Lawyers seek to develop novel strategies to address new challenges as the antitrust landscape shifts. A central issue in class action antitrust litigation is determining damages.
A key component of antitrust damages theory is recoupment, which requires the defendant to price below cost to drive out competition. This has shaped antitrust doctrine and the law’s application.
Impact of Antitrust Litigation
Antitrust laws are based on the premise that competition among a broad range of firms provides consumers with the best value and quality. This competition results in lower prices, more variety of products and services, and greater efficiency. It also promotes innovation and drives business to newer and better technology. As such, federal and state antitrust and competition laws prohibit price fixing, supply control, and bid rigging. They also prohibit product tying and monopolization.
Firms often use antitrust as an attack weapon when they believe their competitors are engaging in unfair practices. Although private litigation and challenges to proposed mergers can involve any business industry, antitrust cases most frequently focus on industries that receive significant consumer spending – healthcare, technology, energy, credit cards, and publishing. These cases can be complex, involving allegations of price fixing or other anti-competitive activities.
Class Actions
An antitrust class action is a lawsuit filed on behalf of several similarly situated plaintiffs, known as the “class.” The plaintiffs in a class action sue because the defendant corporation or companies have engaged in certain anti-competitive practices. The antitrust litigation lawyer has extensive experience in merger clearance, cartel investigations, monopolization, and class action defense. If a case is successful in court, the class members receive a share of the monetary settlement. Most private antitrust cases settle before trial, and many involve class actions.
Defending against class action lawsuits requires understanding antitrust law and how it’s evolving. A recent Huntington Bank and UC Hastings’ Center for Litigation and Courts report analyzed empirical information regarding class action filings and resolutions from 2009 to 2021.
The researchers found that class action litigation is on the rise, and it takes an average of four years to settle such suits. The report also examined the types of claims brought in class actions and a breakdown of settlement amounts.
Another research trend highlighted was a significant rise in indirect purchaser class actions. This issue is important for defendants because it could require them to litigate class actions across the country rather than just in a defendant’s home state. It would also affect the amount of damages awarded to class members.
Litigation Against Government Agencies
In addition to private litigation, antitrust disputes occur when a federal or state agency investigates alleged antitrust violations. Premerger notification filings, Congressional inquiries, or other business and consumer letters may trigger such investigations.
The government can impose civil or criminal sanctions against the accused parties when such investigations lead to court cases. The Sherman Antitrust Act of 1890 and the Clayton Act of 1914 are two major civil statutes that protect free market competition by preventing contracts, conspiracies, or acquisitions that would hurt competitors to form monopolies. The FTC is tasked with enforcing laws and examining mergers to ensure they do not hurt competition. Larger firms can use antitrust lawsuits to extract hefty financial settlements from smaller competitors.
Litigation Against Private Parties
Private antitrust litigation is sometimes brought by individuals or companies rather than government agencies. These lawsuits can involve allegations of anti-competitive behavior such as monopoly power, price-fixing, and other types of cartel activity.
The threat of antitrust litigation can deter firms from engaging in harmful behavior. Bringing a lawsuit may be less expensive than defending one. In federal court, a civil action may take over two years to conclude through summary judgment or trial. Moreover, the time to appeal can add another year or more.
While the costs of a civil suit may deter firms from engaging in anti-competitive behavior, they can also motivate firms to pursue antitrust actions to prevent competitors from taking advantage of them. In addition, the threat of antitrust litigation can provide a powerful incentive for firms to cooperate with rivals to avoid such a suit.
Firms can exploit this dynamic in some ways. For example, they can file antitrust suits to sabotage the construction of competitors’ projects or to force those competitors to share information. Such strategic use of the antitrust laws threatens to undermine antitrust’s objectives.
Incentives
While some antitrust supporters argue that competition among sellers gives consumers lower prices, higher quality products and services, and more choices, others believe it can be abused and lead to price discrimination, exclusive contracts, and other anti-competitive practices. However, those who support the law say that antitrust lawsuits can help level the playing field for businesses by ensuring fair market competition.
Aside from class actions, antitrust cases can also be brought against private parties who engage in mergers or acquisitions. In these cases, antitrust agencies may allow the parties to suggest remedies that would eliminate competition concerns to avoid total objections to the merger. Remedies can include structural or behavioral commitments and restrictions. Structural remedies typically involve divestiture of assets, while behavioral remedies can take the form of a promise to deal in a certain way with competitors or customers, not use exclusivity agreements, or maintain certain price levels.
