Makan Delrahim ‘Merricks v MasterCard: ‘Passing On’ the US Experience’ (2020) Competition Policy International, May Column

Over the past few years, in addition to cooperating with international counterparts in many cases, the DoJ has made efforts to further common understandings on a variety of substantive and procedural antitrust issues. Developments in competition law, both substantive and procedural, can be driven by courts, particularly in countries that allow for private antitrust enforcement in the form of class actions. The upcoming decision of the UK Supreme Court in Merricks v. MasterCard is of interest to competition enforcers around the world because it involves novel questions on the proper approach to certification of an opt-out collective action — akin to a class action in the United States — brought by indirect purchasers. This essay, available here, aims to share the United States’ experiences confronting similar questions to those faced by the UK Supreme Court in this case – in particular, how the class representative can show “a realistic prospect of establishing loss on a class-wide basis,” and what should…

Michael D. Hausfeld, Irving Scher and Laurence T. Sorkin ‘In Defense of Class Actions: A Response to Makan Delrahim’s Commentary on the UK MasterCard Case’ (2020) Competition Policy International June

This article, available here, was written by lawyers of a US firm that is, in its own words, a ‘global leader on claimant focused competition damages practice’, enabling victims of anticompetitive conduct to obtain damages for harm suffered. This law firm acts for an intervenor, the Consumers’ Association, in the UK MasterCard proceedings that led to the US DoJ sending a letter to the UK’s Supreme Court. This piece is – as the title indicates – a reaction to that letter. The paper begins by framing the issue. The DoJ AAG’s letter to the UK Supreme Court provides an overview of class actions in the US. The authors agree with the general overview of Rule 23 provided by the Division. For example, few would argue with the proposition that, in the antitrust context, indirect purchaser class actions raise more difficult questions of commonality, impact, and manageability than direct purchaser class actions, even though harm may have been sustained at both…

Case review of Apple v. Pepper  Harvard Law Review (2019) 33 382

Since Illinois Brick, standing to sue for violation of US federal antitrust law has been reserved exclusively to those parties who purchased directly from price-setting monopolists or cartelists. Indirect purchasers, who transacted with these direct purchasers rather than with the monopolist itself, had no standing, even if the direct purchaser “passed on” the full cost of the monopolistic overcharge to them in the form of higher prices. The Court prohibited these pass-through arguments because it judged itself ill suited to efficiently determine what parts of an overcharge are passed on at any given stage in the chain of distribution. The Court also worried that allowing pass-through arguments would undermine deterrence, as indirect purchasers, who could not sue as effectively as direct purchasers, would be able to claim a portion of what would previously have gone to direct purchasers in a successful suit. Last year, however, the Supreme Court in Apple v Pepper held that app purchasers could sue Apple for…

Herbert Hovenkamp ‘Apple vs. Pepper: Rationalizing Antitrust’s Indirect Purchaser Rule’ (2020) Columbia Law Review Forum 120(1) 14

The simplest measure of loss caused by an antitrust infringement is the amount of the overcharge caused by a conduct. However, customers of the infringing party may be able to pass on this overcharge to their own customers, which means that indirect purchasers may also suffer loss. The US – unlike other countries – typically limits the ability to claim damages to direct purchasers for the amount of the relevant overcharge (typically trebled). In Apple Inc. v. Pepper, the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s App Store because of an antitrust violation could sue Apple for damages because they were “direct purchasers”. The paper, available here, argues that, working within the context of applicable rules, the majority reached the right conclusion. At the same time, and while this judgment eliminates some of the irrationalities of the indirect purchaser rule as it has been applied, it hardly adopts a definite solution to the…

Andrew Gavil ‘Consumer welfare without consumers? Illinois Brick after Apple v Pepper’ (2019) Journal of Antitrust Enforcement 7 447

This essay, available here, examines the recent Apple v Pepper decision with a focus on two issues: its seeming rehabilitation of compensation principles and its approach to evaluating antitrust damages. Together, these two aspects of the Court’s reasoning may undermine the continued vitality of Illinois Brick’s decision not to allow indirect purchasers to claim for damages. The author argues that, although the Supreme Court formally retained Illinois Brick, the Court’s logic in explaining the nature of damages that flow from antitrust violations will prove hard to contain and difficult to reconcile with Illinois Brick’s simplistic conception of ‘pass-on’. That, in turn, will likely alter how parties litigate antitrust damage claims in ways likely to invite future challenges to Illinois Brick. Apple v Pepper also may have reopened long-simmering debates in the USA about how best to balance the twin remedial goals of deterrence and compensation. Given the evolution over four decades of a fairly intricate federal-state, public–private enforcement ecosystem in the USA,…

Lukas Rengier ‘Cartel Damages Actions in German Courts: What the Statistics Tell Us’ (2019) Journal of European Competition Law & Practice 1,

Germany is commonly mentioned as one of the three preferred jurisdictions for cartel damages actions in Europe, next to England and the Netherlands. The level of private enforcement is indeed quite high in Germany, and its growth is accelerating. Up until the end of 2018, there had been 119 judgments by German courts concerning cartel damages actions— 91 by district courts (i.e. first instance courts), 24 by regional courts (i.e. second instance courts), and four by the Federal Court of Justice. Many more lawsuits are currently pending—there is no public record, but the author counts approximately 650 pending cases in district courts alone. This article, available here, takes a closer look at the practical approach adopted by German courts to cartel damages claims by conducting a statistical analysis of these 119 judgments. Section I looks at the history of cartel damages actions in Germany. Cartel damages actions in Germany can be filed before 27 district courts. Seventeen higher regional courts deal with…

The OECD Report on International Private Enforcement

Officially known as ‘Individual and Collective Private Enforcement of Competition Law: Insights for Mexico in 2018’, this Report was prepared with a view to advise Mexico on how to reform its private enforcement regime. The Report can be found here. Advising Mexico in this regard required the pursuit of a comprehensive overview of international experiences with private competition enforcement – with a focus on Europe and North America, but also looking beyond these regions. This project also required the identification of the various elements that comprise private enforcement regimes around the world, the various forms that each of these elements may take, and how these elements relate to one another. I may of course be mistaken, but I think there is no other work like this in the market. As such, I circulate the Report here because I think it can provide a useful reference for anyone working or interested in private enforcement.

Jens-Uwe Franck and Martin Peitz ‘Toward a coherent policy on cartel damages’ (2018) University of Manheim Discussion Paper No. 007

In short, the argument of this paper – which can be found here – is that there is an undue focus on overcharges when talking about cartel damages. The authors argue that significant losses can be suffered as a result of volume effects as well, i.e. from reduced sales / purchases as a result of the higher price that results from a competition infringement. This has implications in terms of standing, since victims of volume effects may not be allowed to bring claims for damages. This is mistaken, and standing should be granted to victims of volume effects. The argument is developed as follows: Part II outlines the law on antitrust standing in the U.S. and the E.U., as well as the basic economics of cartel damages and optimal deterrence. In the US, only direct purchasers or sellers have standing to claim antitrust damages, alongside some victims of ‘umbrella pricing’ (i.e. when non-cartelists raise their prices as a consequence of a competition infringement)….

Walter Hugh Merricks CBE v Mastercard Incorporated and Others [2017] CAT 16

This judgment – which can be found here – concerns the first ever class certification request in an opt-out collective damages claim in the UK. I think this is a very important decision. Class or collective actions allow the aggregation of a large number of small claims for competition damages, and are likely to prove a crucial mechanism for customers seeking to obtain redress for loss caused by a competition infringement. Europe is not familiar with the type of class actions that are typical in North America, and the English courts – and particularly the CAT – are one of the first European courts (if not the first) to have to grapple with the challenges that such claims pose. One very important challenge is class certification, while another is the certification of the class representative. The first opt-out collective claim ever brought in the UK– i.e. Dorothy Gibson v Pride Mobility Products Limited [2017] CAT 9 – ended with the…

Eckart Bueren and Florian Smuda ‘Suppliers to a sellers’ cartel and the boundaries of the right to damages in U.S. versus EU competition law’ (2018) European Journal of Law and Economics (2018) 45(3) 397

This article – which can be found here – looks at the loss that suppliers to a downstream sellers’ cartel can suffer as a result of that cartel, and asks whether they are / should be entitled to claim damages for this loss. The paper is structured as follows: It first identifies three economic effects that determine whether suppliers will suffer losses due to a cartel in which their customers participated: quantity, price and cost effects. The quantity effect is a consequence of cartelised prices, which reduce sales and, hence, the amount of supplies needed to produce the cartelised good or service. The price effect is equivalent to the lower price of input products that will result from the reduced demand by cartelists caused by the quantity effect, multiplied by the number of input units sold. And the cost effects reflect the difference in costs of producing a lower number of supply units (e.g. as a result of loss of…