In brief: the legal framework for private antitrust litigation in USA

Legislation and jurisdiction

How would you summarise the development of private antitrust litigation in your jurisdiction?

In recent years, a confluence of judicial opinions has increased the burdens on private plaintiffs both to bring a case and ultimately to prevail. First, to survive dismissal at the pleading stage – the first stage of litigation – the Supreme Court has held that the claims in a plaintiff’s initial complaint must be plausible, meaning the specific facts in the pleading must plausibly suggest that unlawful conduct has occurred. Second, for those claims styled as class actions, the Supreme Court now requires that plaintiffs demonstrate, by a preponderance of the evidence, that their claims can be sustained using evidence that is common to all class members. Third, the Supreme Court now requires that plaintiffs can put their claims to a jury only if the totality of their evidence tends to exclude the possibility that defendants acted lawfully.

While the frequency of cases has decreased, the size and complexity of civil antitrust cases have increased as putative classes have grown, and certain industries remain targets of private antitrust litigation. In particular, firms in the financial services, healthcare, and technology or big data sectors have been disproportionately targeted by plaintiffs in private antitrust litigation.

Are private antitrust actions mandated by statute? If not, on what basis are they possible? Is standing to bring a claim limited to those directly affected or may indirect purchasers bring claims?

Private antitrust actions are authorised under both federal and state law. Although federal law expressly permits any person ‘who has been injured in his business or property by reason of anything forbidden in the antitrust laws’ to bring an antitrust suit, not all persons who have been harmed may sue under federal law. Courts in the United States have held that only those persons who have suffered an economic injury of the type the antitrust laws were designed to prevent (an ‘antitrust injury’) have standing to sue (Brunswick Corp v Pueblo Bowl-O-Mat Inc, 429 US 477 (1977)).

Categories of persons that have been recognised to have standing include:

• direct purchasers (ie, plaintiffs that directly purchased goods or services from the alleged wrongdoers);
• competitors who participate in the market that was allegedly restrained; and
• certain other limited categories of consumers and competitors that were directly harmed by the alleged misconduct.

Notably, ‘indirect’ purchasers have no standing to bring a claim under federal law.

State laws generally track federal law, although many states have enacted statutes that allow indirect purchasers in those states to recover under state law. As a result, defendants in antitrust suits often face double exposure for alleged misconduct; they face claims from direct purchasers under federal law, and they face claims from indirect purchasers under state law.

If based on statute, what is the relevant legislation and which are the relevant courts and tribunals?

Section 4 of the Clayton Act establishes a private cause of action for plaintiffs to recover damages for any violation of federal antitrust law. Most claims brought pursuant to section 4 allege a violation of section 1 of the Sherman Act (which prohibits agreements, such as conspiracies, in restraint of trade) and section 2 of the Sherman Act (which prohibits certain conduct related to monopolisation and attempted monopolisation), although in the past few years, there have also been suits alleging violations of section 7 of the Clayton Act (which prohibits mergers that may substantially lessen competition or tend to create a monopoly).

Federal district courts have exclusive jurisdiction to hear federal antitrust claims, and appeals are heard in the relevant regional circuit court of appeals and ultimately the Supreme Court if it chooses to hear the appeal. State antitrust claims can be heard in state court, but they can also be heard in federal court if other jurisdictional requirements are satisfied. In practice, state antitrust claims are usually heard in federal court, although one common exception is where a state attorney general is suing under state law.

Private actions

In what types of antitrust matters are private actions available? Is a finding of infringement by a competition authority required to initiate a private antitrust action in your jurisdiction? What is the effect of a finding of infringement by a competition authority on national courts?

Private causes of actions are available for most forms of unlawful conduct and are typically grouped into three separate types of cases: cases challenging coordinated conduct in violation of section 1 of the Sherman Act; cases challenging monopolistic conduct in violation of section 2 of the Sherman Act; and cases challenging anticompetitive mergers under section 7 of the Clayton Act.

Coordinated conduct in violation of section 1 of the Sherman Act includes conduct such as collusion among competitors (eg, price-fixing, bid rigging and group boycotts), anticompetitive vertical agreements (eg, exclusive licensing arrangements) and agreements among competitors that unreasonably restrain trade (eg, agreements that may have some pro-competitive benefits but that are on balance anticompetitive).

Unilateral conduct in violation of section 2 of the Sherman Act includes conduct such as certain cases of tying or bundling products, certain exclusive dealing practices and other attempts to artificially create a monopoly.

Different practices are evaluated under different legal standards. Horizontal collusion is generally considered presumptively unlawful, so plaintiffs typically only need to prove the existence of the agreement. Meanwhile, vertical agreements, single-firm conduct, horizontal joint ventures and mergers are all typically evaluated under a rule of reason balancing test as courts recognise that those types of conduct generally involve pro-competitive benefits as well. Private plaintiffs face significant hurdles in bringing claims based on conduct subject to the rule of reason.

Antitrust plaintiffs generally may bring claims regardless of whether the government brings a claim as well. If the government does successfully bring a challenge, however, then the defendants may be barred from re-litigating certain factual findings in subsequent private litigation.

What nexus with the jurisdiction is required to found a private action? To what extent can the parties influence in which jurisdiction a claim will be heard?

To hear a particular case, a court must have subject-matter jurisdiction, which refers to the court’s ability to hear that particular type of case. In the antitrust context, federal courts can hear cases brought under the federal antitrust laws (federal question jurisdiction) or cases involving state law claims between parties from different states or countries as long as the amount in controversy is sufficient (diversity jurisdiction). Subject-matter jurisdiction cannot be waived, so even if the parties do not litigate the issue, a court can examine the question on its own.

To hear a case involving a particular party, a court must have personal jurisdiction over that party as well. Personal jurisdiction is appropriate if the defendant has sufficient minimum contacts with the forum state, and the cause of action arises from those contacts. If a defendant ‘purposefully avails’ itself of a forum state by selling products there, then personal jurisdiction exists for disputes arising from the sale of those products in that state.

Unlike subject-matter jurisdiction, personal jurisdiction can be waived. Courts typically only exercise personal jurisdiction over a foreign defendant when there is a sufficiently strong nexus between the foreign defendant’s suit-related conduct and the United States; thus, foreign conduct by a foreign defendant that is not directly targeted at the United States may not provide a sufficient basis for a court to exercise personal jurisdiction.

Additionally, courts hearing antitrust cases against foreign defendants must also consider the limits of the Foreign Trade Antitrust Improvement Act of 1982 (FTAIA). The FTAIA limits federal antitrust claims involving foreign commerce to activity that has a ‘direct, substantial, and reasonably foreseeable effect’ on domestic commerce, and the effect ‘gives rise’ to an antitrust claim (F Hoffman-La Roche Ltd v Empagran SA, 542 US 155 (2004)). The FTAIA was intended to balance the United States’ interest in protecting its own citizens with its interest in avoiding interference with other nations’ abilities to regulate their own commercial affairs.

The FTAIA does not apply to import commerce (ie, conduct involving the importation of goods directly into the United States remains subject to US antitrust law). Rather, the key question under the FTAIA is to what extent a foreign company can be held liable in the United States for selling a product to an intermediary that, in turn, imports the product into the United States. The answer is unresolved and is the subject of a circuit split. The Seventh Circuit, for example, has taken the firm position that sales by a foreign entity to another foreign entity outside the United States are not actionable under the FTAIA, regardless of the ultimate effect upon US commerce, because the effect is not ‘direct’ (Motorola Mobility LLC v AU Optronics Corp, 775 F3d 816 (7th Cir 2015), amending 773 F3d 826). The Second Circuit, meanwhile, is more lenient and requires only a ‘reasonably proximate cause nexus between the effect’ in the United States and the foreign conduct (Lotes Co v Hon Hai Precision Indus (Foxconn), 735 F3d 395 (2d Cir 2014)).

Can private actions be brought against both corporations and individuals, including those from other jurisdictions?

Plaintiffs may bring private actions against individuals, corporations and other types of legal entities. Claims can be brought against foreign defendants subject to the personal and subject-matter jurisdictional limitations and the requirements of the FTAIA.