI)’s entry.
The contested behaviors were implemented in the national railway infrastructure market, in which RFI holds a dominant position due to the legal concession granting (D.M. Oct. 31, 2000, No. 138), the company a legal monopoly over the national railway network. In this case, access primarily concerns the high-speed (AV) network. However, the infrastructure involved in the allegedly abusive conduct also includes part of the railway infrastructure intended for regional and medium-long distance transport services. From a geographical perspective, considering the widespread nature of the access conditions across the entire Italian railway network, the actions in question seem to have a national scope.
The alleged abusive conduct carried out in the upstream market of railway infrastructure appears to have hindered SVI’s entry into the passenger railway transport market on the AV network, which is the downstream market where anti-competitive effects would have occurred. ICA carried out inspection activities at the offices of Rete Ferroviaria Italiana S.p.A., Ferrovie dello Stato Italiane S.p.A., and also at the offices of Trenitalia S.p.A. and Italo – Nuovo Trasporto Viaggiatori S.p.A., as they were considered to have information relevant to the investigation.
European Union
A. European Commission
European Commission drops interim measures proceedings against Lufthansa.
The European Commission has closed its interim measures antitrust proceedings against Lufthansa, concluding that the legal conditions for such measures under Article 8 of Regulation 1/2003 were not fully met. The proceedings aimed to require Lufthansa to restore Condor’s access to feed traffic at Frankfurt Airport, as previously agreed between the airlines.
These interim measures were part of a broader investigation into potential competition restrictions on transatlantic routes involving the A++ joint venture between Lufthansa and other airlines. The investigation, launched in August 2024, examines whether the joint venture complies with EU competition rules.
While the interim measures proceedings have been closed, the European Commission continues its main investigation into the competitive impact of the A++ joint venture on transatlantic routes, including the Frankfurt-New York route.
B. ECJ Decision
A parent company can be sued in its home country for its subsidiary’s antitrust violations in another EU member state.
On Feb. 13, 2025, the Court of Justice of the European Union (CJEU) issued a landmark ruling confirming that a parent company may be sued in its home country for antitrust violations its subsidiary committed in another EU member state. The case concerned a Greek subsidiary, Athenian Brewery SA, which the Greek competition authority had sanctioned for abusing its dominant position. Macedonian Thrace Brewery SA subsequently filed a claim for damages before a Dutch court against both the subsidiary and its Dutch parent company, invoking Article 8(1) of the Brussels I bis Regulation. This provision allows for the joint adjudication of claims when they are closely connected.
The CJEU clarified that a parent company and its subsidiary may be regarded as forming a single “economic unit,” thereby justifying both joint liability and international jurisdiction. Furthermore, the CJEU reaffirmed the existence of a rebuttable presumption that a parent company exercises decisive influence over its subsidiary if it holds nearly all of the subsidiary’s shares. This presumption is significant for determining both liability and jurisdiction, provided the claims are substantively interconnected and the risk of contradictory judgments is mitigated.
This ruling carries implications for competition law enforcement within the EU. Aggrieved parties are now able to pursue damage claims in the parent company’s jurisdiction, even if the subsidiary committed the antitrust infringement in another member state. However, national courts must ensure that the conditions for establishing international jurisdiction have not been artificially created, while also allowing the parent company the opportunity to rebut the presumption of decisive influence.
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.
Holly Smith Letourneau, Sarah-Michelle Stearns, Alexa S. Minesinger, Miguel Flores Bernés, Valery Dayne García Zavala, Hans Urlus, Dr. Robert Hardy, Chazz Sutherland, Robert Gago, Filip Drgas, Anna Celejewska-Rajchert, Ewa Głowacka, Edoardo Gambaro, Pietro Missanelli, Martino Basilisco, and Yongho “Andrew” Lee also contributed to this article.
A New Chapter in FCPA Enforcement: State Attorneys General Take Action to Enforce Violations
In a significant shift, California’s Attorney General announced his intention to enforce violations of the FCPA by businesses operating in California under the state’s Unfair Competition Law (UCL).
A cornerstone of U.S. anti-bribery and anti-corruption policy, the Foreign Corrupt Practices Act (FCPA) has for decades fallen exclusively to the U.S. Department of Justice (DOJ) to enforce, providing a relatively stable and predictable enforcement environment for corporations and individuals engaged in international business. However, this predictability was upended this past February.
In response to a February 10 executive order temporarily suspending federal enforcement of the FCPA — which prompted the DOJ to review active FCPA matters, postpone trial dates, and, in at least one case, voluntarily dismiss charges — California has moved swiftly to assert its own enforcement authority. On April 2, California Attorney General Rob Bonta issued a legal advisory signaling his office’s intent to enforce FCPA violations under California’s Unfair Competition Law (“UCL”) — the federal government’s temporary pause notwithstanding.
Specifically, the advisory explains that the FCPA continues to impose binding obligations on California businesses and that violations of the statute may give rise to liability under the UCL, which prohibits “unlawful, unfair, and fraudulent business acts and practices.” Cal. Bus. & Prof. Code § 17200 et seq. The UCL’s broad reach allows the Attorney General to “borrow” violations of other laws, including federal statutes like the FCPA, and pursue them as independently actionable violations under state law. The advisory underscores the range of remedies available to the California Attorney General in such cases, including civil penalties, restitution, injunctive relief, and disgorgement of ill-gotten gains.
State-Level FCPA Enforcement: California at the Forefront
While California is currently leading the way, the question remains whether other states will adopt a similar approach. Several factors suggest this could be the beginning of a broader trend:
1. State attorneys general have increasingly positioned themselves as active enforcers in the face of shifting federal priorities.
This is particularly true when those shifts touch on matters of consumer protection, public integrity, and corporate accountability.
2. Many states possess statutes analogous to California’s UCL.
Commonly referred to as Unfair and Deceptive Acts and Practices (UDAP) laws, these provide state-level enforcement mechanisms against a broad range of unlawful or deceptive business practices. Some UDAP laws, such as New York’s General Business Law § 349, require a showing of consumer harm, while others (such as California’s UCL) allow enforcement actions without the need to demonstrate direct consumer injury. Enforcement authorities in states with laws similar to California’s UCL are well-positioned to leverage them against conduct traditionally addressed under the FCPA.
Whether other state attorneys general will follow California’s lead remains to be seen, but the shifting enforcement landscape demands careful attention, as scrutiny from state-level enforcement may soon fill the gaps left by the DOJ’s recalibrated approach.
3. Unlike the FCPA, private litigants have an independent, private right of action under California’s UCL that empowers them to bring civil actions — suggesting the potential viability of leveraging FCPA violations as the predicate misconduct for UCL claims.
Indeed, Attorney General Bonta’s Advisory and accompanying press release may serve as such a signal to the UCL plaintiffs’ bar. This prospect may be particularly attractive in the current enforcement climate, where some federal FCPA actions are temporarily paused or dropped altogether.
Under the UCL, private plaintiffs who can demonstrate that they have “suffered injury in fact and lost money or property as a result of unfair competition” may pursue claims for relief if they can meet the necessary standing requirements, including demonstrating that an economic injury was causally linked to the alleged misconduct. But in certain circumstances, companies with international operations may be face significant financial exposure associated with alleged FCPA/UCL violations.
Against this backdrop, the most immediate and obvious targets for California state enforcement are likely to be companies with operations in California that were previously charged in federal FCPA cases but are now seeing their matters dismissed following DOJ’s ongoing review. In addition, any “whistleblower” allegations of foreign bribery may now grab the attention of state enforcement authorities.
Fragmented Authority and the Future of FCPA Enforcement
While California’s legal advisory signals a new direction for FCPA enforcement at the state level, the practical realities of international anti-corruption investigations raise significant questions about the scope and effectiveness of such efforts.
Unlike the DOJ, state attorneys general lack dedicated federal investigative resources such as the FBI and typically do not maintain established channels of communication and cooperation with foreign law enforcement agencies. These structural limitations could pose serious challenges for state-led enforcement of complex, cross-border bribery schemes.
At the same time, the federal enforcement landscape is also shifting. Under recently revised DOJ policy, each of the 94 U.S. Attorneys’ Offices throughout the country now have greater authority to initiate and prosecute FCPA-related matters without the need for oversight or direct involvement from DOJ’s Fraud Section, provided the conduct can be framed as “foreign bribery that facilitates the criminal operations of Cartels and Transnational Criminal Organizations (TCOs).”
Takeaways
This development marks a significant shift in the FCPA enforcement landscape, particularly in light of the current administration’s recent pronouncements and policies limiting federal enforcement of the statute. In this evolving environment, companies would be well-advised to reassess their anti-corruption compliance programs to ensure they account not only for federal enforcement risks, but also for the growing likelihood of state-level investigations, enforcement actions, and private causes of action.
The Non-Compliant Cat in the Hat
So, just before Easter, in 1957, a little book you may have heard of, called The Cat in the Hat, made its first appearance. Theodore Geisel — writing under the name “Dr. Suess” — later said that of all his children’s books, he was proudest of this one, because “it had something to do with the death of the Dick and Jane primers,” which he thought would bore any child to tears. In honor of this occasion, here are a few “fun facts” about the book that has taught millions of children how to read:
Geisel was given a word list by his publisher and told that he needed to work them into his book. He was so frustrated with this approach that he decided to scan the list and instead create a story based on the first two words he saw that rhymed, which were “cat” and “hat.”
The Cat in the Hat has been translated into 12 languages, including Latin, where it bears the title “Cattus Petasatus.”
In 1999, the U.S. Postal Service issued a stamp featuring the Cat in the Hat.
The NY Public Library’s list of “Top 10 Checkouts of All Time” shows The Cat in the Hat as number 2. But we imagine it would be ranked number 1 if Dr. Suess had stuck with his original text, which was titled …
The Non-Compliant Cat in the Hat
Work was all dreary, meetings set for all day,As we reviewed Outlook, grayed out all the way.I sat there with Sally, we sat there, we two.And I said, “How I wish we had something better to do!”
But with meetings and Zoom all we could do was to
Sit!Sit!Sit!Sit!
And these interns did not like it, not one little bit.
And then … something went BUMP!How that bump made us jump!We looked! And what we saw was better than our Slack chat!We looked! And we saw him! The Non-Compliant Cat in a Hat!
The hat was all crazy, it had slogans galore!That made fun of our procedures, and said “Compliance’s a snore!”And “internal controls, are great, for do-nothing bores!”And “training is worse than fourteen bedsores!”
And he threw the door aside, it clanged with a bang,In strutted a Cat with that hat that just sang!“Hello, my dear interns! Why so glum and so sad?I’ve come to bring fun, let’s make this less drab!”
Sally looked at the Cat with a skeptical stare,“Who are you, and what’s with that hat and that hair?”“Oh, I’m the Cat, and I’m here to have fun!Forget all the rules; let’s get this day done!”
But just then, from a bowl on the corner desk bright,Swam a Fish in a bowl, trying to bring compliance to light.“Please listen to me! Don’t let chaos unfold!The rules are important, their value is gold!”
But the Cat just laughed, waving a paw in the air,“Who’s heard of a CCO Fish? And why should we care?”There’s so many fun things, let’s send out this contract,To send goods to Iran, we won’t tell OFAC!”
“Compliance screening, well we’ll steer clear of that,And play a good game, it’s called ‘Let’s Ship It Fast!’We’ll send our great goods, to any place that will buy —Even to Iran, where demand’s flying high!”
The Fish started gasping: “You’d cause us much pain,Such shipping’s forbidden, compliance down the drain!Sanctions and penalties, fines and disgrace,If we follow your tricks, it’s jail we’d face!Hey! You two interns, can’t you see what’s at stake?If you follow this Cat, big trouble you’ll wake!”
“Oh, Fishy, relax! You’re such a drag,All you care about is waving the compliance flag!If you’re so scared of OFAC, let’s play ‘Let’s Bribe with a Fish,’In some places, it’s harmless, and really delish!”
But the Fish would not have it, his voice was quite stern,“Now, Cat, that’s a violation, and work we should spurn!Anti-corruption rules are clear, offering fishy quid pro quo,Could cause us all trouble, if about it we know!And what do you mean, when you say ‘its delish?’I especially dislike bribes that involve eating this Fish!”
“Have no fear!” said the Cat, “there’s so much we can do!If we are not stuck in the compliance glue!Let’s skip the audits! Who needs those old things?And trade secrets? Hacking’s fun, let’s see what that brings!Who needs policies, forms, and approvals galore?I’ll say it again, compliance’s a bore!”
And the Cat, then he said, “silly Fish, don’t be mad —I just want to show them some fun to be had!How about a game? We’ll call it ‘Price Fixing Fun!’We’ll chat with competitors to help everyone!How silly it is, to keep our prices so low,When a chat or a call could make profits grow!”
But the Fish swam around in his bowl, oh so fast,This new game made the CCO Fish quite aghast!“Antitrust law says ‘No way! Conspiring’s forbidden today!’You will all land in jail, price fixing’s illegal per se!”So, Cat, take your tricks to some other place!Your understanding of compliance is very off-base!”
But the Cat was undeterred, by our compliance construct,As he hopped and he jumped onto our Code of Conduct.“Look at me! Look at me! Look at me NOW!Non-compliance is fun, but you have to know how!”
“I can ship controlled goods, use a license that’s fake,Waiting for BIS, that would make my mind ache!I can cook these books! Hide agents all on the take!Accounting accuracy is for nerdy fruit cakes!”
“From your Code of Conduct, I can jump on this desk!Your mindless compliance, I find quite grotesque!I can bribe with aplomb, the hot line I’ll finesse!But that is not all. Oh, no. That is not all, I guess ….”
That is what the Cat said … then he fell on his head!Knocking off his hat, on the Code of Conduct he went!He knocked down the Fish, who fell into a pot!Who said, “Would HR approve Fish assault, no they would not!”
“Now look what you did,” said the Fish to the Cat.“Our compliance’s a mess, we’ll never get it back!You’ve bribed everyone, conspired to fix prices, too!Shipped goods to Iran, flushed our controls down the loo!”You SHOULD NOT be here, undermining our compliance, so true,It helps us control risk and makes sure fines don’t accrue!”
“You’ve crossed too many lines!” cried the Fish with despair,“Of our published red flags, you were never aware!The auditors are coming, and they won’t be so nice!You followed no rules, now you’ll pay a great price!”
“But I like to be here. Oh, I like it a lot!”Said the Cat who loves hats, to the Fish in the pot.“I will NOT go away. I do NOT wish to go!And so,” said the Cat, “so, so, so ….”
“I will show you another good game that I know!”
And then he ran out, he practically flew,Then he came back, with compliance gurus!“Now look at this trick,” said the Cat, with a grin,Let’s play one last game, called ‘Comply and We Win!’”
“The compliance gurus, named Risk One and Risk Two,Know compliance failures are things that could bite you.These compliance gurus, with their suits oh-so-neat,For controlling risk, their controls can’t be beat!”
And Sally and I, did not know what to do.So we had to shake hands, with Risk One and Risk Two.But CCO Fish said, “No! No! Those gurus, please make them flee,Risk is managed through our controls, and should always be!”
“Have no fear, little Fish,” said the Cat with the Hat.“Let Risk One and Risk Two work,” and he gave them a pat.“You will see they will say, what I did was not bad,Sure I skirted some rules, but you’ll see they’re not mad!”
But what they next said, turned the Cat’s words right on their head,As they surveyed the damage, they put his non-compliance to bed!“You see,” said Risk One, “This Cat’s right out of line!No checks, no controls, compliance far from divine!”And Risk Two added, “This Cat needs training, that much is clear!Policies are great, but only if everyone adheres!”
The Cat looked remorseful, his fun now all gone,And he stared at his Hat, that started the non-compliance run.He took a deep breath, as realization it dawned,That controlling risk, is everyone’s bond.“Let’s fix all the chaos, I now see what I’ve done,It never works out, doing compliance end runs!”
Then the CCO Fish said, “Look! Look!” And our Fish shook with fear,“The auditors are coming! They are on their way here!Oh, what will they do to us? What will they say?Oh, they will not like finding compliance circumvented this way!”
“So, DO something! Fast!” said the Fish. “Do you hear!I saw them. The auditors! The auditors are near!So, as fast as you can, think of something to do!Do your best, Risk One and Risk Two! Show you’re compliance gurus!”
So Risk One and Risk Two, moved at a fast pace,To reassert compliance, from last to first place!“You can’t ship to Iran!” Risk One said with a frown,“That’s OFAC’s rule, so let’s break it all down.”Risk Two wagged a finger, “No bribing with fish!With or without lemon, let’s cancel that wish!”
They sorted each paper, they checked every box,They tightened procedures, secured every lock.“Compliance,” they chanted, “is here to stay!We’ll make sure this company acts the right way!”Then Risk One and Risk Two, well they dragged out the bad Cat,Who barely managed to first grab his sad hat.
Then the auditors came in, and they said to us two,“Did you work very hard? Tell me. What did you do?Did you follow our controls, compliance earning all plaudits,What will we find, if we do a quick audit?”
And Sally and I did not know, what to say, what to do.Should we tell the things, that today we did do?Should we tell them about it? Now, what SHOULD we do?
Well … what would YOU do, if the auditors asked YOU?
Trump Administration Issues America First Investment Policy
Positive Development for Investors from Allied Nations
In a further solidification of the Administration’s efforts to isolate identified adversaries and strengthen U.S. leadership key strategic technologies, the Administration issued the America First Investment Policy Memorandum with the stated aims to maintain the country’s “open investment environment” towards allies and partners, while also protecting it from “new and evolving threats” arising from foreign adversaries. Id.
The policy comes in the context of prior actions that have curtailed certain outbound investment, including the Biden Administration’s Executive Order 14105 and the final regulations issued on October 28, 2024, targeting outbound investment in specific technologies and products in “countries of concern” (mainly, the People’s Republic of China (PRC), The Special Administrative Region of Hong Kong, and The Special Administrative Region of Macau). For more information, see U.S. Department of the Treasury issues final regulations implementing Executive Order 14105 Targeting Tech Investment in China – Insights – Proskauer Rose LLP.
America First Investment Policy aims to expand the scope of the Outbound Investment Security Program by outlining more intensive and aggressive restrictions on so-called “foreign adversaries or threat actors”, while also facilitating investment by “United States allies and partners” in the interest of ensuring continued U.S. leadership in the development of artificial intelligence and other emerging technologies.
The following key strategies and tools outlined in the policy are noteworthy:
Facilitators to U.S. “allies and partners”:
The loosening of restrictions on foreign investors’ access to U.S. assets where investors can establish a sufficient lack of ties to “the predatory investment and technology-acquisition practices of the PRC and other foreign adversaries or threat actors”;
The creation of an expedited “fast-track” process to facilitate greater investment from allied and partner sources in U.S. businesses involved with U.S. advanced technology and other important areas;
The expedition of environmental reviews for any investment over $1 billion in the U.S.;
Obstacles to “foreign adversaries”:
The reduction of exploitation of public and private sector capital, technology, and technical knowledge by foreign adversaries such as the PRC;
The restriction of PRC-affiliated persons from investing in U.S. technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors;
The use of legal instruments to further deter U.S. persons from investing in the PRC’s military-industrial sector and the review of Executive Order 14105.
General strategies:
The cease of the use of overly bureaucratic, complex, and open-ended “mitigation agreements” for U.S. investments from foreign adversary countries, with more administrative resources being directed toward facilitating investments from key partner countries;
The welcoming and encouragement of passive investments from all foreign persons;
The consideration of new or expanded restrictions on U.S. outbound investment in the PRC in sectors such as semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy;
The review of whether to suspend or terminate the 1984 United States-The People’s Republic of China Income Tax Convention;
The determination of whether adequate financial auditing standards are upheld for companies covered by the Holding Foreign Companies Accountable Act;
The revision of the variable interest entity and subsidiary structures used by foreign-adversary companies to trade on U.S. exchanges;
The restoration of the highest fiduciary standards as required by the Employee Retirement Security Act of 1974, seeking to ensure that foreign adversary companies are ineligible for pension plan contributions.
The Policy is to be implemented through the actions of agents such as the Secretary of the Treasury, in consultation with fellow Secretaries and heads of other executive departments and agencies, as well as the Administrator of the Environmental Protection Agency, the Securities and Exchange Commission and the Public Company Accounting Oversight Board.
The policy includes as “foreign adversaries” the PRC (including the Hong Kong Special Administrative Region and the Macau Special Administrative Region); the Republic of Cuba; the Islamic Republic of Iran; the Democratic People’s Republic of Korea; the Russian Federation; and Venezuela. While some of the policy pronouncements will require legislation to move forward, others, such as streamlining of CFIUS reviews with respect to investment from closely allied nations, can be implemented in the short term, saving time and cost in the review process for many investors.
Bridging the Gap: Applying Anti-Money Laundering Techniques and AI to Combat Tariff Evasion
Introduction
In today’s global economy, characterized by complex supply chains and escalating trade tensions, tariff evasion has emerged as a significant threat to economic stability, fair competition, and government revenue. Traditional detection methods increasingly fall short against sophisticated evasion schemes that adapt quickly to regulatory changes. This article presents a compelling case for integrating advanced anti-money laundering (AML) methodologies with cutting-edge artificial intelligence to revolutionize tariff evasion detection. We also examine how established legal frameworks like the False Claims Act and transfer pricing principles from tax law can be weaponized against tariff fraud, and explore the far-reaching implications for commercial enterprises’ compliance programs — including how these tools can level the playing field for businesses facing unfair competition.
The Convergence of TBML and Tariff Evasion: An Untapped Opportunity
Trade-based money laundering (TBML) and tariff evasion operate through remarkably similar mechanisms, creating a natural synergy for detection strategies. Both practices manipulate legitimate trade channels for illicit purposes:
Mis-invoicing: Deliberate falsification of price, quantity, or product descriptions
False Classification: Strategic misclassification of goods under favorable Harmonized System (HS) codes
Value Manipulation: Artificial inflation or deflation of goods’ values
Phantom Shipments: Creation of entirely fictitious trade transactions
This striking overlap presents customs authorities with a valuable opportunity: leverage the sophisticated detection infrastructure already developed for AML compliance to identify and prevent tariff evasion.
TBML Detection Techniques: A Ready Arsenal for Customs Authorities
The AML compliance ecosystem has developed sophisticated techniques that can be immediately deployed to combat tariff evasion:
Advanced Price Anomaly Detection: Statistical modeling to identify transactions that deviate significantly from market norms, historical patterns, and comparable trade flows
Comprehensive Quantity Analysis: Algorithmic comparison of declared quantities against shipping documentation, customs records, and production capacity data
Systematic HS Code Scrutiny: Pattern recognition to flag suspicious classification practices, such as strategic code-switching or exploitation of classification ambiguities
Geographic Risk Mapping: Targeted scrutiny of transactions involving high-risk jurisdictions known for corruption, weak regulatory oversight, or prevalent smuggling
Related Party Transaction Surveillance: Enhanced monitoring of intra-company trades where pricing manipulation is more feasible
Integrated Data Analytics: Cross-referencing multiple data sources to identify inconsistencies that may indicate fraudulent intent
Network Analysis: Sophisticated mapping of business relationships to uncover hidden connections and coordinated evasion schemes
Artificial Intelligence: The Game-Changer in Tariff Evasion Detection
AI dramatically enhances detection capabilities through its ability to process vast datasets, identify subtle patterns, and continuously improve accuracy:
Deterministic AI and Machine Learning
Advanced Anomaly Detection: Supervised and unsupervised learning models that identify subtle deviations from established trade patterns by simultaneously analyzing multiple variables
Multi-factor Risk Classification: Algorithms that dynamically assess transaction risk based on importer history, commodity characteristics, trade routes, and pricing patterns
Predictive Regression Modeling: Statistical techniques that establish expected transaction values and flag significant deviations for investigation
Adaptive Learning Systems: Models that continuously refine detection parameters based on investigation outcomes, ensuring responsiveness to evolving evasion tactics
Large Language Models (LLMs)
Comprehensive Document Analysis: Automated extraction and verification of critical information across diverse trade documentation, identifying inconsistencies that human reviewers might miss
Natural Language Risk Assessment: Analysis of unstructured data sources including news reports, regulatory filings, and industry communications to develop comprehensive risk profiles
Behavioral Pattern Recognition: Identification of suspicious trade patterns that may indicate coordinated evasion strategies
Contextual Trade Analysis: Advanced semantic understanding that can detect mismatches between declared product uses and actual characteristics
Legal Frameworks: Powerful Tools for Enforcement and Competitive Equity
Effective enforcement requires robust legal mechanisms to prosecute and penalize violations:
The False Claims Act: A Powerful but Underutilized Weapon
The False Claims Act (FCA) represents a particularly potent tool in the anti-evasion arsenal, with key advantages that make it especially effective:
Broad Scope of Liability: Importantly, the FCA does not require proof of specific intent to defraud. This means the law covers a spectrum of non-compliant behaviors ranging from simple negligence and mistakes to deliberate fraud, significantly expanding the universe of actionable violations
Whistleblower Incentives: Qui tam provisions that allow individuals with insider knowledge to report violations and share in financial recoveries, creating powerful incentives for disclosure
Treble Damages: Provisions for triple damages that significantly raise the stakes for would-be evaders
Reduced Burden of Proof: Civil rather than criminal standards of evidence, making successful prosecution more achievable
Extended Statute of Limitations: Longer timeframes for investigation and prosecution, allowing authorities to address complex schemes
A Competitive Equity Tool for Businesses
The FCA serves not only as a government enforcement mechanism but as a powerful resource for companies facing unfair competition:
Leveling the Playing Field: Companies that suspect competitors are gaining unfair advantages through tariff evasion can leverage the FCA to prompt investigation and enforcement
Industry Self-Regulation: The qui tam provisions enable industry insiders to report violations, effectively allowing sectors to police themselves
Competitive Intelligence Application: Information gathered through compliance monitoring can help identify and address unfair competitive practices
Market Access Protection: By ensuring all market participants play by the same rules, legitimate businesses are protected from being undercut by non-compliant competitors
Transfer Pricing Principles: Adapting Section 482 to Tariff Contexts*
Transfer pricing principles offer a sophisticated framework for addressing value manipulation:
Arm’s Length Standard: Application of market-based valuation standards to related-party transactions
Comparable Transaction Analysis: Methodologies for establishing appropriate pricing benchmarks
Documentation Requirements: Structured approaches to establishing and documenting fair market value
Burden-Shifting Frameworks: Legal mechanisms that require importers to justify significant pricing discrepancies
Impact on Commercial Enterprise Compliance Programs
The government’s adoption of these advanced detection techniques has profound implications for corporate compliance strategies:
Transformative Effects on Corporate Compliance
Elevated Risk Profiles: Companies face significantly increased detection risk as governments deploy AI-enhanced monitoring, necessitating more robust internal controls
Expanded Documentation Requirements: Enterprises must maintain comprehensive transaction records that can withstand sophisticated algorithmic scrutiny
Proactive Compliance Monitoring: Organizations need to implement their own advanced analytics to identify and address potential issues before they trigger regulatory attention
Cross-functional Compliance Integration: Tariff compliance can no longer operate in isolation but must coordinate with AML, anti-corruption, and tax compliance functions
Strategic Compliance Responses
AI-Enhanced Self-Assessment: Forward-thinking enterprises are deploying their own AI systems to continuously monitor trade activities against regulatory benchmarks
Predictive Risk Modeling: Companies are developing sophisticated models to identify high-risk transactions before filing customs declarations
Transaction Testing Programs: Implementation of statistical sampling and testing protocols to verify compliance across high volumes of transactions
Enhanced Training Programs: Development of specialized training for procurement, logistics, and finance personnel on evasion risk indicators
Third-Party Due Diligence: More rigorous vetting of suppliers, customs brokers, and other trade partners
Competitive Advantages of Robust Compliance
Reduced Penalty Exposure: Companies with sophisticated compliance programs face lower penalties when violations occur
Expedited Customs Clearance: Trusted trader programs offer streamlined processing for companies with demonstrated compliance excellence
Supply Chain Stability: Reduced risk of shipment delays and seizures due to compliance concerns
Reputational Protection: Avoidance of negative publicity associated with customs violations
Strategic Data Utilization: Compliance data becomes a valuable asset for business intelligence and operational optimization
Competitive Intelligence and Market Protection
For businesses concerned about competitors gaining unfair advantages through tariff evasion, these tools offer strategic options:
Market Analysis: Advanced analytics can help identify pricing anomalies that may indicate competitors are benefiting from tariff evasion
Evidence Building: Systematic collection and analysis of market data can help build compelling cases for authorities to investigate
Whistleblower Protection: Companies can establish secure channels for employees or industry insiders to report suspected violations
Regulatory Engagement: Proactive sharing of competitive intelligence with customs authorities can trigger enforcement actions
Industry Collaboration: Formation of industry working groups to establish compliance benchmarks and identify suspicious practices
Challenges and Considerations
Implementing these advanced approaches presents several challenges:
Data Quality and Accessibility: Effective analysis requires comprehensive, accurate data, often from disparate sources
Supply Chain Complexity: Modern trade flows involve numerous intermediaries, complicating transaction monitoring
Cross-Border Cooperation: Effective enforcement requires unprecedented levels of international information sharing
Adversarial Adaptation: Evasion techniques evolve rapidly in response to detection methods
Algorithmic Fairness: AI systems must be designed and monitored to avoid discriminatory impacts on specific countries or industries
Cost-Benefit Balance: Compliance costs must be proportionate to risk and competitive realities
False Positive Management: Systems must be calibrated to distinguish between intentional evasion, negligence, and legitimate mistakes
Conclusion
The integration of AML techniques, artificial intelligence, and established legal frameworks represents a paradigm shift in the fight against tariff evasion. By leveraging these complementary approaches, customs authorities can dramatically enhance detection capabilities while creating powerful deterrents through robust enforcement.
For commercial enterprises, this evolving landscape creates both obligations and opportunities. The expanded scope of FCA liability—covering even negligent errors—demands heightened vigilance in compliance programs. Yet these same tools also offer legitimate businesses powerful mechanisms to combat unfair competition from less scrupulous rivals. Companies facing market distortions from competitors’ tariff evasion now have sophisticated means to identify suspicious patterns and trigger enforcement actions.
As global trade continues to evolve, this multi-faceted approach will be essential to preserving the integrity of international trade systems and ensuring a level playing field for legitimate businesses. Organizations that proactively embrace these changes will not only mitigate regulatory risk but may discover competitive advantages through superior compliance capabilities and the strategic use of enforcement mechanisms to ensure market fairness.
Commercial Division Moves Towards Adopting Additional Initial Disclosure Requirements
While the Commercial Division Rules are closer to the Federal Rules of Civil Procedure than any other set of court rules in New York (including the base requirements of the CPLR), they are far from identical. One area where the Federal Rules and the Commercial Division Rules differ is that the former contain copious initial disclosure requirements, requiring parties to exchange basic discovery at the outset of a case without awaiting a request, while the latter do not.
That may not be the case for much longer. On February 7, 2025, the Administrative Board of the New York Courts issued a request for public comment on a proposal recommended by the Commercial Division Advisory Council (CDAC) to amend Commercial Division Rule 11 “to automatically exchange certain delineated categories of discovery at the outset of any litigation pending before the Commercial Division.” The CDAC’s memorandum in support of the proposal highlights the success of the initial disclosure regime in the federal system. It also notes that, in the absence of initial disclosure requirements in the Commercial Division Rules, individual Commercial Division justices have developed their own, often inconsistent, initial disclosure sub-regimes. According to the CDAC, the proposed amendments to Commercial Division Rule 11 would create “a uniform initial disclosure system applicable to all cases in all courtrooms across the Commercial Division.”
The proposed new initial disclosure requirements are not exactly the same as those under Federal Civil Rule 26(a). Under the Federal Rules, parties must generally exchange at the outset of a case the following information or documents, “without awaiting a discovery request”:
(i) the name and, if known, the address and telephone number of each individual likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment;
(ii) a copy—or a description by category and location—of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment;
(iii) a computation of each category of damages claimed by the disclosing party—who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered; and
(iv) for inspection and copying as under Rule 34 , any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.
Fed. R. Civ. P. 26(a)(1)(A).
Not so in the New York state court system. Currently, the only initial disclosure requirement that litigants in New York state court are subject to is a defendant’s obligation to furnish to the plaintiff, within 90 days of answering the complaint, “proof of the existence and contents of any insurance agreement . . . under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment.” This is a statewide requirement under CPLR § 3101(f), per amendments that came into force in 2022, and not specific to the Commercial Division. Beyond this one requirement, which mirrors the fourth initial disclosure category under Federal Civil Rule 26(a), neither the CPLR nor the Commercial Division Rules contain initial disclosure requirements.
The CDAC’s proposed amendment to Commercial Division Rule 11 would change that. Specifically, it would add a new Rule 11-h that would require three initial disclosures, “without awaiting a discovery request”:
(i) the name and, if known, the address and telephone number of each individual that the disclosing party intends to use to support its claims or defenses, unless such use is solely for impeachment, together with a brief description of the information expected to be elicited from such individual;
(ii) a copy of all documents, electronically stored information, or other tangible things referred to in the pleadings unless they are attached to the pleadings;
(iii) a computation of each category of damages claimed by the disclosing party.
As this language shows, the proposed new initial disclosure requirements are similar, but not identical, to the parallel requirements under Fed. R. Civ. P. 26(a)(1)(A)(i)-(iii). For example, disclosure (ii) under the proposed Commercial Division Rule captures only documents “referred to in the pleadings,” while the parallel federal requirement calls for automatic disclosure of any document “that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment.”
The public comment period for the proposed amendment ended on March 28, 2025, and the reception was mixed. For example, the Managing Attorneys and Clerks Association announced that it neither opposed nor supported the proposal, but expressed concerns about the evidence preclusion, witness identification, and timing requirements of the proposed amendment. In contrast, the City Bar’s Council on Judicial Administration, Litigation Committee and the State Courts of Superior Jurisdiction Committee announced that they outright oppose the proposal, flagging concerns about redundant and unnecessary discovery work for the parties, as well as ways in which the proposal deviates from the federal initial disclosure framework.
Commercial Division practitioners should keep a close eye on the fate of this proposed amendment to Commercial Division Rule 11. If adopted, it could have immediate implications for discovery practice in the Commercial Division.
Foley Automotive Update and the Latest Insights on Tariffs
Special Update — Trump Administration and Tariff Policies
President Trump on April 14 told reporters he was “looking at something to help some of the car companies” regarding tariffs, and noted “they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.” Further details have not been provided and it is unclear if the statements referred to aspects of the executive order imposing a 25% U.S. import tariff on fully assembled automobiles (effective April 3) or the 25% levies on certain major auto parts (scheduled to take effect no later than May 3).
The Canadian government on April 15 announced it will allow automakers to import certain U.S.-manufactured cars and trucks without tariffs, provided the vehicles are compliant with the Canada-U.S.-Mexico Agreement (CUSMA), and companies operating in the nation do not shift their vehicle production out of Canada. Canada had previously imposed a 25% retaliatory tariff on vehicles imported from the U.S. that are not compliant with the CUSMA.
China raised tariffs on all U.S. goods from 84% to 125% effective April 12, and stated that since “American goods are no longer marketable in China under the current tariff rates, if the U.S. further raises tariffs on Chinese exports, China will disregard such measures.” This follows the Trump administration’s implementation of a 125% “reciprocal” duty on many Chinese imports imposed on top of an existing 20% levy on goods imported from China.
China’s decision to impose export restrictions for certain rare earth minerals and magnets has caused shipments to halt at many Chinese ports pending the establishment of a new regulatory system for the materials. This development could impact automotive supply chains and a range of other sectors.
President Trump on April 15 issued an executive order launching a Section 232 national security investigation into the United States’ reliance on imports of processed critical minerals and derivative products. The U.S. is significantly reliant on China for the processing of many types of rare earth metals.
The Trump administration began investigations into imports of certain semiconductors, and the assessment could result in new tariffs.
The European Commission on April 10 announced a 90-day postponement of its plan to implement counter-tariffs on $23 billion worth of U.S. goods, noting the EU preferred negotiations to escalating trade wars.
Six Senate Democrats, along with Sen. Rand Paul (R-KY), on April 8 announced a privileged resolution to force a floor vote over whether to revoke the emergency declaration used as a basis for President Trump’s tariffs. A vote could occur sometime after the Senate returns from a two-week break, according to an update in POLITICO.
U.S. Senators Chuck Grassley (R-IA) and Maria Cantwell (D-WA) on April 4 introduced legislation that would require the President to notify Congress of coming tariffs within 48 hours of such an imposition and congressional approval within 60 days.
U.S. House Rep. Don Bacon (R-NE) on April 7 introduced legislation that would restrict President Trump’s authority to unilaterally impose tariffs. The bipartisan bill has two Republican co-sponsors.
Automotive Key Developments
Automotive News provided overviews of which auto parts and vehicles could be the most susceptible to U.S. import tariffs or Canadian counter-tariffs.
The Wall Street Journal provided updated analysis on the estimated impact of new tariffs on the revenues of the top automakers.
S&P Global Mobility on April 14 downgraded its U.S. new light-vehicle sales forecasts by 700,000 units in 2025, 1.2 million units in 2026, and 930,000 units in 2027 due to their expectation that “persistent, high tariffs” are the “next phase of normal.” Prior to the downgrade, S&P projections published on March 27 indicated U.S. light-vehicle sales could fall to a range of 14.5 and 15 million units annually if tariffs are maintained.
Goldman Sachs lowered its projection for 2025 U.S. new vehicle sales to 15.4 million units, from a previous forecast of 16.25 million units. New vehicle sales in 2026 were revised by 1.1 million units to 15.25 million units.
Anderson Economic Group estimated a U.S. consumer impact of $30 billion would result from the Trump administration’s 25% automotive import tariffs if the duties are maintained for a full year.
New vehicle sales in Canada could decline by 25% in 2025, according to revised projections from the Canadian Automobile Dealers Association (CADA).
The Wall Street Journal referred to Michigan’s economy as “the first victim of Trump’s trade war,” as the state ranks fifth in the nation measured by the size of its imports and exports.
First-quarter 2025 U.S. new light-vehicle sales increased 4.4% year-over-year, and EV sales rose by an estimated 11.4% YOY, as consumers accelerated purchases ahead of the expectation for higher prices due to tariffs.
First-quarter 2025 U.S. vehicle sales were up 17% YOY for GM, 10% for Hyundai, 7% for Volkswagen, 5.7% for Nissan, 5% for Honda, and 1% for Toyota. Sales declined 12% for Stellantis and 1% for Ford.
U.S. House lawmakers introduced several Congressional Review Act resolutions that intend to repeal certain clean-vehicle waivers issued for California under the Biden administration. Senate Republicans are pursuing similar measures.
Governor Gavin Newsom and California Attorney General Rob Bonta announced they have filed a lawsuit to challenge President Trump’s authority to impose tariffs. The New Civil Liberties Alliance filed a separate suit that alleged the President illegally imposed certain tariffs on Chinese goods.
OEMs/Suppliers
Stellantis will temporarily lay off approximately 900 U.S. workers in Michigan and Indiana and idle certain plants in Canada and Mexico to evaluate the effects of the Trump administration’s automotive import tariffs.
Over 6,000 workers in Canada’s auto sector have received temporary layoff notices since President Trump’s tariffs on automobile imports took effect on April 3.
GM on April 3 announced plans to hire hundreds of temporary employees to support increased production of light-duty trucks at its Fort Wayne, Indiana, assembly plant.
Stellantis and Ford are offering employee discount pricing to U.S. consumers, and Hyundai has pledged to freeze its prices until June, amid expectations tariffs will raise prices for new vehicles.
Two European-headquartered suppliers will require upfront payment from their customers to cover the cost of import duties.
European automakers are exploring a range of responses to U.S. import tariffs such as pausing shipments of certain vehicles, shifting production, and raising prices.
BMW, Mercedes-Benz, and Volvo are among the automakers that have indicated they may consider increased production in the U.S. to mitigate the effects of import tariffs.
Nissan halted orders for sales of certain Mexican-built Infiniti SUVs in the U.S. market due to the Trump administration’s automotive import tariffs.
Continental is exploring a separation of its ContiTech industrial unit to focus on its more profitable tire business.
Infineon Technologies AG will acquire Marvell Technology’s automotive Ethernet business for $2.5 billion, in a deal that is expected to expand the German company’s automobile technology capabilities.
Toronto-based ABC Technologies Inc. completed its acquisition of U.K.-based TI Fluid Systems. Rebranded as TI Automotive, the combined entities will have a revenue of $5.4 billion and will be headquartered in Auburn Hills, Michigan.
Market Trends and Regulatory
President Trump directed the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of Nippon Steel’s proposed acquisition of U.S. Steel to determine if “further action” is appropriate. This follows an order prohibiting the acquisition issued by President Biden on January 3, 2025.
Retail sales of passenger cars in China rose 14.4% in March 2025 from a year earlier, according to analysis from the China Passenger Car Association.
U.S. Senator Elissa Slotkin (D-MI) introduced the Connected Vehicle National Security Review Act “to establish a national security review process for imports of internet-connected vehicles and components made by companies from China or other countries of concern.” Slotkin introduced a similar proposal as a member of the U.S. House in 2024, and she indicated the Senate bill would expand upon a Commerce Department final rule that prohibits the import and sale of connected vehicles and related components linked to the People’s Republic of China (PRC) and Russia.
A bipartisan “right to repair” bill was introduced in the U.S. Senate this month, and this follows similar legislation presented in the U.S. House in February 2025.
The cost of car repairs has increased by an estimated 27% in the last three years, and consumers could be impacted by higher repair costs if tariffs on auto parts are imposed in the coming weeks.
Autonomous Technologies and Vehicle Software
Autonomous trucking developer Kodiak Robotics plans to go public in a SPAC deal valuing the company at $2.5 billion.
Self-driving startup Nuro Inc. raised $107 million in a Series E funding round in a deal that is intended to help scale its autonomous driving technology and establish commercial partnerships.
Autonomous tech company Aurora Innovation intends to launch in Texas this month its first self-driving tractor-trailer without an operator.
China may prohibit the terms “smart driving” and “autonomous driving” in certain types of vehicle advertisements amid increased scrutiny in the nation over the safety of advanced driving assistance systems (ADAS), according to a report in Reuters.
Electric Vehicles and Low-Emissions Technology
To align production with demand, GM will temporarily lay off roughly 200 workers at its Factory Zero EV plant in Detroit, and the automaker will pause production of the BrightDrop electric van at its CAMI plant in Ontario.
Tesla stopped accepting orders in China for certain EV models imported from the U.S. following the imposition of China’s retaliatory 125% import tariff on American goods.
Atlas Public Policy estimated that over $7 billion in clean manufacturing projects in the U.S. were canceled in the first quarter of 2025, including over $2 billion for plants dedicated to EV supply chains.
The U.S. is projected to have at least 200,000 high-speed public chargers in place by 2030, down from previous expectations of 400,000, due to the Trump administration’s suspension of federal funding for the installation of charging stations.
Kia is developing an electric pickup truck for the North American market, with a goal of selling 90,000 units annually. The automaker hopes to sell 1.26 million EVs globally by 2030, down from a previous target of 1.6 million.
A Delaware bankruptcy judge approved the sale of Nikola’s Arizona factory and headquarters to Lucid Motors for $30 million.
The European Union is assessing options to replace recently imposed tariffs on Chinese-made EVs with minimum prices for the imported vehicles, according to an update from the European Commission.
Georgia Federal Court Denies TRO and Motion to Dismiss in Trade Secrets Case
On March 27, 2025, in Stimlabs LLC v. Griffiths, the U.S. District Court for the Northern District of Georgia ordered a former executive, Sarah Griffiths, to face claims related to her alleged theft of Stimlab’s trade secrets under the Defend Trade Secrets Act (“DTSA”) and the Georgia Trade Secrets Act (“GTSA”) after denying her application for a TRO.
Background. Griffiths, the regenerative medicine company’s former Chief Scientific Officer, allegedly downloaded thousands of documents containing confidential information and trade secrets after the CEO told her the company was interested in negotiating her departure. These documents allegedly contained, among other things, information regarding future potential products, confidential communications with government agencies, data related to product development and information related to “a product made of donated human umbilical cord, which is applied to, and used in, the management of ulcers, wounds, and similar injuries to the body.” Griffiths allegedly was one of thirteen employees who had special access to the company’s purported trade secrets. According to the company, she was required to sign restrictive covenants as part of her employment agreement, follow the employee handbook, attend and comply with the confidentiality training she received, use best efforts to protect Confidential Information and comply with the company’s Information Security Policy.
Rulings. Following a hearing on August 13, 2024, the company’s motion for a temporary restraining order was denied, as the court found that the company had “not introduced evidence that [Griffiths] accessed [Stimlabs’] documents for any purpose other than to do her job at the time, and the case law is very clear that this does not constitute misappropriation.” However, the court still denied Griffith’s motion to dismiss the complaint, finding that the company sufficiently identified 12 specific examples of trade secrets that purportedly were misappropriated, which were sufficient allegations to state a claim for misappropriation. The court emphasized the allegations that Griffith’s actions violated her employment obligations. In denying the motion to dismiss, the court noted that the complaint the TRO was based on had been amended and now included four exhibits including various agreements and policies that Griffith had allegedly violated. The court also decided not to dismiss the company’s breach of contract claim, despite Griffiths’ argument that the company suffered no damages. The court found that discovery was the best avenue to address this issue.
Implications. This case shows that even though an application for immediate injunctive relief may be denied, there still may be ground to develop claims that were raised in the request for injunctive relief application, and thus a motion to dismiss may not be in order. Here, by amending the complaint and identifying the trade secrets that allegedly were misappropriated, the employer was able to survive a motion to dismiss, allowing the case to proceed. We will continue to follow this case as the litigation progresses.
FTC Issues RFI on Anti-Competitive Regulations
On April 14, 2025, following President Trump’s recently issued executive order addressing regulatory barriers to competition, the Federal Trade Commission (FTC) issued a Request for Public Comment Regarding Reducing Anti-Competitive Regulatory Barriers (RFI).
The RFI asks consumers, workers, businesses, startups, potential market entrants, investors, and academics for comments on federal regulations that may have one of the six anti-competitive effects identified by the FTC. Those enumerated effects include creating or facilitating the creation of monopolies, creating unnecessary barriers to entry, limiting competition, creating or facilitating licensure or accreditation requirements that unduly limit competition, unnecessarily burdening the agency’s procurement process, and imposing distortion on the operation of the free market.
After identifying a regulation with one of the enumerated effects, the FTC requests, essentially, a legal analysis of the basis of the comment. The additional information requested includes:
a citation to the regulation,
the specific language in that regulation that leads to the anti-competitive effect,
an applicable legal authority interpreting the regulation,
an explanation of how the regulation operates (including relevant product and geographic markets affected),
an explanation of why the regulation should be eliminated or modified, and
an explanation of “whether the regulation satisfies the definition of ‘significant regulatory action’ in Executive Order 12866 of September 30, 1993.”
The amount of detailed information requested through the RFI suggests that the FTC will carefully consider industry comments, which may be submitted through May 27, 2025.
Privacy Tip #440 – Text Scam Proceeds Surpass $470M in 2024
I have been getting a lot of texts that are clearly scams, and those around me have confirmed an increase in spammy texts.
According to an FTC Consumer Protection Data Spotlight, individuals lost over $470 million resulting from text scams. The top text scams of 2024 that accounted for half of the $470 million lost by consumers to fake texts included:
Fake package delivery problems;
Phony job opportunities;
Fake fraud alerts;
Bogus notices about unpaid tolls; and
“Wrong number” texts that aren’t.
According to the FTC, actionable ways to help stop text scams include:
Forwarding messages to 7726 (SPAM). This helps your wireless provider spot and block similar messages.
Reporting it on either the Apple iMessages app for iPhone users or Google Messages app for Android users.
Reporting it to the FTC at ReportFraud.ftc.gov.
How can you avoid text scams?
Never click on links or respond to unexpected texts. If you think it might be legit, contact the company using a phone number or website you know is legitimate. Don’t use the information in the text message. Filter unwanted texts before they reach you.
Remember that texts are just like emails and can be used for smishing instead of phishing. Treat them the same—with a healthy bout of caution and vigilance to avoid being victimized.