Private Recovery Actions
Private Recovery Actions in the United States
In the United States, private antitrust litigation serves as a vital and robust complement to government antitrust enforcement in protecting and promoting competition. The Supreme Court has repeatedly noted that private enforcement is ‘an integral part of the congressional plan for protecting competition’1 and that ‘Congress has expressed its belief that private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws.’2 Private antitrust enforcement, which accounts for the overwhelming majority of antitrust suits filed in the United States, performs two important and necessary functions that governmental authorities alone cannot sufficiently address: optimal deterrence for anti-competitive activity, and providing compensation to purchasers directly harmed by anti-competitive conduct.
This article provides a brief primer on key aspects of private antitrust litigation in the United States. It begins with an overview of the substantive types of private antitrust actions. The article next discusses the different processes by which and contexts in which plaintiffs can file suit. It then summarises significant issues that private plaintiffs must address in litigation to prevail on their claims and recover damages. The article concludes by discussing several recent developments in the field.
Substantive antitrust actions
The Clayton Act, 15 USC section 12 et seq, establishes a private right of action for violation of the federal antitrust proscriptions set forth in the Sherman Act, 15 USC section 1 et seq. Section 4 of the Act provides that a treble-damage antitrust claim may be brought by ’[a]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws.’3 Section 16 of the Act provides injunctive relief for any person ‘threatened [with] loss or damage by [a] violat[ion] of [the] antitrust laws.’4 The Supreme Court has noted that the breadth of section 4’s language ‘reflects Congress’ “expansive remedial purpose” in enacting [section] 4: Congress sought to create a private enforcement mechanism that would deter violators and deprive them of the fruits of their illegal actions, and would provide ample compensation to the victims of antitrust violations.’5 Consistent with this broad congressional mandate, the court has stated a disinclination to ‘engraft artificial limitations on the [section] 4 remedy.’6
Section 1 of the Sherman Act governs concerted restraints of trade, and provides that ’[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal.’7 Despite the expansiveness of the statute’s language, courts have interpreted the Sherman Act to prohibit only those agreements that ‘unreasonabl[y]’ restrain trade.8 Thus, courts analyse whether most business combinations or contracts are violative of this statute pursuant to the ‘rule of reason.’9 This Rule requires a court to consider ‘the facts peculiar to the business in which the restraint is applied, the nature of the restraint and its effects, and the history of the restraint and the reason for its adoption.’10
The Supreme Court, however, has also developed the doctrine that certain business relationships are per se violations of the Act without regard to consideration of their reasonableness, because they have ‘such predictable and pernicious anti-competitive effect, and such limited potential for precompetitive benefit.’11 ‘Per se treatment is appropriate once experience with a particular kind of restraint enables the court to predict with confidence that the rule of reason will condemn it.’12
The per se doctrine applies a ‘conclusive presumption’ of illegality to certain types of restraints,13 obviating the need to consider the intent behind the restraint, any claimed pro-competitive justifications, or the restraint’s actual effect on competition.14 Indeed, ’[i]n applying these rigid rules, the court has consistently rejected the notion that naked restraints of trade are to be tolerated because they are well intended or because they are allegedly developed to increase competition.’15
Thus, where the per se rule applies, ‘the only inquiry is whether there was an agreement to restrain trade, since the unreasonableness of the restraint is conclusively presumed regardless of whether the rule of reason would lead to a different result.’16
‘Classic examples’ of agreements subject to the per se rule are ‘naked, horizontal restraints pertaining to prices or territories.’17 An arrangement is ‘horizontal’ when its participants are either actual or potential competitors operating at the same level of the distribution chain.18
Private actions alleging horizontal collusion, particularly class actions (and any subsequent opt-out actions) that follow the announcement of related governmental investigations or guilty pleas, occupy a prominent space in the private enforcement arena. Recent examples include In re Dynamic Random Access Memory (DRAM) Antitrust Litigation,19 where the plaintiff class alleged a conspiracy to fix the prices of and allocate customers for memory chips, and obtained over US$325 million in total settlements, and In re International Air Transport Surcharge Antitrust Litigation,20 where a putative class of plaintiffs alleged a conspiracy to fix the prices of fuel surcharges added to their long-haul flight tickets, and obtained approximately US$200 million in total settlements.
Private actions filed without prior governmental action have also resulted in significant recoveries. Recent examples include In re Urethane Antitrust Litigation (Polyether Polyol Cases),21 where the plaintiff class alleges a conspiracy to fix prices and allocate markets for several chemicals used to make polyurethanes, and have secured a partial settlement of over US$55 million, and In re OSB Antitrust Litigation,22 where the plaintiff class alleged a conspiracy to restrict output of oriented strand board, and achieved a total settlement of over US$120 million.23
Section 2 of the Sherman Act24 prohibits monopolisation and attempted monopolisation by a single company. Section 2 cases are particularly fact-specific, and implicate a wide array of anti-competitive practices, including abuse of the patent system, bundled pricing and predatory pricing.
Section 2 cases based on patent abuses may arise in several scenarios. A company may obtain a patent by fraud and then use that patent to exclude competitors from the market, or may initiate sham litigation alleging patent infringement to keep a properly competing product off the market. A company may also engage in a reverse payment settlement, whereby it pays a potential market entrant a significant monetary sum in exchange for the would-be entrant’s agreement not to enter the market for a specified time frame.25
Bundled pricing cases arise where a firm with monopoly power over a particular product sells that product in conjunction with other products (collectively referred to as the ‘bundle’) to customers at a ‘discount’ only if customers agree to purchase a specified high percentage of their total purchases of the bundled goods from that firm. This practice may harm equally efficient or more efficient competitors that sell only some of the competing products because they cannot profitably sell their own products to customers given the discounts offered. As a result, competitors lose market share on the competitive products to the dominant firm, which extends its monopoly power into other product markets as well. Finally, predatory pricing occurs where a firm with monopoly power over a product prices that product below its total incremental cost with the specific intent of driving competitors in that market out of business and recouping the short-term losses incurred by its below-cost pricing with supra-competitive prices once the competitors have left the market.
Private plaintiffs have increasingly brought class cases based on section 2 violations. Several recent prominent examples include: In re Tricor Direct Purchaser Antitrust Litigation,26 where class plaintiffs alleged that the defendants violated section 2 by fraudulently obtaining patents for a cholesterol drug and using those patents to illegally exclude generic competitors from marketing a similar drug. The parties recently settled the case for US$250 million.27 In In re Endosurgical Products Direct Purchaser Antitrust Litigation,28 proposed plaintiff classes alleged that the defendants violated section 2 by bundling endosurgical products with sutures, over which the defendant possessed overwhelming market power, and by including anti-competitive provisions in their contracts with group purchasing organisations (GPOs) that required the GPOs to offer only the defendants’ products to member hospitals. The defendants settled the claims of the putative direct and indirect purchaser classes for monetary and structural relief conservatively valued at nearly US$40 million.29
Finally, in In re Intel Corp Microprocessor Antitrust Litigation,30 both Advanced Micro Devices (AMD) – the chief competitor of the defendant Intel in the x86 microprocessor market – and a proposed class of indirect purchasers of Intel’s x86 microprocessors allege that the defendant unlawfully maintained its monopoly power over these products in violation of section 2 by, among other things, forcing major customers into exclusive deals for cash payments and favourable pricing contingent on the exclusion of AMD, and establishing and enforcing quotas among large retailers that effectively forced them to overwhelmingly or exclusively stock Intel’s products. Both the competitor and class cases, which Intel’s chief counsel has called ‘one of the largest pieces of litigation in US history,’ are ongoing.
Procedural antitrust actions
The class action is the preeminent procedural mechanism for bringing purchaser antitrust cases, and allows for the aggregation of claims brought by all affected market participants in a single proceeding. Courts have singled out antitrust cases as uniquely suitable for class treatment.31 These pronouncements are based in part on the fact that, while private antitrust actions are among the most complex and expensive to litigate in the American civil justice system, individual purchaser claims are usually relatively small. Thus, very few individual claims justify the risks and expense of litigation absent the aggregation available in the class context. This economic reality means that, absent the class action mechanism, numerous businesses and individuals injured as a result of anti-competitive conduct would be effectively without means to pursue redress through the courts – a notion that is patently inconsistent with the broad remedial purposes of the US antitrust laws.
Purchasers affected by anti-competitive conduct in the US seek class certification under Federal Rule of Civil Procedure 23, which, in what the Supreme Court characterised as the ‘most adventuresome’ innovation at the time, was amended in 1966 to specifically provide the so-called ‘opt out’ class action where actions and judgments would be binding ‘on all class members save those who affirmatively elected to be excluded.’32
The ‘opt-out’ class action facilitates aggregation of purchaser antitrust claims by greatly reducing the transaction and information costs of common representation. Instead of all class members being required to agree in advance to be bound by a judgment in the common proceeding, representative parties may pursue claims on behalf of an entire class, with all class members being bound by the resulting judgment or settlement unless they affirmatively make a decision to ‘opt out’ of the class.
Certification under Rule 23 requires:
- numerosity, or that ‘the class is so numerous that joinder of all member is impracticable’;
- commonality, meaning that ‘there are questions of law or fact common to the class’;
- typicality, meaning that the ‘claims or defences of the representative parties are typical of the claims or defences of the class’;
- adequacy of representation;
- predominance, or that ‘questions of law or fact common to class members predominate over any questions affecting only individual members’; and
- superiority, meaning that ‘a class action is superior to other available methods for fairly and efficiently adjudicating the controversy’. Fed R Civ P 23.
Predominance is by far the most legally controversial requirement for private antitrust class actions as the other elements are usually easily met; the key relevant issues such as a conspiracy’s participants, nature, duration and effects are generally the same for all plaintiffs. However, companies accused of engaging in anti-competitive conduct typically try to defeat certification by arguing that their industry is so complex and differentiated that individual issues, particularly relating to damages, will overwhelm the common issues involving the conspiratorial behaviour itself.
As discussed in more detail below, questions of class certification, and more specifically predominance, have been fertile ground for active jurisprudential interpretations in recent years, with several prominent court opinions calling into question the proper extent of the court’s fact-finding role at the class certification stage, and, in turn, the degree and specificity of the proofs that plaintiffs must put forth at this early stage of the proceedings.
Despite this apparent attempt to scale back the scope of competition law class actions, this procedural mechanism continues to be the most prevalent, efficient, and often the only feasible model for appropriate redress for purchaser victims of antitrust violations.
Under American class action procedures, potential plaintiffs are typically given an opportunity to ‘opt out’ of a class. This opportunity arises after a class has been certified by the court, but before the case proceeds to trial. Any companies or individuals opting out of a class action will receive none of the benefits of the class process, including the right to participate in any settlement or verdict, and will retain their right to bring an independent lawsuit, either as an individual plaintiff or as part of a group of plaintiffs that opted out of the class. Determinations of liability from the class case will not be binding on opt-out plaintiffs.33
The process of opting out of a class action is fairly straightforward. After certification, a formal notice is sent to all members of the class who can be identified through reasonable effort.34 This is often supplemented by publishing the notice in a relevant trade publication, on defendants’ websites, or even a popular periodical or newspaper.35 In the event of an early class settlement, a ‘settlement class’ will typically be certified and notices will include the amount of the settlement.36 The certification notice will include an address to which any requests for exclusion must be sent as well as a deadline for such requests and an explanation of the form that the requests should take. Requests for exclusion need only contain sufficient information to identify the party and a simple signed statement that the party does not wish to participate in the class action. No reasons for exclusion need be supplied.37
Deciding whether to opt out of a class action may be more complicated. It is usually in the interests of class members to stay in a class, primarily because it is costless to participate in a class action as an unnamed plaintiff while the significant expense of the litigation is borne by class counsel or the named plaintiffs. Furthermore, class members can be confident that they are being fairly represented and their positions zealously advocated insofar as courts may not certify a class until they have evaluated the adequacy of proposed class counsel to confirm that they have the requisite experience and reputation to manage a significant class litigation, that there are no apparent conflicts of interest within the class, and that the representative clients are well-positioned to fairly and adequately represent the interests of the class.38
However, it may be in the interests of a class member to opt-out of a case where the member, because of its purchase size, may have sustained greater impact from the anti-competitive activity at issue than a more typical class member. Such parties often have sufficient potential recoveries to justify the litigation expenses associated with an individual or small group antitrust litigation, and may leverage their unique importance to the defendants’ businesses into a premium settlement position that permits a recovery above and beyond their pro rata share of a class settlement. Alternatively, opt-out plaintiffs may enjoy sufficient ongoing business with defendants that a change in trading terms, whether in the form of a price or non-price concession, may benefit both parties more than a single, lump-sum payment. Opt-out counsel may be able to tailor their representation to balance and maintain the specific and often delicate supplier relationships that will both pre-date and outlive the litigation.39
Courts have made clear that the Sherman and Clayton Acts were designed to protect ‘competition not competitors.’40 However, competitors may have standing to maintain and often do bring antitrust actions provided they can establish that the acts complained of also harmed purchasers. These actions typically complain that the defendant has abused its monopoly power to exclude a competitor from the market through a refusal to deal, leveraging, or predatory pricing. The competitor’s quantum of damages is usually the profits lost by its exclusion from the market.41
’[A]s a general matter, the Sherman Act “does not restrict the long-recognized right of [a] trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal”.’42 ‘However, ”[t]he high value that we have placed on the right to refuse to deal with other firms does not mean that the right is unqualified”.’43 In fact, most circuit courts of appeals have recognised ‘the essential facilities doctrine’, by which a monopolist may be required under the antitrust statutes to deal with a competitor where:
- the product developed by the monopolist is so superior that it is ‘essential’ for rivals to have in order to compete;
- the monopolist has denied the rival use of the facility;
- the facility cannot be duplicated by the rival; and
- forced dealing is feasible.44
The Supreme Court has never endorsed this doctrine. However, while the court refused to ‘either recognise it or to repudiate it’ in Verizon Communications Inc v Law Offices of Curtis V Trinko LLP, as it critically noted that, ’[t]he mere possession of monopoly power ... is not only not unlawful; it is an important element of the free-market system,’ and that ’[f]irms may [properly] acquire monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers.’45 The court went on to say that, ’[c]ompelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust law .... Moreover, compelling negotiation between competitors may facilitate the supreme evil of antitrust: collusion.’47
The Supreme Court has also made clear that the parameters of a section 2 claim based on a theory of predatory pricing are extremely limited. In Brooke Group Ltd v Brown & Williamson Tobacco Corp, the court restricted a cause of action under this theory to only those cases where the plaintiff can show that the defendant is pricing a product below an appropriate measure of plaintiff’s costs and there is a ‘dangerous probability’ of defendant recouping those losses through supra-competitive prices after its competitor is forced to exit the market.48
The Supreme Court’s apparent reluctance to recognise these causes of action unless stringent limitations are imposed illustrates the tension between the customary purpose of the antitrust laws to protect competition and the use of them to compensate competitors unless the additional harm to purchasers is clear. ‘To hold that the antitrust laws protect competitors from the loss of profits due to such price competition would, in effect, render illegal any decision by a firm to cut prices in order to increase market share. The antitrust laws require no such perverse result.’49
Sustaining a private antitrust action
Whether a private suit is brought on behalf of a class or individually, the substantive elements of the claims, ie, whether there was an antitrust violation, remain the same, and the plaintiff bears the burden of proof to establish antitrust injury and damages.
The Supreme Court and lower federal courts, in a long line of evolving jurisprudence, have developed certain limitations on antitrust recovery, namely the doctrine of ‘antitrust standing,’50 requirements for directness of injury, and other prerequisites for recovering damages. In addition to proving the underlying anti-competitive conduct, plaintiffs must meet these various thresholds to justify recovery.
Establishing ‘antitrust injury’
In Brunswick Corporation v Pueblo Bowl-O-Mat, the Supreme Court made clear that antitrust plaintiffs must prove ‘antitrust injury[..] which is to say injury of the type the antitrust laws were intended to prevent ... The injury should reflect the anti-competitive effect either of the violation or of anti-competitive acts made possible by the violation.’51 In that case, three bowling centres sued one of the largest manufacturers of bowling equipment and operators of bowling centres, alleging that its acquisition of failing bowling centres in plaintiffs’ area denied plaintiffs an anticipated increase in market share and profits based on a reduction of competition.52 The court reasoned that, even if the acquisitions were unlawful, ’[t]he antitrust laws . . . were enacted for the protection of competition not competitors,’ and that ’[i]t is inimical to the purpose of these laws to award damages’ caused to a plaintiff by the vigorous competition that the antitrust laws were designed to protect.53
The touchstone for antitrust injury is whether plaintiff’s harm derives from an exclusionary, or competition-reducing, as opposed to pro-competitive, aspect or effect of defendant’s conduct.54 However, this burden should not be onerous as courts have repeatedly found that such injury may flow even from common-law business torts against a single competitor if such conduct is ‘of the type that tends to impair the opportunities of rivals based on something other than competition on the merits.’55
Showing directness of the injury
In addition to antitrust injury, the Supreme Court has read the common-law doctrine of proximate cause into section 4 of the Clayton Act.56 This requirement demands some direct relation between the injury asserted and the misconduct alleged and includes consideration of factors such as the potential for duplicative recovery, the complexity of determining damages and the existence of better situated victims.57 Concerns regarding ‘directness’ of injury led the Supreme Court, in Illinois Brick Co v Illinois,58 to hold that indirect purchasers of a price-fixed product could not maintain a federal antitrust damages action. This broad bar on indirect purchaser actions has been greatly criticised for ‘prevent[ing] consumers, a key-protected group under the antitrust laws, from redress through private’ suits and undermining the deterrent effect of private enforcement action.59 Indeed, more than 25 states have circumvented this prohibition by permitting indirect purchaser suits under state antitrust law.60
Illinois Brick, however, has not forestalled all federal antitrust recovery for derivative injuries. Specifically, the court has held that recovery is appropriate where concerns about duplicative recovery are not present and the plaintiff’s injury, while indirect, was ‘clearly foreseeable.’61 For example, in Blue Shield of Virginia v McCready, the Supreme Court held that a health insurance subscriber had standing to maintain an action alleging damages based on a conspiracy among the health-care plan and psychiatrists to reduce competition by refusing to reimburse for psychotherapy performed by psychologists while providing reimbursement for comparable treatment provided by psychiatrists. In so holding, the court acknowledged that the alleged conspiracy was ‘aimed’ against psychologists, not the health insurance subscriber, or, in other words, that the plaintiff was not in the ‘target area’ of the alleged antitrust conspiracy, but noted that ’[t]he availability of the [section] 4 remedy to some person who claims its benefit is not a question of the specific intent of the conspirators.’ Id. at 478-79 & n.14.
Finally, a private antitrust plaintiff must prove the quantum of damages that it suffered due to the anti-competitive acts of the defendant(s), as distinct from unrelated market forces, to receive compensation.62 However, the plaintiffs’ burden in presenting evidence of damages is relaxed.63 An antitrust plaintiff need only introduce evidence sufficient for a jury to estimate the amount of damages.64 In other words, ‘the damages may be determined without strict proof of what act caused the injury, as long as the damages are not based on speculation or guesswork.’65
[Courts’] willingness to accept a degree of uncertainty in fixing the amount of damages rests in part on the difficulty of ascertaining business damages, in that the vagaries of the marketplace usually deny us sure knowledge of what plaintiff’s situation would have been in the absence of the defendant’s antitrust violation. [This] willingness also rests on the principle that it does not come with very good grace for the wrongdoer to insist upon specific and certain proof of the injury which it has itself inflicted.66
Under American antitrust law, private plaintiffs are entitled to recover treble damages, ie, threefold the actual damages that they suffered.67 Indeed, the treble damages remedy is mandatory if a plaintiff prevails on its antitrust claim.68 The treble damages provision was designed to punish past violations of the antitrust laws and to deter future antitrust violations.69 Moreover, treble damages ‘make the remedy meaningful by counter-balancing ‘the difficulty of maintaining a private suit’ under the antitrust laws.70
The effect of the spectre of treble damages on negotiating litigation settlements varies depending on the particular case at hand. Courts entrusted with approving an antitrust class action settlement do not normally give great weight to treble damages in determining the ‘reasonableness’ of a proposed settlement.71 ‘At the same time,’ as one court recently has recognised, ‘treble damages are a fact of life in antitrust litigation. In some cases a court, asked to approve a settlement, may believe the class’s claim is so strong that the merits of the amount negotiated cannot reasonably be evaluated without measuring it against the likelihood of a treble as well as a single damages recovery.’72 Accordingly, courts typically defer to the judgment of experienced counsel, who ‘will certainly be aware of exposure to treble damages in an antitrust action,’ in deciding whether to approve a class settlement as fair, reasonable and adequate.73
Pleading standards – Twombly and beyond
One key question for private recovery actions is how much detail about defendants’ anti-competitive behaviour must be produced in initial court pleadings to sustain a claim.
The Supreme Court, in Bell Atlantic Corp v Twombly74 required plaintiffs, in order to adequately state a claim of injury based on an antitrust conspiracy, to plead sufficient factual matter in their initial complaint to ‘plausibly suggest,’ rather than merely be ‘consistent with,’ an unlawful agreement.75 The court went on to dismiss the claim in that case because the complaint merely alleged ‘lawful parallel conduct,’ which ‘fail[ed] to bespeak [an] unlawful agreement.’76 However, the court made clear that its requirement of ‘plausible grounds to infer an agreement’ did not ‘impose a probability [or heightened pleading] requirement ... it simply calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [an] illegal agreement.’77
Twombly has bred considerable confusion regarding the specificity with which plaintiffs must plead an antitrust conspiracy; however, several recent opinions of lower courts interpreting the Supreme Court’s pronouncement have provided additional guidance. These opinions support that courts now require somewhat more at the pleadings stage for a private plaintiff alleging an antitrust conspiracy; however, the sea change in conspiracy pleadings jurisprudence that some commentators were predicting simply has not materialised. Specific factual allegations tending to prove conspiracy are not required. To withstand dismissal, a plaintiff’s allegations, taken as a whole and viewed in context of relevant current and historical industry dynamics, simply must demonstrate that the existence of the alleged conspiracy merely is plausible and provide the defendants with the requisite notice of the claims asserted against them.
In In re Chocolate Confectionary Antitrust Litigation,78 the court sustained plaintiffs’ complaint alleging a conspiracy to fix the price of chocolate candy products in the United States against a Twombly challenge. Plaintiffs claimed that the defendants implemented three contemporaneous and almost identical price increases and monitored pricing in both the United States and Canada. The complaint provided that the market was ripe for collusion (ie, the products are fungible, the relevant market is mature, high entry barriers exist and the market is highly concentrated among suppliers), exacerbated by declining demand and product saturation, and that there was significant interaction between the United States and Canadian markets, where competition authorities had already identified compelling evidence of price-fixing. The court held that these allegations were ‘sufficient “to nudge [plaintiffs’] claims across the line from conceivable to plausible[.]”’79
Similarly, the court denied defendants’ motion to dismiss on Twombly grounds in Standard Iron Works v ArcelorMittal.80 The complaint in that case failed to allege specific evidence of a conspiracy, relying instead on parallel conduct coupled with additional facts suggestive of a conspiracy, including that:
- the market structure was ripe for collusion;
- the defendants’ coordinated supply cuts represented an abrupt departure from each firm’s prior behaviour;
- such behaviour, at a time when pricing was considerably above cost and when demand for steel greatly exceeded supply, ran contrary to the defendants’ independent competitive interests;
- the timing of the production cuts occurred close in time to trade association meetings that the defendants’ executives attended and where they made statements at the meetings calling for industry-wide production restraint;
- the same executives attended private trade association meetings;
- the defendants’ executives made statements suggesting agreement; and
- the defendants enjoyed supracompetitive profits pursuant to their coordination. The court held that these allegations, when viewed together and in context, plausibly suggested a conspiracy.81
The court likewise denied a Twombly motion in In re Static Random Access Memory (SRAM) Antitrust Litigation,82 where plaintiffs pled, supported by several e-mails sent between executives of different defendants, that the defendants had an ongoing agreement to exchange pricing information and intended that this exchange would lead to price stabilisation or increases. The complaint also provided that the average sale price of SRAM steadily and significantly increased during the conspiracy period, that the defendants’ executives who marketed SRAM were the same individuals who previously pled guilty to fixing the prices of DRAM, a similar product market, and that the defendants participated in various trade associations, thus providing opportunity to meet and fix prices. In addition, the plaintiffs alleged that the relevant market was one in which such information exchanges would lead to price stabilisation or increases (ie, SRAM devices were homogeneous, the market was concentrated, and there were high entry barriers).83
These recent interpretations of the Twombly standard make clear that antitrust plaintiffs do not face a significantly heightened pleading standard, nor do they need to allege specific facts of an illegal agreement at the complaint stage. Plaintiffs’ allegation merely must tip beyond the ‘merely consistent’ realm to plausibility.
Heightened class certification hurdles
As alluded to earlier, putative class actions often face a significant hurdle when courts are asked to certify that a case can proceed to trial on behalf of an entire class of purchasers. Perhaps the most complicated of the prerequisites to class certification is whether ‘common questions’ predominate over ‘individual questions.’ To determine this, Rule 23 asks a court to identify the merits ‘questions’ that are to be tried in a case, and to weigh those that are common to multiple class members against those that affect only individual members of the class. It does not ask the court to answer those merits questions, nor does it ask the court to determine which side of the disputed issues is correct. Indeed, such merits determinations are specifically prohibited.
In In re Initial Public Offering Securities Litigation (IPO),84 the Second Circuit reiterated the Supreme Court’s pronouncement in Eisen v Carlisle & Jacquelin85 that:
We find nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.’ Consistent with Eisen, the Second Circuit emphasised that in making determinations concerning whether the requirements of Rule 23 are satisfied, ‘a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement.86
Likewise, in In re New Motor Vehicles Canadian Export Antitrust Litigation (Canadian Cars),87 the First Circuit recognised that ‘the validity of plaintiffs’ theory is a common disputed issue’ and that ’[i]t will be for the fact finder to decide whether this theory is persuasive.’88 The First Circuit explained that a court deciding class certification should not be making such ‘persuasive[ness]’ determinations with regard to ‘hard factual proof,’ but instead should only scrutinise the plaintiffs’ arguments for a satisfactory ‘explanation of how the pivotal evidence behind plaintiffs’ theory can be established.’89
Finally, in In re Hydrogen Peroxide Antitrust Litigation90 the Third Circuit stated that ‘Plaintiffs’ burden at the class certification stage is not to prove’ its case, but that, instead, ‘the task for plaintiffs at class certification is to demonstrate that the element of antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual to its members.’91
This language in recent opinions of the courts of appeals supports an interpretation of the class certification standards more clearly evident in the Supreme Court’s mandate in Eisen – that ‘a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement.’ In other words, in inquiring into the predominance of common questions to support a class action, a court should not attempt to determine the persuasiveness of a plaintiff’s common proof.
Other language in these decisions, however, has confused some courts and attorneys into believing that a court deciding class certification is now permitted to determine broadly whether it is persuaded by all of the plaintiffs’ methods of common proof, thereby transforming the court’s role from that of merely identifying common and individual questions in a case, into the much more problematic role of determining which are the correct answers to key merits questions. For example, the Third Circuit in Hydrogen Peroxide, stated that ‘the court must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits.’92
Those taking a more transformational view of the law contend that such language requires a court to determine at the time of class certification whether the plaintiffs’ proposed common proof of their case is correct or incorrect by a standard of the preponderance of the evidence. Such an interpretation of the recent case law is revolutionary because it effectively calls for the court to stop class action cases from going to a jury even when there are ‘genuine issues of material fact’ that would preclude summary judgment, in effect substituting a court’s own evaluation of key merits questions for that of the jury.
A close reading of this case law shows that this revolutionary view is currently unsupported. To be sure, all of the recent Court of Appeals case law has stated unequivocally that in order to certify a class a court must make either ‘findings’ or ‘determinations’ that the prerequisites to class certification are satisfied. However, one must consider the substance of the specific class action requirements in question. In the IPO case, for example, the Second Circuit illustrated its statements with regard to the need for ‘determinations’ by reference to the requirement of numerosity, stating that ‘in considering whether the numerosity requirement is met, a judge might need to resolve a factual dispute as to how many members are in a proposed class. Any dispute about the proposed class must be resolved....’93 This is true of the numerosity requirement, which on its face calls for the court to determine how numerous the class members are. Some other class action requirements, similarly, call for a court to make outright determinations of fact. For example, the requirement of adequacy of representation requires that courts find the representation to be in fact adequate.
By contrast, unlike Rule 23 requirements like numerosity or adequacy, the requirement of predominance does not ask a court to determine whether proposed common methods of proof are correct or incorrect, persuasive or unpersuasive. Instead, all it asks the court to do is to determine that common questions are presented and that the plaintiff genuinely has common methods of proof. Once that key point is grasped, it becomes clear that recent Court of Appeals case law is less transformational than some have contended, in light of the fact that the class action prerequisites that call for the court to make actual fact determinations – such as numerosity and adequacy – are not commonly the primary controversies on class certification in the first instance. Instead, the primary controversy at the time of class certification nearly always centres on the predominance of common questions. Those questions need not be answered in order for a court to determine that they are common questions. Accordingly, for a court in the context of the predominance inquiry to determine whether the plaintiffs’ proposed common proof is correct or incorrect would violate the Second Circuit’s admonition in IPO – which comes directly from the Supreme Court’s authority in Eisen – that ‘a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement.’
Renewed government enforcement efforts
One final area that merits mention is the effect that the change of presidential administrations has had and will continue to have on governmental antitrust enforcement, and, in turn, private antitrust enforcement. When Barack Obama took George W Bush’s place as president of the United States, increased antitrust enforcement from the Department of Justice was anticipated, particularly in the area of single-firm conduct. The DoJ’s statements and actions to date have not disappointed those who hailed this anticipated change of course.
In a speech that new DoJ Antitrust Division head Christine Varney gave to the US Chamber of Commerce in May 2009,94 she reported that the Antitrust Division would step up enforcement in the area of single-firm conduct and reinvigorate the previous administration’s lackadaisical efforts on this front. To that end, Varney withdrew the section 2 report penned by the previous administration,95 noting that ‘the section 2 report lost sight of an ultimate goal of antitrust laws – the protection of consumer welfare.’96 Varney commented that the report ‘sounded a call of great scepticism regarding the ability of antitrust enforcers – as well as antitrust courts – to distinguish between anti-competitive acts and lawful conduct, and raised the related concern that the failure to make proper distinctions may lead to “overdeterrence” with regard to potentially procompetitive conduct,’ a concern which she ‘do[es] not share.’97 Varney also noted that the report ‘went too far in evaluating the importance of preserving possible efficiencies and understated the importance of redressing exclusionary and predatory acts that result in harm to competition[.]’98 She concluded by mandating a ‘return to fundamental principles of antitrust enforcement’ by ‘go[ing] “back to the basics” and evaluat[ing] single-firm conduct against these tried and true standards that set forth clear limitations on how monopoly firms are permitted to behave.’99
In addition, the DoJ has reversed its prior position on reverse patent settlements, and harmonised it with that of the Federal Trade Commission.100 In Arkansas Carpenters Health and Welfare Fund v Bayer AG,101 titled as In re Ciprofloxacin Hydrochloride Antitrust Litigation before the district court, the DoJ filed an amicus brief in response to the Second Circuit’s invitation to address the issue of ‘whether settlement of patent infringement lawsuits violates the federal antitrust laws when a potential generic drug manufacturer withdraws its challenge to the patent’s validity, which if successful would allow it to market a generic version of the drug, and the brand-name patent holder, in return, offers the generic manufacturer substantial payments.’102 The DoJ argued, while taking no position on the ultimate merits of the appeal, that reverse payment agreements that delay entry by a potential generic competitor in exchange for a payment from a pioneer drug manufacturer possessing market power presumptively violate section 1 of the Sherman Act.103 While arguing that such agreements are not per se illegal, and should be evaluated under the rule of reason, the DoJ maintained that they are nevertheless presumptively unlawful, as the ‘anti-competitive potential of reverse payments- is sufficiently clear’.104 The DoJ further argued that it should be the defendants’ burden to rebut the presumption by proffering evidence that the payment did not purchase reduced competition.105
The impact of the DoJ’s new direction on antitrust enforcement, which is still in its incipiency, remains to be seen. Nonetheless, such increased enforcement efforts on the part of the government may translate to corresponding increase in follow-on private cases being filed on the basis of the significant evidence of government investigation and guilty pleas, contributing to victim recovery and increased deferrance for anti-competitive actions.
1 California v American Stores Co, 495 US 271, 284 (1990).
2 Minnesota Mining & Mfg Co v New Jersey Wood Finishing Co, 381 US 311, 318 (1965).
3 15 USC section 15.
4 15 USC section 16.
5 Blue Shield of Va v McCready, 457 US 465, 472 (1982). See Brunswick Corp v Pueblo Bowl-O-Mat Inc, 429 US 477, 486 n10 (1977) (‘Treble damages were provided in part for punitive purposes, but also to make the remedy meaningful by counterbalancing the difficulty of maintaining a private suit against a combination such as is described in the Act.’) (internal quotation marks and citations omitted).
6 McCready. 457 US at 472.
7 15 USC section 1.
8 See State Oil Co v Khan, 522 US 3, 10 (1997).
9 United States v Topco Associates Inc, 405 US 596, 606-07 (1972).
10 Id. at 607.
11 In re Cardizem CD Antitrust Litig, 332 F3d 896, 906 (6th Cir 2003) (internal quotation marks and citations omitted).
12 Id. at 906 (internal quotation marks omitted).
13 Arizona v Maricopa County Med Soc’y (Maricopa County), 457 US 332, 344 (1982).
14 National Collegiate Athletic Ass’n (NCAA) v Board of Regents, 468 US 85, 100 (1984).
15 Topco, 405 US at 610. See Eli Lilly and Co v Zenith Goldline Pharms Inc, (Zenith) 172 F Supp 2d 1060, 1074 (SD Ind 2001) (damage to the market is presumed).
16 Re/Max Int’l v Realty One Inc, 900 F Supp 132, 148 n8 (ND Ohio 1995).
17 Cardizem, 332 F3d at 907.
18 See Topco, 405 US at 608 (agreement between competitors ‘at the same level of the market structure’ to allocate territories in order to minimise competition is a ‘classic example’ of per se violation).
19 In re Dynamic Random Access Memory (DRAM) Antitrust Litig, No. M-02-1486 PJH, 2009 WL 1517040 (ND Cal 1 June 2009); DRAM Antitrust Litigation Website, www.dramantitrustsettlement.com/dram/default.htm (last visited 23 July 2009).
20 In re Int’l Air Transport Surcharge Antitrust Litig, C 06-01793 CRB, MDL No. 1793, 2008 WL 4766824 (ND Cal 31 Oct 2008).
21 Urethane Settlement Website, www.polyetherpolyolsettlement.com/urethane/docs/ FinalOrderApprovingBayerSettlement.pdf (last visited 23 July 2009).
22 OSB Antitrust Litigation Settlement Information Website, www.osbsettlement.com/ (last visited 23 July 2009).
23 Much less frequently pursued by governmental authorities and private parties because of the more onerous requirements under the ‘rule of reason’ analysis, ‘vertical’ restraints of trade concern agreements between persons at different levels of the distribution chain, and include retail price maintenance, exclusive territorial restrictions, exclusive dealing arrangements, and tying. Perhaps the most prominent example, recent or otherwise, of a vertical restraint action is In re Visa Check/MasterMonev Antitrust Litigation, 297 F Supp 2d 503 (EDNY 2003), aff’d, Wal-Mart Stores Inc v Visa USA Inc, 396 F.3d 96 (2d Cir. 2005), where a class of approximately five million merchants who alleged that the defendants tied their debit cards to their credit cards secured a US$3.05 billion settlement.
24 15 USC section 2.
25 This last situation also typically raises a section 1 claim. Over the past year, both the FTC and DoJ have expressed a renewed interest in reverse payment cases, taking the position that such conduct is generally anti-competitive. See, infra, notes 90-96 and accompanying text.
26 In re Tricor Direct Purchaser Antitrust Litig, Case No. 05-340 (SLR) (D Del filed 27 May 2005).
27 Order and Final Judgment Approving Settlement, Awarding Attorneys’ Fees and Expenses, Awarding Representative Plaintiff Incentive Awards, Approving Plan of Allocation, and Ordering Dismissal as to All Defendants, at 1, In re Tricor Direct Purchaser Antitrust Litig, Case No. 05-340 (SLR), Dkt No. 543, (D Del 23 Apr. 2009).
28 In re Endosurgical Products Direct Purchaser Antitrust Litig, Case No. SACV 05-8809 JVS (MLGx) (CD Cal filed 19 Dec 2005).
29 Order re Motion for Preliminary Approval of Class Action Settlement, and Motion for Substitution of Co-Lead Counsel, at 8-9, In re Endosurgicial Products Direct Purchaser Antitrust Litig, Case No. 05-8809 JVS (MLGx), Dkt No. 181, (CD Cal 31 Dec 2008).
30 In re Intel Corp, MDL Dkt No. 05-1717-JJF (D Del filed 9 Nov 2005), Paul v Intel Corp, Case No. 05-485-JJF (D Del filed 12 July 2005).
31 See, eg, Alabama v Blue Bird Body Co Inc, 573 F2d 309, 320 (5th Cir 1978) (‘antitrust price-fixing cases are particularly suited for class action treatment’); In re Carbon Black Antitrust Litig, No. 03-10191-DPW, MDL No. 1543, 2005 WL 102966, at *9 (D Mass 18 Jan 2005) (‘The allowance for treble damages in antitrust actions ‘was designed to encourage private enforcement of the antitrust laws by offering generous recompense to those harmed by the proscribed conduct and simultaneously to erect a deterrent to those contemplating similar conduct in the future’.... [C]lass actions are a particularly appropriate mechanism for achieving such enforcement…and, therefore, courts resolve doubts in favor of certifying the class.’) (citations omitted).
32 Amchem Prods Inc v Windsor, 521 US 591, 615-15 (1997).
33 See Parklane Hosiery Co Inc v Shore, 439 US 322, 331 (1979) (’[t]he general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where – the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.’); see also Premier Elec Constr Co v Nat’l Elec. Contractors Ass’n, 814 F2d 358, 367 (7th Cir 1987) (applying Parklane in class action context); Becherer v Merrill Lynch, 193 F3d 415 (6th Cir 1999) (en banc) (unfair to bar opt-out plaintiffs claims based on adverse class determination); In re Brand Name Prescription Drugs Antitrust Litig, 115 F.3d 456, 457 (7th Cir 1997) (same); In re Corrugated Container Antitrust Litig, 756 F2d 411, 418-19 (5th Cir 1985) (same).
34 See Eisen v Carlisle & Jacquelin, 417 US 156, 166-67 (1974).
35 See id at 167; see also In re ‘Agent Orange’ Prod Liab Litig, 818 F2d 145, 168 (2d Cir 1987) (‘Rule 23, of course, accords considerable discretion to a district court in fashioning notice to a class.’); Berland v Mack, 48 FRD 121, 129 (SDNY 1969) (‘Rule 23 contemplates cooperative ingenuity on the part of counsel and the court in determining the most suitable notice in each case.’).
36 Of course, such notices may afford sophisticated plaintiffs enough information to estimate their likely recovery if they participate in the settlement.
37 Objections to settlements may be heard by the court overseeing the settlement at the final approval hearing, but the procedure for opting out is distinct from the process of objecting to a settlement. The detailed notice sent to prospective class members should explain both.
38 See Fed R Civ P 23(a)(4) & (g)(1).
39 Indeed, purchasers in certain industries, where there are not enough direct purchasers to maintain a class action or where it makes more sense to file an individual action, might bring an individual or group Sherman Act section 1 case, even absent any class action proceeding whatsoever alleging price fixing, bid rigging, market allocation or other horizontal conspiracies.
40 Brunswick Corp v Pueblo Bowl-O-Mat Inc, 429 US 477, 488 (1977).
41 Distributors or potential distributors may also bring suits against suppliers under various theories, such as resale price maintenance, exclusive dealing arrangements, and group boycotts.
42 Verizon Commc’ns Inc v Law Offices of Curtis V Trinko LLP, 540 US 398, 408 (2004) (quoting in part United States v Colgate & Co, 250 US 300, 307 (1919)).
43 Trinko, at 408 (quoting Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 US 585 (1985). The Supreme Court upheld a section 2 violation in Aspen Skiing where the defendant, who owned three of four mountains in a ski area terminated long-term cooperation with its smaller competitor on a joint all-area ski ticket, to its apparent short-term detriment: ’[the defendant] elected to forgo these short-run benefits because it was more interested in reducing competition – over the long run by harming its smaller competitor.’ Aspen Skiing, 472 US at 608. The court has made clear that ‘Aspen Skiing is at or near the outer boundary of section 2 liability.’ Trinko, 540 US at 409.
44 See, eg MCI Commc’ns Corp v American Telephone and Telegraph Co, 708 F2d 1081, 1132-33 (7th Cir 1983). See generally ABA Section of Antitrust Law, 2002 Annual Review of Antitrust Law Developments 62-63 (2003).
45 Trinko, 540 US at 411.
46 Id at 407.
47 Id at 407-08. The Trinko court likewise took a swipe at the theory of leveraging, where a monopolist uses its power in one market to obtain monopoly power in another market, suggesting that leveraging presupposes an independent source of anti-competitive conduct, ie the illegal refusal to deal rejected in that case. Id at 415 n.4.
48 Brooke Group Ltd v Brown & Williamson Tobacco Corp,509 US 209, 222-24.
49 Id at 223.
50 See Associated Gen Contractors of Cal Inc v Cal State Council of Carpenters, 459 US 519, 535 n.31 (1983). The doctrine of antitrust standing is distinct from the constitutional doctrine, which requires merely that the plaintiff suffer an actual, particularised injury that is ‘fairly traceable’ to the defendant’s conduct and is likely to be redressed by a favorable decision. See Lujan v Defenders of Wildlife, 504 US 555, 560-61 (1992).
51 Brunswick Corp 429 US at 488-89 (antitrust injury is read into section 4 because a plaintiff is not injured ‘by reason of anything forbidden in the antitrust laws’ if injury derives from increased or continued competition). See Atlantic Richfield Co v USA Petroleum Co, 495 US 328, 334 (1990) (plaintiff fails to show antitrust injury unless it is attributable to an anti-competitive aspect of the conduct alleged ‘since [i]t is inimical to [the antitrust] laws to award damages for losses stemming from continued competition.’) (internal quotation marks omitted).
52 Brunswick Corp, 429 US at 488.
53 Id. See also Abcor Corp v AM Int’l Inc, 916 F2d 924 (4th Cir 1990) (course of aggressive competition that may include sporadic acts of deception of tortuous conduct is insufficient to substantiate an antitrust violation).
54 The fact of a cognisable antitrust injury is distinct from establishing an appropriately specific measure of damages, which is discussed below.
55 Taylor Publ’g Co v Jostens Inc, 216 F3d 465, 481 (5th Cir 2000) (quoting in part Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 US 585, 605 (1985)). See Conwood Co LP v US.Tobacco Co, 290 F3d 768 (6th Cir 2002) (defendant’s pervasive removal of plaintiff’s retail racks and point of sale advertising and provision of misleading information to retailers constituted violation of section 2 of Sherman Act); United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (defendant’s deception to developers regarding the incompatibility of their applications to other operating systems violated section 2 of the Sherman Act); Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C, 148 F.3d 1080 (D.C. Cir. 1998) (false advertising and sham objections to competitor’s broadcast license constituted antitrust violation); Nat’l Ass’n of Pharm Mfrs Inc v Ayerst Labs, 850 F2d 904 (2d Cir 1988) (false and misleading statements may constitute antitrust violation if effect is not de minimis).
56 Anza v Ideal Steel Supply Corp, 547 US 451, 457 (2006).
57 Id at 457-60.
58 Illinois Brick Co v Illinois, 431 US 720, 746 (1977). The court carved out two narrow exceptions to this general rule. An indirect purchaser would have standing to sue if (i) the direct purchaser was assured of selling a fixed quantity regardless of price because of a cost-plus contract; and (ii) the direct purchaser is owned or controlled by a seller accused of an antitrust violation. Id at 730-35. Illinois Brick has been held not to apply in suits for injunctive relief. See Mid-West Paper Prods Co v Cont’l Group Inc, 596 F2d 573 (3d Cir 1979).
59 See Lawrence A Sullivan and Warren S Grimes, The Law of Antitrust: An Integrated Handbook (2d ed. 2006), 973-74 (citing commentary).
60 Id at 973. The Supreme Court has held that these laws are not preempted by federal law, notwithstanding the federal rule limiting recovery to direct purchasers. California v ARC America Corp, 490 US 93 (1989). Interestingly, the Class Action Fairness Act of 2005, 28 USC sections 1332, 1453, 1711-15 (2000 & Supp. IV, 2004), provides for federal court adjudication of state law based class actions, including the state law antitrust claims of indirect purchasers. Thus, contrary to the mandate articulated in Illinois Brick, it is now possible for direct and indirect purchasers to each seek treble-damage recovery from a single cartel in a coordinated federal proceeding, thereby theoretically exposing the cartelists to sanctions totaling six times the actual loss.
61 See Blue Shield of Virginia v McCready, 457 US 465, 479 (1982).
62 Isaksen v Vermont Castings Inc, 825 F2d 1158 (7th Cir 1987).
63 J Truett Payne Co Inc v Chrysler Motors Corp, 451 US 557, 568 (1981).
64 Bigelow v RKO Radio Pictures, 327 US 251, 264-65 (1946).
65 LePage’s Inc v 3M, 324 F3d 141, 166 (3d Cir 2003).
66 Law v National Collegiate Athletic Ass’n, 5 F Supp. 2d 921, 929 (D Kan 1998) (quotations and citations omitted).
67 15 USC section 15(a).
68 Kristian v Comcast Corp, 446 F3d 25 (1st Cir 2006).
69 American Soc’y of Mech Eng’rs,Inc v Hydrolevel Corp, 456 US 556, 575 (1982); Texas Indus Inc v Radcliff Materials Inc, 451 US 630, 639 (1981).
70 Brunswick, 429 US at 486, n10 (quoting 21 Cong Rec 2456 (1890) (remarks of Senator Sherman)).
71 Rodriguez v West Publishing Corp, 563 F3d 948, 964 (9th Cir 2009); City of Detroit v Grinnell Corp, 495 F2d 448, 458 (2d Cir 1974), overruled on other grounds as recognised by US Football League v Nat’l Football League, 887 F2d 408, 415-16 (2d Cir 1989); In re Warfarin Sodium Antitrust Litig, 212 F.R.D. 231, 257-58 (D. Del. 2002).
72 Rodriguez, 563 F3d at 964-65.
73 Id at 965.
74 Bell Atlantic Corp v Twombly, 550 US 544 (2007).
75 Id at 556-57.
76 Id at 556.
78 In re Chocolate Confectionary Antitrust Litig, 602 F. Supp. 2d 538 (M.D. Pa. 2009).
79 Id at 576-77.
80 Standard Iron Works v ArcelorMittal, No. 08-C-5214, 2009 WL 1657449 (ND Ill 12 June 2009).
81 Id at *13-20.
82 In re Static Random Access Memory (SRAM) Antitrust Litig, 580 F Supp 2d 896 (ND Cal 2008).
83 Id at 901-03.
84 In re Initial Public Offering Securities Litig., 471 F.3d 24 (2d Cir. 2006).
85 Eisen, 417 US at 177.
86 IPO, 471 F.3d at 41.
87 In re New Motor Vehicles Canadian Export Antitrust Litig, 522 F3d 6 (1st Cir 2008).
88 Id at 29.
90 In re Hydrogen Peroxide Antitrust Litig, 552 F3d 305 (3d Cir 2008).
91 Id at 311-12.
92 Id at 307.
93 IPO, 471 F.3d at 40.
94 Christine A Varney, assistant attorney general, Antitrust Division, US Department of Justice, Vigorous Antitrust Enforcement in This Challenging Era, Remarks as Prepared for the United States Chamber of Commerce (12 May 2009). (Varney).
95 See Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act, United States Department of Justice (2008).
96 Varney, at 7.
97 Id at 6.
98 Id at 7.
99 Id at 9 (citing Lorain Journal v United States, 342 US 143 (1951), Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 US 585 (1985), and United States v Microsoft, 253 F3d 34 (DC Cir 2001) (en banc)).
100 See Oral Statement of Commissioner J Thomas Rosch, Federal Trade Commission, FTC Oversight Hearing, Committee on Commerce, Science and Transportation, United States Senate (10 April 2007), at 3 (‘We continue to believe that most, if not all, reverse payments are illegal if they are made at the same time a generic agrees not to compete as soon as it could if it won its challenge to the branded’s patent.’).
101 In re Ciprofloxacin Hydrochloride Antitrust Litig, No. 05-2851-cv (L) (2d Cir filed 6 July 2009)
102 Brief for the United States in Response to the Court’s Invitation, In re Ciprofloxacin Hydrochloride Antitrust Litig, No. 05-2851-cv(L) (2d Cir filed 6 July 2009), at 1.
103 Id at 11.
104 Id at 10.
105 Defendants can do so ‘by providing a reasonable explanation that the payment bought something other than an additional limitation of competition, so that there is no reason to find that the settlement does not provide a degree of competition reasonably consistent with their contemporaneous evaluations.’ Id at 32.