SAN FRANCISCO – A San Diego salt company has lost an appeal in a California court in an antitrust claim against a Mexican salt producer owned partially by the Mexican government and a Japanese company.
Sea Breeze Salt Inc., along with Innofood, S.A. of Mexico filed the appeal in courts after the U.S. District Court for the Central District of California dismissed their case against Exportadora de Sal, S.A. de C.V. (ESSA) and Mitsubishi Corp.
The U.S. Court of Appeals for the 9th Circuit ruled on Aug. 15 to uphold the lower court's dismissal of the antitrust case, stating it is barred by the act of state doctrine.
Sea Breeze claims that ESSA breached a 2014 contract agreement with Innofood for the distribution of solar sea salt.
"ESSA then refused to honor multiple purchase orders issued by Innofood under the distribution contract. ... As a result of the breach of contract, Sea Breeze was unable to fulfill deals it had in place with purchasers in the United States," the ruling states.
The original suit also states that “'[f]or decades, Mitsubishi has enjoyed a monopolistic stranglehold on ESSA’s solar sea salt production, distribution, and sales.' That is, ESSA sold its salt exclusively to Mitsubishi."
According to the ruling, ESSA is a Mexican salt production corporation which is 51-percent owned by the government of Mexico, and Mitsubishi Corp., a Japanese entity, holds the remaining ownership interest in ESSA.
"ESSA is the world's largest producer of solar sea salt and produces 90 percent of Mexico’s salt exports. This amounts to almost 17 percent of the total global output of salt," the ruling states.
In its claim, Sea Breeze alleged that ESSA's alleged decision to sell its salt exclusively to Mitsubishi is an illegal restraint of trade in violation of the Sherman Act, adding that the company intentionally interfered with contractual relations under California law.
The court said that the choice to deal with Mitsubishi is a sovereign act.
"Under Mexico’s Constitution, 'the government of Mexico is the only entity that may own and exploit the country’s natural resources,' including by 'creat[ing] organizations that manage and distribute these resources.' ... Sea salt is explicitly included within the list of natural resources that the Mexican Constitution commits to state ownership."
"We see no meaningful distinction between granting a foreign company an exclusive concession to extract salt—which plaintiffs appear to concede would be a sovereign act—and extracting that salt through a government-owned company under a policy by which the entire output is sold exclusively to one buyer," Judge Kim McLane Wardlaw wrote in the ruling.