The Private Antitrust Remedy: Lessons from the American Experience

Loyola University Chicago Law Journal, Dec 2010

By Edward D. Cavanagh, Published on 01/01/10

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The Private Antitrust Remedy: Lessons from the American Experience

Loyola University Chicago Law Journal The P rivate Antitrust Remedy: Lessons from the American Experience Edward D. Cavanagh 0 1 0 Edward D. Cavanagh, Th e Private Antitrust Remedy: Lessons from the American Experience , 41 Loy. U. Chi. L. J. 629 (2010). Available at: 1 St. John's University School of Law - The Private Antitrust Remedy: Lessons from the American Experience Edward D. Cavanagh* I. INTRODUCTION The treble damage remedy has been a centerpiece of private antitrust enforcement since the enactment of the Sherman Act in 1890.1 Aware that government resources were limited, Congress created the private right of action as a complement to public enforcement to assure the detection and prosecution of antitrust offenders. 2 The private right of action has proven to be a very potent weapon in the civil enforcement arsenal.3 It is the very potency of the private remedy, however, that has made the private right of action a target of criticism by defendants and, more recently, the courts. 4 Indeed, in the last decade, the private remedy has been the subject of a full-scale siege in the federal courts. Ironically, at the very time the private antitrust remedy is seemingly in eclipse in the United States, antitrust enforcement authorities in Europe5 and elsewhere are contemplating adoption of the private right * Professor of Law, St. John's University School of Law. This article was originally presented as a paper at the George Washington University School of Law Conference on Private Enforcement of Competition Law on February 28, 2009. The author wishes to thank the participants in that conference and especially Professor Stephen Calkins for their very helpful comments on prior drafts of this article. Portions of this article have been adapted from Edward D. Cavanagh, Detrebling Antitrust Damages in Monopolization Cases, 76 ANTITRUST L.J. 97 (2009) and used with permission. 1. The provision for mandatory trebling is currently housed in section 4 of the Clayton Act, 15 U.S.C. ยง 15 (2006). 2. See Blue Shield of Va. v. McCready, 457 U.S. 465, 472 (1982) ("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."). 3. See Blackburn v. Sweeney, 53 F.3d 825, 829 (7th Cir. 1995) ("Treble damages are a potent remedy."). 4. See, e.g., Bell At. Corp. v. Twombly, 550 U.S. 544, 558-559 (2007) (citing sources emphasizing the high cost of discovery in antitrust litigation); Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 882-83 (2004) (warning that where an industry is regulated, costly private antitrust litigation may be unjustifiable in that industry because it risks "chill[ing] the very conduct the antitrust laws are designed to protect") 5. See Commission Green Paperon Damages Actions for Beach of the EC Antitrust Rules, of action. 6 As in the United States, neither the European Commission nor the competition authorities in member states have the resources to detect and prosecute all antitrust transgressions so as to promote a "competition culture" in Europe.7 This Article examines the private remedy through the lens of the American system and offers some observations about the American experience that may prove useful in designing private remedies schemes in antitrust regimes abroad. II. THE PRIVATE RIGHT OF ACTION IN THE UNITED STATES This Part will summarize the elements of the private right of action in the United States, followed by an explanation of the objectives it seeks to accomplish. A. Features Under section 4 of the Clayton Act,8 "any person injured in his business or property by reason of anything forbidden in the antitrust laws" may sue for recovery in federal court. Section 4 further provides that: (1) the litigants are entitled to a trial by jury; (2) any damage award from the jury is automatically trebled by the court; and (3) a prevailing antitrust plaintiff (but not a prevailing defendant) is entitled to reasonable attorneys' fees as well as treble damages. 9 Under section 5 of the Clayton Act, a final decree in favor of the government in any public enforcement proceeding "shall be prima facie evidence" in any subsequent private action on the same claim. 10 In addition, the parties are entitled to broad pretrial discovery under the Federal Rules of Civil Procedure, which authorize discovery of "any matter, not privileged relevant to any claim or defense."' I Finally, many antitrust actions are brought as class actions. 12 As a result, defendants' financial exposure COM (2005) 672 final (Dec. 19, 2005), availableat http://eur-lex.europa.eu/LexUriServ/site/en/ com/2005/com2005_0672en01.pdf (identifying obstacles and potential solutions to improve damage actions under competition law); Andrew I. Gavil, The Challenges ofEconomic Proofin a Decentralizedand Privatized European Competition Policy System: Les (...truncated)


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Edward D. Cavanagh. The Private Antitrust Remedy: Lessons from the American Experience, Loyola University Chicago Law Journal, 2010, Volume 41, Issue 3,