Competition Litigation Laws And Regulations

Published date06 October 2022
Subject Matterntitrust/Competition Law, Antitrust, EU Competition
Law FirmShearman & Sterling LLP
AuthorMr David Higbee, Ryan Shores, Todd Stenerson and Rachel Mossman

1. General

1.1 Please identify the scope of claims that may be brought in your jurisdiction for breach of competition law.

The United States has both federal and state competition laws.

Under the federal antitrust laws, the government, through the Department of Justice (DOJ), brings criminal claims. The DOJ, the Federal Trade Commission (FTC), and private plaintiffs can bring civil claims. State antitrust laws vary.

Federal antitrust law governs both coordinated and unilateral behaviour. It prohibits multi-firm conduct and "contract[s], combination[s], or conspirac[ies]" that unreasonably restrain trade. Classic examples of multi-firm behaviour likely to "unreasonably" restrain trade include price-fixing, bid rigging, and market-allocation schemes. Other conduct, like exclusive dealing, non-compete agreements, non-solicitation provisions, resale price maintenance, and other vertical and horizontal restraints are subject to scrutiny under the federal antitrust laws.

The federal antitrust laws forbid a single firm from monopolisation, attempted monopolisation, or conspiracy or combination to monopolise. Possessing a dominant or even a monopoly market share is not by itself illegal, but firms violate the U.S. competition laws when they obtain, maintain, or exercise monopoly power in an anticompetitive manner. Examples of potentially problematic single-firm conduct include tying, bundling, and refusals to deal.

The federal antitrust laws also govern mergers and acquisitions where the effect may be to substantially lessen competition. The DOJ and FTC can sue to stop mergers if they determine the combination will substantially lessen competition.

On July 9, 2021, the FTC rescinded a 2015 policy that limited its enforcement abilities. The FTC stated that its mandate from Congress is to enforce and prohibit "unfair methods of competition" beyond just the Sherman and the Clayton Act.

1.2 What is the legal basis for bringing an action for breach of competition law?

The Sherman Antitrust Act is the principal competition law in the United States. Section I of the Sherman Act governs multi-firm conduct. Section II applies to single-firm conduct and monopolisation.

Sections 4 and 16 of the Clayton Act grant private parties who have been injured under the competition laws with a right to bring civil claims against the violators for damages and injunctive relief, respectively. 15 U.S.C. ' 15, 26.

Section 7 of the Clayton Act (15 U.S.C. ' 18) governs mergers, acquisitions, and joint ventures and prohibits such transactions where "the effect of such acquisition may be substantially to lessen competition, or tend to create a monopoly". Section 7 is primarily enforced by the DOJ and the FTC, though states attorneys general and private parties may enforce it under Sections 4 and 16 of the Clayton Act. 15 U.S.C. ' 15(c), 26.

1.3 Is the legal basis for competition law claims derived from international, national or regional law?

The legal basis for U.S. competition claims is derived from federal (national) and state (regional) law. Except for indirect purchaser claims, most antitrust claims are brought under federal law.

International law is typically not invoked for substantive competition claims. The U.S. Supreme Court recently held that a federal court determining foreign law should accord respectful consideration to a foreign government's interpretation, but that a U.S. court is not bound to accord conclusive effect to the foreign government's statements. Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co., 585 U.S. ___, 138 S. Ct. 1865 (2018).

1.4 Are there specialist courts in your jurisdiction to which competition law cases are assigned?

There are no specialist courts for competition law.

1.5 Who has standing to bring an action for breach of competition law and what are the available mechanisms for multiple claimants? For instance, is there a possibility of collective claims, class actions, actions by representative bodies or any other form of public interest litigation? If collective claims or class actions are permitted, are these permitted on an "opt-in" or "opt-out" basis?

The government may bring civil or criminal actions against violators of the antitrust laws. In addition, private plaintiffs who have been injured in their "business or property by reason of anything forbidden in the antitrust laws" have a right to sue under the Clayton Act. 15 U.S.C. ' 15(a).

The Supreme Court has limited standing for monetary damages under the federal statutes to those plaintiffs who are "direct purchasers" or are competitors directly injured. Blue Shield of Va. v. McCready, 457 U.S. 465 (1982). In addition, the harm must be caused by the competition-reducing aspects of the challenged conduct. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977). One caveat to this general limitation is that several states have passed statutes allowing for indirect purchasers to have standing to sue under state antitrust laws.

Representative plaintiffs may bring claims on behalf of themselves and similarly situated entities. A case can only proceed as a class action if it meets the prerequisites set forth in Federal Rule of Civil Procedure 23(a):

"(1) the class is so numerous that joinder of all members is impracticable ("numerosity"); (2) there are questions of law or fact common to the class ("commonality"); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class ("typicality"); (4) the representative parties will fairly and adequately protect the interests of the class ("adequate representation");"

and one of the sections of 23(b):

"(1) prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or

(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members, not parties, to the individual adjudications or would substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."

Rules 23(b)(1) and (2) class actions do not permit "opt-outs", while 23(b)(3) class actions do proceed on an "opt-out" basis.

1.6 What jurisdictional factors will determine whether a court is entitled to take on a competition law claim?

Courts must have both subject-matter and personal jurisdiction to decide competition law claims.

Subject-matter jurisdiction: Federal district courts have subject-matter jurisdiction over cases arising under federal statutes (called federal question jurisdiction). Federal district courts can also decide state antitrust law claims when they are brought with federal claims and arise from the same nucleus of operative facts giving rise to the federal claim. In addition, federal district courts have subject-matter jurisdiction over controversies arising between citizens of different states when the amount at issue exceeds $75,000 (diversity jurisdiction). As such, federal courts can decide state law competition claims where the litigants are from different states and the alleged damages exceed $75,000. The Class Action Fairness Act also establishes subject-matter jurisdiction for certain class actions where the amount in controversy exceeds $5 million, the class comprises at least 100 plaintiffs, and there is at least minimal diversity between the parties (i.e., at least one plaintiff class member is diverse from at least one defendant). 28 U.S.C. ' 1332(d).

When claims concern conduct that occurred outside of the United States, to establish jurisdiction the plaintiff must show that...

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