Territorial Supply Constraints

By Squire Patton Boggs on Posted in supply chain

Please contact Gerard McElwee and Oliver Geiss with any questions

Territorial Supply Constraints (TSCs) refer to a range of practices used by brands and manufacturers that limit where retailers, wholesalers and distributors source their products – for example, preventing them from buying products from outside the country where they operate.

EU competition law does not outright prohibit TSCs, as TSCs are necessary in some situations and indeed can lead to lower prices for consumers. However, the Commission has conducted several investigations into restrictions on cross-border trade, and has taken enforcement action in notable cases. The Commission adopted two decisions prohibiting TSCs in 2024, imposing fines in both cases, and the trend of increased enforcement is continuing; in March 2025, the Commission confirmed that it had conducted unannounced inspections (dawn raids) in the soft drink industry to investigate suspected restrictions on trade between EU member states. In addition to enforcement action, TSCs are increasingly subject to policy initiatives aimed at increasing free trade.

We anticipate that TSCs will remain in focus in the short-to medium-term. Any changes to how TSCs are addressed – including a possible blanket ban, as endorsed by some EU member states – would have a significant impact on operators at all levels of the supply chain from manufacturing to wholesale, distribution and retail, and across all industries (both goods and services).

Copper Crisis?  The Economic Impacts of a Copper Import Tariff

By Shawn Harwood, Amjad Wakil and Jeremy Dutra on Posted in supply chain

On February 25, 2025, President Trump signed an executive order directing the Secretary of Commerce to investigate an alleged national security threat to the copper supply chain under Section 232 of the Trade Expansion Act and to report his findings and remediation recommendations.[1]

Why Copper?

Copper is crucial for defense, infrastructure, electronics, and emerging technologies, making it the U.S. Defense Department’s second-most used material. While the United States maintains significant copper reserves, it only produces half of the refined copper it consumes, making it heavily reliant on foreign suppliers. China controls approximately 50% of global smelting and refining capacity, although the United States sources the majority of its foreign copper from Canada, Chile, and Mexico.[2] This reliance, along with potential foreign market manipulation, is believed to pose a national security risk to America’s supply of raw copper, copper concentrates, refined copper, copper alloys, scrap copper, and copper derivative products.[3] Currently, no tariffs or quotas exist on copper imports.

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Cross-Post from Trade Practitioner – Final Rule Implementing ICTS Supply Chain Executive Order 13873 In Effect

By Squire Patton Boggs on Posted in supply chain, US national security/supply chains

This is a Cross-Post from the Trade Practitioner Blog.

On May 15, 2019, President Trump issued Executive Order 13873 – Securing the Information and Communications Technology and Services Supply Chain (“EO” or “EO 13873”). After taking comments on a proposed implementing rule, the Department of Commerce (“DOC” or “Secretary”), on the very eve of the Biden Administration taking office, issued an Interim Final Rule…… Continue Reading

AirBoss II:  Michigan Court Awards Automotive Supplier $3.5 Million Based On “Unjust Enrichment”

By Janine Little and Sarah Rathke on Posted in supply chain

On December 13, 2024, an Oakland County, Michigan trial court awarded AirBoss Flexible Products Co. nearly $3.5 million dollars on an unjust enrichment counterclaim asserted against MSSC, Inc., a tier one U.S. automotive supplier.[1]  The ruling is the latest in a protracted battle between the two companies, which reached its well-known apex in July 2023 when the Michigan Supreme Court reversed a Court of Appeals opinion holding that blanket purchase orders lacking a written quantity term were unenforceable under the UCC Statute of Frauds.[2]

AirBoss, a supplier of rubber-based products, entered into a contract whereby it would provide MSSC, a supplier of parts for vehicle suspension systems, with components for ultimate use by an OEM.[3]  The agreement between AirBoss and MSSC was set forth in a blanket purchase order that specified the parts to be supplied and the prices, but not the quantity.[4]  The purchase order stated, “If this order is identified as a ‘blanket order’, [MSSC] shall issue a ‘Vendor Release and Shipping Schedule’ to [AirBoss] for specific part revisions, quantities, and delivery dates for Products. . . .”  MSSC would therefore place orders for specific quantities of products through periodic releases as is common in the automotive industry.[5]

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Bipartisan Push to Strengthen American Supply Chains

By C. Bradford Ellison, Shawn Harwood, D. Michael Kaye and Anya Bharat Ram on Posted in supply chain

Members of the Senate Commerce Committee have demonstrated an early bipartisan interest in continuing to promote U.S. supply chain resilience, highlighting an avenue for bipartisanship in the Trump Administration’s foreign policy agenda.

Sen. Marsha Blackburn (R-Tennessee) has partnered with Democratic colleagues as an original cosponsor on the reintroduction of two pieces of legislation aimed at coordinating the U.S. government’s focus on supply chain resilience: the Strengthening Support for American Manufacturing Act (S. 99); and, the Promoting Resilient Supply Chains Act(S. 257).

The Strengthening Support for American Manufacturing Act would require the Secretary of Commerce and the National Academy of Public Administration to produce a report on the effectiveness and management of the Department of Commerce’s various manufacturing support programs. Notably, the report is tasked with identifying relevant offices and bureaus within the Department of Commerce with responsibilities related to critical supply chain resilience, and manufacturing and industrial innovation, and make recommendations on improving their efficiency by identifying gaps and duplicative duties between offices.

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Forced Labor Update & Analysis – Fresh Names for the UFLPA Entity List

By Shawn Harwood, Anya Bharat Ram, C. Bradford Ellison, Ludmilla Kasulke and D. Michael Kaye on Posted in supply chain

I. Background

The Uyghur Forced Labor Prevention Act[1] (“UFLPA”) was enacted to address alleged forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China. The Act relies on a rebuttable presumption that goods were made with forced labor if mined, produced, or manufactured, wholly or in part, in the XUAR or produced by one of 144 organizations currently named to the UFLPA Entity List. As such, these commodities are prohibited from entering the United States pursuant to Section 307 of the Tariff Act of 1930. The UFLPA was signed into law on December 23, 2021 and implemented on June 21, 2022 without regulatory guidance. U.S. Customs and Border Protection (“CBP”) enforces the Act and the multi-agency Forced Labor Enforcement Task Force (“FLETF”) directs its implementation.

II. Enforcement Update

Since June 2022, CBP has detained over 12,500 shipments valued at $3.68 billion, impacting significant quantities and varieties of goods imported from China as well as Malaysia, Vietnam, Thailand, and others. The four most heavily impacted commercial industries are electronics, automotive/aerospace, apparel/textiles, and industrial/manufacturing materials. These sweeping enforcement measures have required companies to examine their global supply chains and operating policies to remediate exposure to UFLPA enforcement.

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Cross-Post From Capital Thinking Blog – EU Publishes Regulation Banning Products Made With Forced Labour

By Squire Patton Boggs on Posted in supply chain

This is a Cross-Post from the Capital Thinking Blog.  Please contact Thomas Delille, Marion Seranne, Ludmilla Kasulke, D. Michael Kaye, Christina Economides or Guillermo Giralda Fustes with any questions.

The Forced Labour Regulation (FLR) was published on December 12, 2024, prohibiting products made with forced labor on the EU market.  The ban—which will begin on December 14, 2027—will apply to any global company that sell products in, or export products from, the EU.  Although the prohibition will not enter into force for nearly three years, companies operating in the EU should begin surveying for potential risks in their supply chains and prepare internal compliance programs.  For more information, including a comparison of the FLR to the U.S. Uyghur Forced Labor Prevention, read the full analysis here.

Metal Surcharges Back in Antitrust Crosshairs

By Oliver Geiss on Posted in supply chain

On 12 December 2024, the Italian antitrust authority has launched an investigation into suspected cartel activity among low-voltage copper cable manufactures. According to the authority, the manufacturers allegedly agreed to standardize surcharges for metal procurement, evading competitive pricing practices as far back as 2005. Furthermore, since 2008, the manufacturers allegedly implemented a unified system, referred to as the “Sales System”, to adjust prices in response to copper cost fluctuations.

The recent raids in Italy add to a growing list of similar investigations involving standardized surcharges. Surcharges are used across many industries. They are often linked to fluctuating prices on global exchanges, allowing manufacturers to automatically adjust prices in response to cost changes. While surcharges are permitted tools for managing input costs, antitrust laws prohibit companies from collectively fixing or aligning surcharge formulas.

For example, in the Airfreight cartel case, that started in 2006, airlines were accused of coordinating fuel and security surcharges to offset external cost increases. In 2017, the German antitrust authority fined industrial battery manufacturers for coordinating lead surcharges, dating back to 2004. More recently, in 2022, Germany’s competition authority raided cable manufacturers over allegations of coordinated metal surcharge calculations. See our blog. In November 2023, the European Commission sent a statement of objections to manufacturers of automotive starter batteries regarding concerns that between 2004 until 2017 starter batteries manufacturers created, published and agreed to use new indices in their price negotiations with car producers.

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Trump Administration: Major Changes May be Coming in the Federal Government’s Posture Toward Electric Vehicles (EV’s)

By Squire Patton Boggs on Posted in supply chain

Please contact Jennifer Tharp, Jennifer Satterfield, Kara-Marie Urban, or Ayah Ighneim with any questions.

Automotive manufacturers, regulators and consumers face considerable uncertainty on how the incoming Trump Administration will attempt to reshape the automotive industry when President Donald Trump returns to the White House on January 20, 2025. Significant changes are on the horizon, with President Trump’s major campaign themes, including protectionist trade policies and an “all of the above” energy policy, reflecting a noteworthy shift from President Biden’s globalist and clean energy platform. As in 2017, President Trump’s approach to economic and environmental issues is near certain to create ripple effects throughout the automotive industry.

Changes may be most pronounced on EV policy – a political lightning rod for Republicans in recent years – despite Tesla CEO Elon Musk’s role in the upcoming Trump Administration. Future proposals are likely to further President Trump’s promises to eliminate government incentives for EV manufacturing and purchases, with the aim of tipping the scales back in favor of gas-powered vehicles, and the oil industry.

Read the full insight here to learn more about these initiatives.

Where Are My Chips?

By Squire Patton Boggs on Posted in Legal Analysis

Please contact Tim Flamank with any questions.

If you subscribe to the view that Artificial Intelligence (AI) is going to change life as we know it, then you will have a vested interest in the semiconductor industry. Semiconductors, or chips, are the workhorses behind AI and nearly every modern digital technology. Chips are so vital that they have been described as the “oil of the 21st century”, turning companies like Nvidia and TSMC (leaders in advanced chip design and manufacturing respectively) into household names.

It is therefore surprising that the supply chains underpinning this crucial component remain some of the most precarious.

Key risks include:

  • Chip manufacturing remains a highly globalised activity, despite recent initiatives by governments to “onshore” more of the supply chain.
  • Key stages of the production process are geographically concentrated. Localised disruption can therefore have global ramifications for supply, demand and pricing dynamics.
  • Global supply and demand can be volatile. While some companies, like Nvidia, have benefited from strong demand, other parts of the industry have seen oversupply. The long-term growth potential of key demand drivers, such as AI, is still uncertain.
  • Governments employing more muscular trade policies, for example through export controls and sanctions.

It is fair to say that chips increasingly resemble a commodity. As disputes lawyers, we deal in the legal mechanisms and frameworks which have developed to respond to disruptions in similar markets. The purpose of this article is to consider how, from an English law perspective, some of these concepts may apply to contractual arrangements in the chip sector. In so doing, we hope to show the practical value that advanced thinking about potential disruption can bring.

Most people will be familiar with the concept of force majeure. We have written about its potential applicability to chip contracts in the past. Force majeure clauses generally operate to release contractual parties from their obligations upon the occurrence of certain disruptive events, for example extreme weather or war.

Read the full insight here.

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