Enforcement proceedings in dominance in USA

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The DOJ and the FTC are the federal regulators with primary responsibility for enforcement against monopolisation. (Some industry-specific regulators have enforcement authority with respect to their industry.) Investigations can start in a variety of ways, including on the regulator’s own initiative (eg, learning about conduct from the news), complaints from interested parties, or requests from other governmental actors (eg, requests from the US Congress).

The investigatory powers of both regulators are extensive and include the powers to subpoena documents and data, compel testimony and require written responses to interrogatories.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

Available remedies in monopolisation cases brought by regulators include injunctive relief and other equitable remedies, as well as civil penalties. Injunctive relief can include structural remedies (such as divestitures or, in extreme cases, dissolving or splitting the defendant firm) or behavioural remedies (such as prohibiting the defendant from engaging in certain activities or requiring that the defendant deal with rivals on certain terms). Equitable relief can also include monetary equitable remedies, such as disgorgement of profits or restitution. Although monetary equitable remedies are unusual, they can be quite significant, and in one case the FTC obtained monetary equitable relief in a settlement of over US$1 billion.

Although criminal sanctions are theoretically available in monopolisation cases, they are not pursued in practice.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The DOJ must bring monopolisation actions in federal court.

The FTC can bring monopolisation actions in federal court, but it also can bring enforcement actions in its internal administrative courts. The FTC must sue in federal court to obtain injunctions, monetary equitable remedies or civil penalties. But the FTC can issue forward-looking ‘cease and desist’ orders after an administrative hearing, and it has very broad latitude in fashioning these orders to remedy the misconduct - it can require divestitures, prohibit otherwise lawful business activities that could be used to facilitate an unlawful activity, and require affirmative conduct to restore competition.

What is the recent enforcement record in your jurisdiction?

The agencies regularly investigate monopolisation cases, but bring a relatively limited number of cases, at most a few cases a year.

Investigations can take significant time - with some lasting multiple years - and if a lawsuit is brought, it generally takes well over a year to reach an initial decision and longer through the appeals process. Thus, enforcement decisions often do not occur until long after the challenged conduct has occurred, during which time the industry might have changed, making it difficult to effectively remedy violations.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

A contract that violates the antitrust laws is unenforceable. Whether the particular offending provisions can be severed from the rest of the contract is determined on a case-by-case basis.

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

Private parties can bring claims under the antitrust laws, although private parties cannot enforce the FTC Act. Private plaintiffs can seek damages or injunctive relief.

In addition, the US government, US states, and foreign governments can bring federal antitrust claims as an injured party (eg, if the government is a purchaser of the product). US states can also bring parens patriae actions seeking treble damages on behalf of their residents.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

Private parties, as well as governments suing on their own behalf or on behalf of their residents, are entitled to three times their actual injury plus litigation costs and reasonable attorney fees. (There are a few exceptions that typically do not apply in monopolisation cases - eg, a foreign government is generally limited to single damages, and a defendant in a cartel case that obtains amnesty and cooperates with private plaintiffs is subject only to single damages.)

To obtain damages, beyond proving an antitrust violation, a plaintiff must prove that it suffered injury, that the violation was a material and proximate cause of its injury, and that its injury was an ‘antitrust injury’, meaning that it resulted from the anticompetitive effects of the violation. A private plaintiff must also prove the amount of damages with reasonable certainty. Typically, damages are measured as the difference between the plaintiff’s position in the actual world and the position that the plaintiff would have been in ‘but for’ the anticompetitive effects of the violation.

Damages can be significant. For example, in Conwood v US Tobacco, the plaintiff was awarded US$1.05 billion after trebling in a case alleging that a smokeless tobacco manufacturer had removed and destroyed a competitor’s display racks and advertising from retail stores without the permission of the retailers.

To what court may authority decisions finding an abuse be appealed?

Cases brought in federal district court by regulators or private plaintiffs are entitled to an appeal to a federal appellate court. Subsequently, parties can petition for review by the US Supreme Court. On appellate review, findings of fact are given substantial deference and reversed only for clear error. Findings of law are reviewed de novo. Mixed questions of fact and law - such as how legal principles apply to particular facts - are generally reviewed on a sliding scale.

Cases brought by the FTC in its administrative courts can be appealed first to the Commission and then to a federal appellate court. In those cases, the appellate court will review whether the FTC’s findings of fact are supported by substantial evidence. In addition, appellate courts generally give some deference to the FTC’s conclusion that conduct violates section 5 of the FTC Act.