Joshua Davies and Rose Kohles ‘Antitrust Annual Report – Class Action Filings in Federal Court’

This report, available here, reviews US federal class actions from 2013-2018. It looks at various statistics regarding US federal class actions over the years (with lots of graphs and pics). The Report provides a number of interesting insights without extensive analysis. It finds that: (i) a mean number of 420 complaints are filed per year in the US; (ii) most antitrust class actions that reached Final Approval did so within three to five years; (iii) the mean settlement amount varied by year from about $25 million to $42 million, and the median amount varied by year from about $5 million to $11 million; (iv) the total annual settlements ranged from about $1 billion to $5 billion per year; (v) the cumulative total of settlements was $19.3 billion from 2013-2018. While a mean average of 420 cases were filed a year between 2009 and 2018, there is significant variation year-on-year. This seems to be driven by the size of the industry…

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,…

Harry First and Stephen Webber Wallace ‘Pairing Public and Private Antitrust Remedies’ in Albert A. Foer Liber Amicorum, Concurrences (Forthcoming)

Discussions on private competition remedies most often deal with questions of optimal deterrence and effectiveness. Lost in conversation is the basic idea that antitrust violations cause economic harm, and that those victimised by that harm should be entitled to damages from those who have violated the law. This is the underappreciated compensatory function of antitrust. Section 4A of the Clayton Act is a powerful, yet historically underused enforcement tool that empowers the United States to obtain treble damages for anticompetitive conduct when the government is itself the victim. The paper, which can be found here, focuses on whether the US government should not only pursue public enforcement activities, but also engage in private enforcement claims to be compensated for losses as a result of anticompetitive conduct. It examines the limited use of Section 4A, and discusses some possibilities for future cooperation between public and private plaintiffs that could advance the compensatory goal of antitrust. It is structured as follows: Section I looks…

OECD work on Crisis Cartels (2009)

The OECD background paper on this topic was written by Professor Simon J. Evenett in 2011, and can be found here. The purpose of this paper is to consider whether changes in policies towards cartel formation are merited during economic crises and associated recoveries. The paper is structured as follows: Sections two defines crisis cartels. The term crisis cartel is used to refer to a cartel that was formed during a severe sectoral, national, or global economic downturn. Such cartels can occur without state permission or legal sanction, which may trigger enforcement; or they may be permitted, even fostered, by a government, which may trigger advocacy. The impact of a crisis on the incentive of firms to cartelise will depend on the nature of the crisis, be it sectoral, national, or international. In thinking through the impact of each type of crisis on the behaviour of cartel members, one must identify the ways in which the crisis affects the business…

David S. Evans  ‘Basic principles for the design of antitrust analysis for multisided platforms’ (2019) Journal of Antitrust Enforcement 7 319

Competition agencies and courts have increasingly had to deal with multiplatform businesses – and have started to incorporate economic insights on their operation into their decisions. Nonetheless, many questions concerning the design of antitrust analysis involving platform businesses remain unsettled. This article, available here, develops three basic principles for conducting the antitrust analysis of multisided platforms in light of economic learning, as follows: Section II explains how multisided platforms increase welfare by reducing transactions costs and resolving externalities among economic agents. Platforms lower transaction costs by bringing potential traders to a common place for interacting, thereby solving a collective action problem. The economics literature often relies on simple indirect network effects to explain how two-sided platforms create value. Positive indirect network externalities arise because the presence of additional numbers of the right counterparties increases the likelihood of good exchanges. In practice, however, the externality issues addressed by platforms are broader and subtler. Platforms also often deal with negative network externalities…

Francesco Ducci ‘Procedural implications of market definition in platform cases’ (2019) Journal of Antitrust Enforcement 7 419

One of the most important questions raised by the economics of platforms, particularly for the adjudication of competition law disputes, is how to structure a legal framework that incorporates multi-sidedness while remaining consistent with the general principles guiding a rule of reason/effects-based analysis. Such framework becomes more complex in platform cases because the presence of multiple sides with interrelated demand coordinated by an intermediary platform raises additional questions that need to be confronted. This include: (i) How many markets should be defined, a single platform market or separate markets on each side? (ii) Should one aggregate the welfare effects on different users on the various sides of a platform, or should effects on each market side be treated in isolation? (iii) How should the burden of proof of anticompetitive and pro-competitive effects be allocated? Depending on whether the relevant market includes the platform as a whole or just one side, the boundary of the relevant market has fundamental consequences for…