Competition Litigation Comparative Guide

• Jurisdiction: United States,Federal
• Law Firm: Arnold & Porter
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Author: Ms Sonia Kuester Pfaffenroth, C. Scott Lent and Dylan Young
• Published date: 14 April 2023

1 Legal framework

1.1 Which laws regulate competition in your jurisdiction?

US antitrust law is derived primarily from the Sherman Act and the Clayton Act. In particular:

• Section 1 of the Sherman Act (15 USC § 1) prohibits agreements that unreasonably restrain trade;
• Section 2 of the Sherman Act (15 USC § 2) prohibits anti-competitive monopolisation; and
• Section 7 of the Clayton Act (15 USC § 18) restricts anti-competitive mergers and acquisitions.

The Hart-Scott-Rodino Act (15 USC § 18a) requires that:

• mergers and acquisitions of a certain size be notified to the federal government; and
• the parties comply with a waiting period prior to consummation to allow for a review by federal authorities.

Other statutes include:

• the Federal Trade Commission Act ('FTC Act'), which prohibits "unfair methods of competition" (15 USC § 45); and
• Section 8 of the Clayton Act (15 USC § 19), which prohibits competing companies from sharing directors under certain circumstances (so-called 'interlocking directorates').

The Robinson-Patman Act (15 USC § 13) prohibits certain forms of price discrimination. While the Robinson-Patman Act has not been the subject of enforcement by federal regulators in recent years, federal enforcers have indicated a renewed focus on the act, and it has remained the subject of private litigation.

In addition, most US states have their own antitrust and/or unfair competition statutes that may vary from federal standards. Many state statutes are modelled after, and interpreted consistently with, their federal counterparts and federal precedent.

1.2 Which authorities are responsible for enforcing the competition legislation? What is their general approach to enforcement?

At the federal level, the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) share responsibility for enforcing competition policy. Only the DOJ has authority to prosecute criminal violations of the antitrust laws. Both the FTC and the DOJ have authority to pursue civil non-merger enforcement actions and have responsibility for merger enforcement. Where both agencies share jurisdiction, there is a clearance process to determine which agency will pursue a given investigation. The federal agencies generally share a similar approach to enforcement. The DOJ and FTC have published joint guidelines regarding a variety of enforcement topics, which often inform but do not bind judicial analysis of antitrust cases. The agencies approach enforcement:

• by pursuing investigations relating to specific parties and conduct; and
• through advocacy and policy outreach.

The DOJ Antitrust Division is part of a centralised Executive Branch agency, the Department of Justice. The Antitrust Division is led by an Assistant Attorney General who operates under the supervision of the head of the Department of Justice, the Attorney General, and of the Associate Attorney General. Both are appointed by the President and confirmed by the US Senate. In contrast, the FTC is an independent commission led by a bipartisan group of five Commissioners who are appointed by the President and confirmed by the Senate for staggered terms.

The DOJ Antitrust Division is currently led by Assistant Attorney General Jonathan Kanter. Kanter has emphasised the need to thoroughly litigate perceived antitrust violations and "not settle, unless a remedy fully prevents or restrains the violation", while questioning some substantive bedrocks of modern US jurisprudence such as the consumer welfare standard. Under his leadership, the DOJ has been aggressive in litigation and has re-emphasised lesser-utilised statutes such as Section 8 of the Clayton Act.

The current Chair of the FTC is Lina Khan. Under Khan, the FTC has been aggressive in litigation, especially in the technology sector. Khan has joined Kanter in voicing scepticism of antitrust enforcement focused exclusively on the consumer welfare standard. In 2022, the FTC announced an expanded approach to enforcement of Section 5 of the FTC Act outside of traditional antitrust jurisprudence, to scrutinise conduct that "goes beyond competition on the merits" insofar as it is "facially unfair" and "negatively affects competitive conditions". The FTC has also foreshadowed renewed federal enforcement of the Robinson-Patman Act.

State antitrust laws are enforced by each state's attorney general, who for some states is a directly elected official. State attorneys general may:

• bring enforcement actions on behalf of the state for violations of state competition laws; and
• bring damages claims for violations as parens patriae on behalf of injured persons within their geographic boundaries (15 USC § 15c).

State attorneys general may launch investigations and bring enforcement actions independently or in coalitions with other states. States also frequently work jointly with the federal agencies on investigations and enforcement actions.

2 Private claims

2.1 What types of private claim may be brought for breach of competition law in your jurisdiction?

The Sherman Act, the Clayton Act and the Robinson-Patman Act may be the subject of private litigation; whereas the Hart-Scott-Rodino Act and the Federal Trade Commission Act may not. Qualifying parties may bring many of the same civil actions as government enforcers (eg, cartelisation, monopolisation, merger challenges). Private parties can sue to recover treble damages as well as injunctive relief under Sections 4 and 16 of the Clayton Act (15 USC §§ 15, 26). State statutes vary widely on this issue, but at least some provide for a private right of action and many of those also allow for recovery of multiple damages.

2.2 What is the legal basis for bringing a claim for breach of competition law?

Section 1 of the Sherman Act (15 USC § 1) prohibits "[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". Longstanding jurisprudence interprets 'in restraint of trade' as requiring an "unreasonable restraint of trade".

Section 2 of the Sherman Act (15 USC § 2) declares:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.

Section 7 of the Clayton Act (15 USC § 18) prohibits:

acquir[ing] the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

The Robinson Patman Act deems it illegal to:

• "discriminate ... against competitors of the purchaser, in that, any discount, rebate, allowance, or advertising service charge is granted to the purchaser over and above any discount rebate, allowance, or advertising service charge available at the time of such transaction to said competitors in respect of a sale of goods of like grade, quality, and quantity;"
• "sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States;" and
• "sell, or contract to sell, goods at unreasonably low prices for the purpose of destroying competition or eliminating a competitor."

Please see question 6.3 for more detail on the elements of claims brought pursuant to these statutes.

3 Parties

3.1 Who has standing to bring a claim for breach of competition law?

Federal antitrust enforcers – the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) – can bring challenges to enjoin violations of the Sherman Act, the Clayton Act and the Robinson Patman Act. The DOJ can also bring challenges for statutory penalties under the Hart-Scott-Rodino Act. The DOJ can also bring damages actions under Section 4a of the Clayton Act. The FTC has exclusive jurisdiction to enforce the FTC Act.

As discussed in question 2.1, private plaintiffs may bring claims under a more limited set of statutes. Even with a private right of action, all private plaintiffs must have constitutional standing to sue (eg, see Lujan v Defenders of Wildlife, 504 US 555 (1992)). In addition, federal antitrust claimants must be able to demonstrate an 'antitrust injury', which broadly requires that their alleged injury be caused by the antitrust violation itself and reflect the anticompetitive effect of the violation (eg, see Brunswick Corp v Pueblo Bowl-O-Mat, Inc, 429 US 477 (1977)). Further, the Supreme Court has drawn a 'bright line' between:

• direct purchasers (ie, those that paid for a product or service which was subject to the violation); and
• indirect purchasers (ie, purchasers further downstream).

Federal claimants must be direct purchasers under Illinois Brick Co v Illinois, 431 US 720 (1977) to recover damages for violations of federal antitrust law. Many states, however, have 'repealed' Illinois Brick to enable indirect purchasers to pursue damages claims under state antitrust statutes.

3.2 Can a claim for breach of competition law be brought against parties outside the jurisdiction?

Yes. Sections 1 and 2 of the Sherman Act apply to all "persons" affecting any part of "trade or commerce among the several states or with foreign nations" (15 USC §§ 1, 2). Similarly, Section 7 of the Clayton Act applies to any "person engaged in commerce or in any activity affecting commerce" (15 USC § 18). In both cases, the term 'person' is defined to include "corporations and associations existing under or authorized by ... the laws of any foreign country" (15 USC §§ 7, 12).

Federal antitrust laws apply to foreign conduct that has a substantial and...