ABA Antitrust Section | Global Private Litigation Committee Global Private Litigation Bulletin ISSUE 6 | March 2016 Inside this Issue Letter from the Editors – page 1 Cartels Worldwide Are Paid Handsomely for Their Crimes and Are Projected to Amass Even Greater Momentum and Gains in the Years Ahead: Important Implications for All Antitrust Jurisdictions, by Kathleen Foote, Pamela Pham – page 2 Do Cartels Pay?, The View from the Plaintiffs’ Side, by Megan Jones – page 7 Does Antitrust Crime Pay? – A Defense Perspective, by Amy B. Manning – page 11 Do Cartels Pay?, A Global View, by Kristina Nordlander – page 14 Upcoming Global Private Litigation Committee Events – page 17 Letter from the Editors “Does Crime Pay?” poses – and answers from varying viewpoints – a core economic and behavioral question of cartel conduct. In theory, if a rational business executive or company believes the potential benefits of anticompetitive agreements outweigh the potential costs, the business may commence or continue such behavior. Beginning with the enforcers’ perspective, Kathleen Foote (Chief of the California Department of Justice’s antitrust unit) and her antitrust colleague, Deputy Attorney General Pamela Pham, marshall data to show that cartel overcharges exceed fines in the U.S. and to an even greater extent internationally. They make the case that unless public and private enforcers ramp up fines and recoveries, deterrence will continue (continued) Chairs Vice‐Chairs Jeffrey LeVee Jon Lawrence Hollis Salzman Jones Day 555 South Flower St, 50th Floor Los Angeles, CA 90071‐2300 [email protected] +1 (213) 243‐2572 Freshfields Bruckhaus Deringer LLP 65 Fleet St London, EC4Y 1HS [email protected] +44 207 832 7692 Robins Kaplan LLP 601 Lexington Ave, Ste 3400 New York, NY 10022‐4611 [email protected] +1 (212) 980‐7405 Gregory P. Hansel Preti Flaherty One City Center Portland, ME 04101 [email protected] +1 (207) 791‐3000 Bruce Simon Pearson, Simon & Warshaw, LLP 44 Montgomery St, Ste 2450 San Francisco, CA 94104‐4719 [email protected] +1 (415) 400‐7700 Judith Zahid Melissa Maxman Zelle LLP Cozen O'Connor 44 Montgomery St, Ste 3400 1627 I St NW, Ste 1100 San Francisco, CA 94104‐4807 Washington, DC 20006‐4022 [email protected] [email protected] +1 (415) 633‐1916 +1 (202) 912‐4873 *The Committee also thanks the contribution of Meegan Hollywood, Robins Kaplan LLP (Young Lawyers Division Representative). Letter from the Editors (continued) to be outstripped by the lucrative rewards of hard‐core antitrust conspiracies. For the plaintiffs’ perspective, we turn to Megan Jones, a partner at Hausfeld LLP, whose article cites extensive data to support her view that continuing cartel conduct in a variety of industries calls for ramping up detection, fines and civil recoveries. From the defense side, Amy B. Manning, Managing Partner of McGuireWoods LLP’s Chicago office, argues that the combined human, financial and competitive tolls of cartels unequivocally exceed the value of financial gains. To bring additional international perspective, we hear from Kristina Nordlander, a partner with Sidley Austin LLP based in Brussels, who explores whether EU sanctions are sufficient to deter cartels, and explains the growing role of private damages actions in Europe. On behalf of the Global Private Litigation Committee, we thank all of our prominent contributors for their excellent articles proving once again that brevity is the soul of wit and that you don’t need a law review article to capture the essence of an idea. Sincerely yours, Gregory P. Hansel Preti Flaherty Judith A. Zahid Zelle LLP CARTELS WORLDWIDE ARE PAID HANDSOMELY FOR THEIR CRIMES AND ARE PROJECTED TO AMASS EVEN GREATER MOMENTUM AND GAINS IN THE YEARS AHEAD: IMPORTANT IMPLICATIONS FOR ALL ANTITRUST JURISDICTIONS Kathleen Foote and Pamela Pham1 Hard‐core private international cartels (PICs)2 would have us believe that they don’t exist, yet they continue to operate around the world largely undetected and profiting handsomely. And when caught in one of the 119 jurisdictions with antitrust laws,3 cartel members regularly point to declining profits and complain of the injustice of multiple prosecutions and duplicative recoveries. In reality, those member companies even individually are powerful economic actors, and when their strength is harnessed into collective cartel action it can exploit entire global markets and reap rewards from victims in every continent. Even as the United States, Europe, and the rest of the world (ROW) continue to ramp up efforts to detect, convict, and sanction PICs, the best estimates are that three out of four PICs continue to go undiscovered and unpunished. “[R]oughly speaking, the typical global cartel gets to retain at least 10 percent of its North America illegal gains plus the 58 percent of its EU‐based illegal profits—not to mention all of its ROW profits.”4 So, regardless of the “victims” we represent, as advocates of the antitrust laws and their stringent remedies, it is important to remind ourselves of the core purposes of our laws and examine our effectiveness as their enforcers. A few givens: The wrongdoer should not be able to retain the fruits of the wrongful act. Deterrence is imperative. For deterrence to be effective, violation must be unprofitable. Let’s start with some empirical evidence. There are no public databases, but fortunately Professors Connor and Lande have painstakingly dug out the histories of cartel prosecutions, both governmental and private, over the last two and a half decades. In reviewing their results, several points become apparent: 
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At best, there is a 25‐30% probability that cartels will be uncovered.5 From 1990‐2014, 1014 private international cartels (PICs) were uncovered. The detection rate reached a record high in 2010‐2014, with 70 new PICs being uncovered each year.6 Page | 2 
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Of the 1014 discovered PICs, 717 were convicted and 217 await a decision.7 More than 34,000 companies (7,238 named) are liable for international price fixing.8 77% of corporate cartelists are from Europe or North America.9 Nominal affected sales total $1.5 to $1.7 trillion worldwide, with global cartels averaging $10 billion.10 Gross cartel overcharges exceed $1.6 trillion, of which global cartels were 60%.11 Monetary penalties reached $123 billion worldwide: 0.8% of sales and less than 5% of overcharges.12 Canada continues to lead the pack with median fines of 17.5% of affected sales, with the US (13.2%)13 and EC (8.7%) trailing behind.14 Trend analyses show that while EC fines are on an upward trend, US fines are on a downward trend because affected sales are exploding.15 In terms of private recovery, from 1990‐2014, the median average settlement in the US16 was a mere 37% of single damages.17 The “scene outside of North America is often characterized as moribund.”18 Specifically, these figures show that the ratio of penalties and damages to overcharges is 90 percent when the equation uses only US data. But when the ROW’s penalties and recoveries are added to the equation, the worldwide recovery ratio plummets by 50 percent: Page | 3 While explanations and extenuating circumstances may offset to some degree the impact of these stark numbers, they still point compellingly to the same conclusion: Here, the evidence clearly shows that the PICs and their constituent companies are unstopped and unfazed by the threat of treble damages. Indeed, this reality is recognized by the US Department of Justice Antitrust Division, which has found that “[t]he threat of prison time for individuals provides the single most valuable deterrent from cheating the system and profiting from collusion.”19 But although USDOJ has dramatically ramped up its criminal prosecutions of individuals to good effect, the impact on overall deterrence is unlikely to prove more than modest given these data. Thus, the issue is not whether there is over‐deterrence, but whether cartels can be deterred if we continue to maintain the status quo, or must something give way to change? Page | 4 More aggressive application of the treble damages rules is certainly the most obvious candidate for a shift of the pendulum toward greater deterrence. Indeed, the treble damages remedy was adopted in the US “in order to maximize deterrence.” In pointing this out the California Supreme Court reaffirmed its own legislature’s primary goal as deterrence, even in a case where the need for victim restitution may be slight.20 Yet, the PICs have managed to convert the treble damages remedy into a single damages remedy simply by agreeing to pay fines and damages well below single damages. Somewhat ironically, as antitrust enforcement has become a greater priority abroad, courts in the US have become increasingly concerned about the dangers of duplicative recovery against cartel members. The US Supreme Court has recently cautioned against “duplicative recoveries”21 when the greater danger may be to the victims’ right to full recovery.22 But in any event, the courts themselves along with legislators and other policy‐makers have already begun to establish mechanisms for screening out possibly duplicative recoveries. USDOJ’s Antitrust Division representatives have spoken often of their coordination with foreign antitrust enforcers regarding appropriate standardized bases for allocating cartel fines. California’s antitrust statute allows both private treble damages and treble damages in state‐initiated parens patriae cases, but provides that one such recovery will act as an offset to the other. Through coordination, state and federal courts that handle related matters also ensure that the defendants’ due process right against duplicative recovery is sufficiently protected. The courts also push public and private prosecutors to coordinate their theories and recoveries in order to avoid duplicative litigation and recoveries. Undoubtedly further refinements to such coordination will be seen in coming years. And coordination itself may benefit plaintiffs as well as defendants where case management by the courts serves to recognize the legitimacy of each of the multiple enforcement and victim claims rather than discarding certain ones in the name of streamlining the docket. Even so, unless public and private enforcers, as well as the courts, become more aggressive in making single damages the floor and not the ceiling on ex ante fines and recoveries, our efforts to deter cartel abuses will continue to be outstripped by the lucrative rewards of hard‐core antitrust conspiracies. And the public in every part of the world will pay an increasing price. 1
Kathleen Foote serves as the Chief of the California Department of Justice’s antitrust unit. Pamela Pham joined the antitrust unit in 2012 as a Deputy Attorney General. The authors would like to thank AAI Advisory Board Member and Emeritus Professor John M. Connor, Purdue University, for his guidance on this topic. The authors are especially grateful to Professor Connor for the empirical evidence he has compiled on the worldwide overcharges, fines/penalties, and recoveries associated with private international and global cartels from 1990‐2014, as well as for the illustrative figures he had prepared for this article. The Regulatory Moneyball aspect of our work would be lacking otherwise. 2
This paper focuses on hard‐core private international cartels, because they “tend to be larger, better publicized, more injurious to markets, and geographically more widespread than the many more numerous local cartels. Many international cartels are virtually global in their operations.” See John M. Connor, Private Recoveries in International Cartel Cases Worldwide: What Do the Data Show?, Competition Policy International Antitrust Chronicle (1) (December 2012), at 3, available at https://www.competitionpolicyinternational.com/private‐recoveries‐in‐international‐cartel‐cases‐worldwide‐
what‐do‐the‐data‐show/ (This is a slight revision of his AAI Working Paper No. 12‐03 (October 15, 2012), available at http://www.antitrustinstitute.org/~antitrust/sites/default/files/WorkingPaperNo12‐03.pdf). 3
There are 196 nations in the world, but only 119 are members of the International Competition Network (as of 2015). See Press Release, The International Competition Network to Focus on Its Membership Needs (May 1, 2015), available at http://www.internationalcompetitionnetwork.org/uploads/library/doc1027.pdf. Page | 5 4
Connor, supra note 2, at 15. 5
John M. Connor & Robert H. Lande, Not Treble Damages: Cartel Recoveries Are Mostly Less Than Single Damages, 100 Iowa L. Rev. 1997, 2005 (2015). 6
John M. Connor, The Private International Cartels (PIC) Data Set: Guide and Summary Statistics, 1990‐2014 (Working Paper, August 29, 2014). 7
Id. 8
Id. 9
Id. 10
Id. 11
Id. 12
Id. 13
US fines reflect both US government and state government fines. 14
Connor, supra note 2, at 13. 15
Connor, supra note 6. 16
US recoveries reflect damages recovered by private litigants as well as by state attorneys general in civil actions. 17
Connor and Lande, supra note 5, at 1997. 18
Connor, supra note 2, at 9. 19
Testimony of Assistant Attorney General Bill Baer Before Senate Judiciary Committee on Antitrust, Competition Policy and Consumer Rights, March 9, 2016, available at https://www.justice.gov/opa/speech/assistant‐attorney‐general‐bill‐baer‐antitrust‐division‐testifies‐senate‐
judiciary. 20
Clayworth v. Pfizer, Inc., 49 Cal. 4th 758, 783 (2010). 21
See Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 416 (2004). 22
The California Supreme Court is contrary, remarking that overdeterrence might be preferable to underdeterrence. See Clayworth, supra note 20, at 777‐784. Page | 6 DO CARTELS PAY?, THE VIEW FROM THE PLAINTIFFS’ SIDE Megan Jones1 Joining my distinguished co‐authors of this newsletter, I have been asked to opine on whether crime pays, and more specifically, does participating in an antitrust cartel pay? I believe that without significant increases in cartel detection, in the levels of expected fines or civil settlements, and increased jail time, international price fixing will remain – to some ‐‐ rational business conduct that will continue. By almost any metric (number of jail time, amount of fines, number of countries that now have antitrust enforcement regimes), the deterrence of cartels is uniformly sought. Consider the trend in what some call the ultimate deterrent, jail time2: And the increase in criminal antitrust fines: Page | 7 See https://www.fbi.gov/news/testimony/cartel‐prosecution‐stopping‐price‐fixers‐and‐protecting‐consumers. And the increase in antitrust enforcement regimes: See http://www.oecd.org/daf/competition/Challenges‐Competition‐Internat‐Coop‐2014.pdf. Despite the above, cartels around the globe continue to occur: Page | 8 Id. Assuming the neoclassical model of economics, the rationality axiom states that a “rational economic man maximizes his utility.” This statement can also mean that pursuit of self‐interest is the only thing that is done by rational economic actors—and that anything else is irrational.3 Thus, despite the threat of increasing jail time and criminal fines and detection by new antitrust regimes around the world, participating in antitrust cartels can still be viewed by some as in a business’s best interest. Cartels continue to form because the two biggest levers in enforcement are not as effective as they could be. I am not the first to arrive at this conclusion. Messrs. Connor and Lande think they know why. In a joint paper, “Cartels as Rational Business Strategy: Crime Pays,”4 they argue that deterrence is still too weak. American cartel sanctions are only 9‐21% as large as they need to be to offer “optimal” deterrence. This means that, despite the large increase in antitrust fines in the last 20 years, the average level of U.S. anti‐cartel sanctions should be quintupled to truly make crime “not pay.”5 Add to that the fact that jail may not hobble but rather enhance an executive’s career.6 Some corporations do not punish, and even reward, the individuals responsible for antitrust violations. This is because “since the executives are not perceived to have ripped off shareholders for personal gain, companies often have no problem welcoming them back into their corporate suites....[S]ome corporate honchos believe executives that pleaded guilty took a bullet for the team, according to white‐collar lawyers and industry observers.” Id. There are also reports that some companies continue to pay employees while they are in prison. Id. Conclusion As the FBI testified in 2013, cartel misconduct: [W]hether international, national or local, harms both American consumers and businesses. The courts agree. They unanimously condemn cartel offenses ‘because of their pernicious effect on competition and lack of any redeeming virtue,’ N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958), and describe criminal antitrust offenses as ‘the supreme evil of antitrust,’ Verizon v. Trinko, Page | 9 540 U.S. 398, 408 (2004). Judicial precedent and common sense tell us the same thing: price fixing, bid rigging, and other criminal antitrust crimes cause direct and unambiguous antitrust harm. . . . Our efforts to uncover and prosecute cartel behavior are, and need to be, robust.7 From infant formula to car parts to travel services, antitrust cartels continue to invade every aspect of a consumer’s life. We must increase our efforts to increase deterrence to the point that rational economic actors begin to say “no thanks” to invitations to collude. 1
Megan Jones is a partner with Hausfeld LLP, in San Francisco. 2
See also Michael O’Kane, Does Prison Work for Cartelists?: The View from Behind Bars, 56 ANTITRUST BULL. 483 (2011). 3
http://www.ase.tufts.edu/gdae/pubs/te/mic/3e/mic_3e_ch7.pdf. 4
34 Cardozo Law Review 427 (2012). 5
See also http://www.economist.com/news/business/21599799‐trustbusters‐have‐got‐better‐detecting‐
cartels‐and‐bolder‐punishing‐them‐incentives. 6
http://www.cardozolawreview.com/content/34‐2/CONNOR.LANDE.34.2.pdf (at n. 54, citing Dan Levine, Antitrust Convictions Don’t Mean End of Job for Some Executives, law.com (April 12, 2010 and describing an executive who was sent to prison for six months for price fixing, and when released, was made a senior vice president “with more responsibility than he had before he entered prison . . . .”). 7
https://www.fbi.gov/news/testimony/cartel‐prosecution‐stopping‐price‐fixers‐and‐protecting‐consumers Page | 10 DOES ANTITRUST CRIME PAY? – A DEFENSE PERSPECTIVE Amy B. Manning 1 I have been asked to write a short comment, from the defense perspective, on the following question, “Does crime pay with respect to cartels?” With the human, financial and competitive costs of record prison sentences, massive fines, and more and more jurisdictions across the world aggressively prosecuting competition crimes ‐‐ the answer is an unequivocal no. Human Costs The human costs of cartels are extremely high. Prison sentences for cartels have been on a constant upward march in the past seven years. In January 2009, a Florida district court imposed a 48 month prison sentence on a shipping executive for criminal antitrust violations.2 At the time, it was the highest antitrust prison sentence ever imposed. In February 2011, an Iowa district court sentenced a former sales manager in western Iowa to serve 48 months in prison.3 In December 2013, prison sentences increased again ‐‐ a Puerto Rico district court sentenced the former president of a water freight carrier to serve 60 months in prison.4 It is doubtful that any of those men would say that the loss of their liberty was worth any price or profit. Further, while the Antitrust Division has long focused on individuals in cartel investigations, the Yates Memorandum issued in 2015 signals that more employees than ever before may be facing prison sentences.5 In addition to prison sentences, there are other human costs. Senior executives who are not facing their own issues are required to divert their time to a cartel investigation instead of devoting all of their energies to making the business successful. Many employees will be required to spend significant time and resources with company lawyers rather than focused on their jobs. Some employees will live with extreme fear and uncertainty. Were they copied on an email that someone will interpret as a violation? Will someone blame them for not recognizing the problem? These distractions can lead to a decrease in productivity. A company also may lose human capital because beleaguered employees look for new jobs, or the company is facing such financial losses that it has no choice but to consider layoffs. Financial Costs There are crippling financial costs for companies alleged to be part of a cartel. A company dealing with a cartel problem may face an extremely high fine in the United States. In each of the years 2009, 2012, 2013, and 2014, the Antitrust Division of the Department of Justice imposed over $1 billion in fines.6 In 2015, the Antitrust Division imposed a record of over $3 billion in fines.7 On an individual corporate basis, the Division has obtained nine individual corporate fines over $300 million, with three of those fines at or near $500 million.8 Due to significantly increased enforcement of competition violations in jurisdictions across the world, if an alleged violation is international, a company also could be facing substantial fines in many other jurisdictions. In the last five years, the European Commission (“EC”) alone has obtained almost €6 billion in fines for cartels.9 The EC also has imposed ten fines over €300 million since 2001.10 As yet another international example, in May of 2014, the Japanese Fair Trade Commission imposed the equivalent of $233 million in fines against four vehicle shippers for price fixing.11 Also in 2014, the Brazilian competition authority, the Council for Economic Defense or CADE, imposed the equivalent of $1.4 billion in fines against six cement companies for price Page | 11 fixing.12 While the Brazilian prosecution appeared to involve domestic conduct, the record fine further demonstrates the aggressive enforcement against antitrust crimes taking place across the world. A company facing criminal antitrust liability also must pay the legal and other expenses associated with an antitrust investigation by competition regulators in the United States and potentially elsewhere. Those costs can be further increased if various investigations are proceeding at different rates. A company may resolve its issues in one jurisdiction only to have a new investigation launched in another jurisdiction creating renewed interest by the press and renewed problems for the company. Multiple plaintiffs’ actions, by classes of customers and opt outs, in the United States and increasingly elsewhere will most certainly follow announcement of a cartel investigation. A company alleged to have engaged in a cartel will face the fees and costs of defending against those actions. In the United States, it will face claims for treble damages, joint and several liability and attorneys fees. Even settlements of these cases can involve staggering amounts. In In re TFT‐LCD (Flat Panel) Antitrust Litigation in the United States, settlements of over $1.1 billion were approved.13 A company managing cartel allegations also may face additional financial nightmares. It may see its customers disappear, its sales plummet, its stock price drop and its financial viability sink into serious danger. Competitive Costs A cartel issue can lead to costs from a competitive standpoint. If one alleged conspirator has obtained the benefits of amnesty, it has a financial, and thus a competitive advantage, over the remaining alleged conspirators in the relevant market. The company with amnesty receives no fine and no prison sentences for employees, officers and directors.14 If it provides satisfactory cooperation to plaintiffs under the Antitrust Criminal Penalty Enhancement and Reform Act (“ACPERA”), it may be liable only for single not treble damages and only for its own sales.15 Thus, all remaining companies face more significant financial and personnel losses than the competitor who obtains amnesty, giving the amnesty applicant a distinct competitive advantage in the market. Conclusion A company alleged to be part of a cartel faces the parade of horribles set forth above. With these significant, varied, and crushing costs, there is no question: cartels do not pay. 1
Amy B. Manning is the Managing Partner of the Chicago office of McGuireWoods LLP. 2
Former Shipping Executive Sentenced to 48 Months In Jail, https://www.justice.gov/opa/pr/2009/January/09‐
at‐075.html.
United States v. VandeBrake, 771 F. Supp. 2d 961 (N.D. Iowa 2011), aff’d, 2012 U.S. App. LEXIS 8584 (8th Cir. April 27, 2012). 3
4
United States v. Frank Peake, No. 3:11‐cr‐00512 (D.P.R. Dec. 6, 2013). 5
https://www.justice.gov/dag/file/769036/download. 6
https://www.justice.gov/atr/division‐update/2015/criminal‐program‐update. Page | 12 7
Id. 8
See https://www.justice.gov/atr/sherman‐act‐violations‐yielding‐corporate‐fine‐10‐million‐or‐more. 9
http://ec.europa.eu/competition/cartels/statistics/statistics.pdf. 10
Id. 11
http://www.law360.com/articles/519608/japan‐fines‐car‐shippers‐223m‐for‐price‐fixing. 12
http://www.law360.com/articles/542551/brazil‐hits‐6‐cement‐cos‐with‐1‐4b‐in‐cartel‐fines. 13
http://www.law360.com/articles/576871/court‐urged‐to‐ok‐1‐1b‐deal‐in‐lcd‐price‐fixing‐mdl. 14
https://www.justice.gov/atr/corporate‐leniency‐policy.
15
See Antitrust Criminal Penalty Enhancement and Reform Act of 2004, Pub. L. No. 108‐237, tit. II, 118 Stat. 661 (2004). Page | 13 DO CARTELS PAY?, A GLOBAL VIEW Kristina Nordlander1 To some observers, administrative fines imposed by the European Commission (“Commission”) do not appear to deter cartel activity – or not enough. Others claim that EU fines are too high and disproportionate. So what role will private damages actions play in relation to public enforcement? Private antitrust litigation in Europe is still finding its feet. However, with the implementation of new reforms, the pace of developments is set to increase across Europe. We may see a heavier private enforcement element as a result, which could change the equation for potential cartelists. Is there a failure of EU sanctions to deter?
Unlike the U.S. enforcement system, which provides for criminal sanctions against individuals in addition to administrative fines, the EU enforcement system provides only for the latter. Some factors suggest that such EU sanctions may be under‐utilized. For example, the Commission rarely imposes fines reaching the maximum threshold of 10% of a company’s turnover:2 in respect of decisions issued by the Commission imposing fines for alleged participation in a cartel, fines amount to less than 1% in roughly half of cases.3 Further, as the vast majority of fining decisions are appealed, fines are frequently reduced by the EU courts in Luxembourg. Finally, and perhaps counter‐intuitively, the total amount of fines imposed by the Commission in such cartel cases has fallen in each of the last two years, reaching a four‐year low of EUR 365 million in 2015.4 Against this background, the think tank Bruegel argues that EU fines are too low to deter.5 However, industry representatives regularly claim that EU cartel fines are disproportionate and unfair,6 and for its part the Commission has suggested that the level of its fines – nearly EUR 20 billion since 2005 – constitutes an adequate deterrent although they “do not seem to deter everyone”.7 Role of private damages actions Private damages litigation may be an additional means of deterring cartels in the EU, whilst facilitating recovery for antitrust harm. The picture is complex, however, because at the same time facilitating additional damages litigation may have a chilling effect on leniency/immunity applications, which is the EU’s main tool for discovering cartels. Some companies have seized on private damages actions in Europe as presenting opportunities for recovery;8 damages can far outweigh the initial EU administrative fine. Michelin, for example, is reported to have recovered more than EUR 50 million from alleged participants in cartel infringements between 2003 and 2013.9 Commission decisions on a number of cartels, including air freight, cathode‐ray tubes, and LCD panels, have triggered a recent wave of such follow‐on private litigation claims, especially in the United Kingdom, the Netherlands, and Germany. The Commission estimates that 45 damages claims were filed in national courts between 2006 and 2013, as a result of 16 Commission fining decisions.10 Moreover, the EU itself is encouraging private antitrust litigation. With the adoption of the Directive on antitrust damages actions (“Damages Directive”)11, customers of suppliers in breach of EU rules on anti‐
Page | 14 competitive agreements and abuse of a dominant position should soon be able to recover any surcharge paid on purchases more easily and with greater procedural uniformity across Europe. The Damages Directive must be implemented into the legal systems of the EU Member States by 27 December 2016.12 Important developments in legal practice have accompanied this reform, including new professional litigation vehicles13 pursuing follow‐on damages claims and the establishment in Europe of specialist private antitrust litigation law firms. The United Kingdom is expected to become a forum of choice for plaintiffs, due to extensive disclosure rules, availability of litigation financing, and recent reforms introducing a new U.S.‐style opt‐out procedure for collective redress. Germany and the Netherlands remain favorable venues for private damages actions due to the expertise of the antitrust bar in each, their favorable procedures, and lower overall litigation costs.
1
Kristina Nordlander is a partner with Sidley Austin LLP based in Brussels. She would like to thank Monika Kostrzewa, Trainee Solicitor, and Kyle Le Croy, Associate, both of the London office, for their help in researching and drafting this article. The views expressed in this article are exclusively those of the author and do not necessarily reflect those of Sidley Austin LLP or its partners. This article has been prepared for informational purposes only and does not constitute legal advice.
2
Under the “Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (2006/C 210/2),” there is a cap on the fine of 10 percent of a business’s total turnover in the year preceding the decision. 3
European Commission – Cartel statistics; http://ec.europa.eu/competition/cartels/statistics/statistics.pdf. 4
Ibid. 5
Mario Mariniello, “Do European Union fines deter price fixing?”, Bruegel Policy Brief, Issue 2013/04; http://bruegel.org/wp‐content/uploads/imported/publications/Do_European_Union_fines_deter_price‐
fixing‐__English_.pdf. 6
Nikki Tait and Michael Peel, “Cartels put fines in the dock,” Financial Times, 14 July 2009: ‘Michael Cutting, a London‐based partner at Linklaters, says that – independently of the downturn – many competition lawyers increasingly think the cartel fines being levied in Brussels are becoming “extraordinarily large.”’ 7
Alexander Italianer, “Fighting cartels in Europe and the US: different systems, common goals,” Annual Conference of the International Bar Association, 9 October 2013; http://ec.europa.eu/competition/speeches/text/sp2013_09_en.pdf. 8
PaRR, Michelin and Deutsche Bahn spearhead private antitrust enforcement in Europe claiming millions, 15 March 2013; https://app.parr‐global.com/intelligence/view/789240. 9
Ibid. 10
See supra, PaRR, Michelin and Deutsche Bahn spearhead private antitrust enforcement in Europe claiming millions. Page | 15 11
Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringement of the competition law provisions of the Member States and of the European Union. A Directive sets out binding aims, but it leaves Member States free to decide the means by which they will fulfill those aims. 12
The Commission has issued a non‐binding recommendation on collective redress: Commission Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (2013/396/EU). The Recommendation provides various safeguards against the abuse of the class action system (e.g., it is in favor of opt‐in class actions and a “loser pays” clause, and it is against the use of contingency fees). Importantly, the Recommendation also states that punitive damages leading to overcompensation of a claimant for damage suffered should be prohibited. 13
These vehicles actively collect claims from injured parties and subsequently initiate legal proceedings in one or more jurisdictions. Page | 16 UPCOMING EVENTS Spring Meeting Programs WEDNESDAY, APRIL 6, 2016 1:45 – 3:15 PM Simplifying Expert Evidence To Achieve Better Results Presented by the Global Private Litigation Committee Legal cases worldwide require courts to make merits decisions about competing economic experts. The size and complexity of expert reports, which inevitably include regression analyses, present difficult case management issues. Join a federal judge, international practitioners and an economic expert in exploring ways to make experts more user‐friendly in the U.S. and internationally. CHAIR & MODERATOR: Melissa H. Maxman, Cozen O’Connor, Washington, DC SPEAKERS: Richard J. Gilbert, University of California Berkeley, Berkeley, CA Prudence J. Smith, Jones Day, Sydney The Honorable Jon S. Tigar, Judge, U.S. District Court for the Northern District of California, San Francisco, CA Adam B. Wolfson, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA 3:30 – 5:00 PM Global Private Settlements: Preferred Paths To Resolution? Presented by the Global Private Litigation Committee As private enforcement regimes develop, resolving disputes efficiently and effectively is of increasing interest. Claimants want compensation without undue delay or cost. Defendants want to quantify and crystallize liability and move on. Experienced litigators will discuss how international settlements play out, focusing on driving factors, pathways, timing, impediments, and favorable outcomes. CHAIR & MODERATOR: Judith Zahid, Zelle LLP, San Francisco, CA SPEAKERS: Jeroen Kortmann, Stibbe, Amsterdam Jon Lawrence, Freshfields Bruckhaus Deringer, London Anke Meier, Noerr, Frankfurt Reidar Mogerman, Camp Fiorante Matthews Mogerman, Vancouver Telephonic Committee Programs TUESDAY, APRIL 26, 2016 12:00 – 1:00 PM EDT "Strictly Confidential": Hot Topics In Discovery And Confidentiality In European Private Antitrust Litigation Presented by the Global Private Litigation Committee Three eminent European panelists will discuss discovery and the treatment of confidential information in private antitrust litigation. The focus of this session will be on highly anticipated case‐law and legislative Page | 17 developments in Europe. The panelists will consider the status of the implementation of discovery provisions in the EU Antitrust Damages Directive, while also examining: (i) recent European and Member State case‐law developments concerning, in particular, access to European Commission Decisions and the Commission case‐
file; and (ii) other protections applied to confidential and privileged information in European Member States. MODERATOR: Mark Sansom, Freshfields, London SPEAKERS: Sarah Ford, Brick Court Chambers, London Thomas Funke, Osborne Clarke, Cologne Martijn van Maanen, BarentsKrans, The Hague MONDAY, MAY 9, 2016 12:00 – 1:00 PM EDT Does Crime Pay? Sign up for the companion ABA Teleconference Program, “Does Crime Pay?”, to be presented on May 9, 2016 at noon U.S. Eastern Time, sponsored by the Global Private Litigation Committee, at which our contributors will appear live and on your telephone line to present on this topic and to answer your questions. A global panel of practitioners will examine past and projected profits of hard‐core cartels and evaluate (debate) the ex post deterrence power of current monetary penalties and recoveries to inform ongoing enforcement efforts in the US, EU, and the rest of the world. MODERATOR: Gregory Hansel, Partner, Preti Flaherty, Portland, ME PANELISTS: US/State Government Perspective: Kathleen Foote, Antitrust Chief, California Department of Justice, San Francisco, CA US Plaintiffs Perspective: Megan Jones, Partner, Hausfeld, San Francisco, CA US Defense Perspective: Amy Manning, Managing Partner, McGuireWoods, Chicago, IL EU Perspective: Kristina Nordlander, Partner, Sidley Austin, Brussels The Global Private Litigation Bulletin is published four times a year by the American Bar Association Section of Antitrust Law Global Private Litigation Committee. The views expressed in the Global Private Litigation Bulletin are the authors' only and not necessarily those of the American Bar Association, the Section of Antitrust Law or the Global Private Litigation Committee. If you wish to comment on the contents of the Global Private Litigation Bulletin, please write to the American Bar Association, Section of Antitrust Law, 321 North Clark Street, Chicago, IL 60654. COPYRIGHT NOTICE ©Copyright 2016 American Bar Association. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. To request permission, contact the ABA’s Department of Copyrights and Contracts via www.americanbar.org/utility/reprint. Page | 18