Antitrust Damages
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Description
Antitrust private actions have been an important component of civil enforcement in the United States since the passage of the Clayton Act. Private actions have been seen, in combination with public enforcement, as a means of achieving an appropriate level of deterrence. However, they have also been viewed as a mechanism for compensating those who were injured by illegal anticompetitive activities. In recent years, private antitrust enforcement has been growing outside the United States. Such actions are now available in parts of Asia (e.g., Japan) and in England. Private actions will almost certainly grow throughout the European Union as well. To obtain a financial recovery in a private action, the plaintiff must prove three distinct elements: (1) an antitrust violation; (2) antitrust injury; and (3) damages—a measure of the extent of the injury. In this chapter, I focus entirely on the important third element—antitrust damages. While much of the analysis is conceptual in nature, the analytical details do depend on the institutional context in which damages are applied. Therefore, unless otherwise noted it will be presumed that we are operating within the US private civil litigation system. In order to pursue an antitrust case, the plaintiff must have been injured, i.e., have standing to sue. Under federal law, only direct purchasers have such standing. Direct purchaser suits can be brought through the class action mechanism or individually. When suits are brought as class actions, plaintiffs’ damage claims are based on alleged overcharges, which are trebled if liability is proven. Individual suits may claim either overcharges or lost profits. Indirect purchasers can sue, but only in states that have passed Illinois Brick ‘repealer’ statutes. By 2008, 35 states had done so. Almost all damage awards are paid in dollars. However, the vast majority of antitrust cases that continue beyond summary judgment motions settle. Furthermore, a substantial number of those settlements involve coupon payments as well as cash. Not surprisingly, the complexity of the US system of private antitrust enforcement raises many important but difficult damages-related issues. This chapter treats a number of those issues, some of which are explicitly normative and others of which are not. I begin in section II with an analysis of antitrust overcharges. I describe the primary approaches to the analysis of overcharges and offer commentary on those methods. In section III, I move to an analysis of lost profits as an alternative to overcharges. This leads naturally to a discussion of the deterrence as well as compensation goals of antitrust. Section IV focuses on indirect purchasers; I emphasize the importance of pass-through analysis in evaluating indirect purchaser damages. Finally, in section V, I describe and evaluate the use of coupons in lieu of cash in the settlement of antitrust claims.
Source Publication
Research Handbook on the Economics of Antitrust Law
Source Editors/Authors
Einer Elhauge
Publication Date
2012
Recommended Citation
Rubinfeld, Daniel L., "Antitrust Damages" (2012). Faculty Chapters. 1823.
https://gretchen.law.nyu.edu/fac-chapt/1823
