Antitrust Damages Research Articles

Should Us Tax Law Be Constitutionalized? Centennial Reflections on Eisner v. Macomber (1920)

The US Supreme Court last decided a federal tax case on constitutional grounds in 1920, a century ago. The case was Eisner v. Macomber, and the issue was whether Congress had the power under the Sixteenth Amendment (authorizing an income tax, 1913) to include stock dividends in the tax base. The Court answered no because “income” in the Sixteenth Amendment meant “the gain derived from capital, from labor, or from both combined.” A stock dividend, since it did not increase the wealth of the shareholder, was not “income.” Macomber was never formally overruled, and it is sometime still cited by academics and practitioners for the proposition that the Constitution requires that income be “realized” to be subject to tax. However, in Glenshaw Glass, the Court held in the context of treble antitrust damages that the Macomber definition of income for constitutional purposes “was not meant to provide a touchstone to all future gross income questions” and that a better definition encompassed all “instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.” In the century that has passed since Macomber, the Court has never held that a federal tax statute was unconstitutional. This behavior of the Court constitutes a remarkable example of American tax exceptionalism, because in most other countries tax laws are subject to constitutional review and are frequently ruled unconstitutional. In what follows, we will first examine three examples of how tax law is constitutionalized in other countries (part 2). We will then look at some of the larger tax expenditures in the US and ask how they would fare under constitutional scrutiny (part 3). Finally, we will attempt to answer the question whether US tax law should be constitutionalized, and answer in a reluctant negative (part 4). But we will also urge Congress, which is equally charged with upholding constitutional values, to take horizontal equity more into consideration when evaluating tax expenditures.

Access to the Commission File and Confidentiality of Information under European Competition Law in the Context of Antitrust Damages Claims

Access to the Commission File and Confidentiality of Information under European Competition Law in the Context of Antitrust Damages Claims

How much effectiveness for the EU Damages Directive? Contractual clauses and antitrust damages actions

The Damages Directive is celebrated as a milestone for private enforcement of EU competition law; it harmonizes national procedural laws and aims to facilitate full compensation for damages resulting from competition law violations. Businesses frequently use contractual clauses that might present obstacles in obtaining compensation. Recent examples include a US case against Uber which was inadmissible because of clauses in the app’s terms and conditions; and clauses included in Ryanair’s terms and conditions. This paper explores the extent to which clauses on jurisdiction, mandatory arbitration, and those preventing participation in class actions endanger the Directive’s effectiveness. It shows that, in contrast to consumer situations, such dangers do exist in commercial cases. It suggests a balancing exercise between party autonomy and full effectiveness of victims’ rights. The principle of effectiveness provides some protection, but these dangers to the development of a strong private enforcement are likely to remain in the future and suggest renewed attention for private enforcement.

Antitrust Damages' Claims in Spain

English Abstract: After briefly describing the institutional and legal framework for antitrust damages claims in Spain, this article surveys the courts’ experience in deciding these actions and shows the rise in cartel follow-on claims in the last five years. Damages claims for antitrust infringements declared or known after the 27 May 2017 will be governed by national legal provisions implementing Directive 2014/104/UE. Although there had been in the past some antitrust damages cases for abuse of dominance and vertical restraints (both follow-on and stand-alone), nowadays follow-on cartel actions are the most numerous. Therein, private plaintiffs tread on the heels of competition authorities. Competition authorities’ unearthing of major cartels in several industries has paved the way for damages suits by their victims. After the Supreme Court decided the leading case of damages’ claims in the sugar cartel, follow-on on damages claims have germinated from the paper envelopes cartel, the decennial real estate insurance cartel and, most notably, the truck manufacturers’ cartel. Spanish Abstract: Tras describir brevemente el marco institucional y legal de las reclamaciones de danos y perjuicios por infracciones del Derecho de la competencia en Espana, este trabajo analiza la experiencia de nuestros tribunales en la decision de estas acciones y muestra el aumento de las demandas follow-on en casos de carteles en los ultimos cinco anos. Adicionalmente, las reclamaciones por danos y perjuicios por infracciones de la competencia declaradas o conocidas con posterioridad al 27 de mayo de 2017 se regiran por las disposiciones legales nacionales que trasponen la Directiva 2014/104/UE. Aunque en el pasado ha habido algunos pronunciamientos sobre danos por abuso de posicion dominante y restricciones verticales (tanto follow-on como stand-alone), ahora las acciones follow-on en caso de carteles son las mas numerosas. En ellas, los demandantes privados “pisan los talones” a las autoridades de competencia. El descubrimiento por parte de las autoridades de competencia de algunos carteles en varias industrias ha allanado el camino para las demandas por danos de sus victimas. Despues de que el Tribunal Supremo dictara dos sentencias pioneras sobre la indemnizacion de los danos y perjuicios causados por el cartel del azucar, se han planteado sucesivas reclamaciones de danos por los afectados por el cartel de los sobres de papel, el cartel de los seguros inmobiliarios decenales y, sobre todo, el cartel de los fabricantes de camiones.

Apple v Pepper: the unintended fallout in Europe

In Apple v. Pepper, the US Supreme Court held that iPhone users were direct purchasers of apps from Apple, which, according to precedent set by Illinois Brick v. Illinois, made them the proper plaintiffs to sue Apple for antitrust damages. The damages were the result of Apple’s alleged monopolization of the app distribution aftermarket through imposing a supra-competitive 30 percent commission fee to the price of each downloaded app. The case was closely watched because the Court’s decision controlled whether plaintiffs could proceed with the substantive issues in their complaint, namely whether Apple is a monopolist and whether it has monopolized the app distribution market. The decision was positively received by the public, for it gave standing to consumers against big tech, but scholarly commentary has been more reserved and even critical. This note adds to the ongoing debate on the case by showing how the Court’s decision, whose effects are seemingly confined in US antitrust law, can have an impact on EU competition law and its enforcement. The two ways by which the case can have an unanticipated fallout in Europe relate to the Court’s implicit rejection of indirect purchasers’ right to claim damages, and the Court’s implicit designation of Apple as an intermediary instead of an agent of app developers.

Article 17(3) of the EU Antitrust Damages Directive and the Possibility for National Competition Authorities to Assist in the Quantification of Harm

One of the explicit aims of the Directive on competition damages actions (the Directive) is to make the quantification of harm resulting from violations of European Union (EU) competition rules easier for damages claimants. One of the several ways envisioned by the Directive to achieve that aim is Article 17(3), according to which national competition authorities (NCAs) may assist national courts in quantifying the harm caused by anti-competitive conduct. In this paper, I focus on the transposition of Article 17(3) of the Directive in Sweden and make the argument that Sweden has not correctly implemented the Article in Swedish law. The topic is admittedly rather limited at first glance, but a discussion on the (non-)transposition of Article 17(3) of the Directive in Swedish law offers three significant insights which make pursuing it worthwhile. Firstly, it informs us about the nature and degree of interaction of the Swedish Competition Authority (SCA) with Swedish courts and tells us something about the relationship between the two. Secondly, it reveals some important procedural differences between private and public enforcement of EU competition rules in Sweden and exposes a certain tension between national rules of procedure, on the one hand, and the effective application of EU competition rules in Sweden, on the other. “Effectiveness” is a requirement that follows both from well-established case law of the Court of Justice of the EU (CJEU) and from the Directive itself. As a result, the second insight inevitably leads to a discussion on whether certain aspects of Swedish procedural law may be impeding the effective application of EU competition law. Thirdly, it explores different courses of action for Swedish courts and claimants that may find, like this author, that Article 17(3) has not been implemented correctly in Swedish law.

The Impact of EU Cartel Policy Reforms on the Timing of Settlements in Private Follow-On Damages Disputes: An Empirical Assessment of Cases from 2001 to 2015

Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This paper explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded, but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, i.e. the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.

A panacea for competition law damages actions in the EU? A comparative view of the implementation of the EU Antitrust Damages Directive in sixteen Member States

This article makes an original contribution to the literature on the developing area of private enforcement of EU competition law. It delivers a significant, rigorous and comprehensive analysis of the transposition across a broad selection of Member States (MS) of a major EU Directive introduced with the aim of harmonizing and facilitating competition law damages actions across the EU. It looks at the implementation of the Directive 2014/104/EU in sixteen MS. It analyses the solutions followed by each of those MS in addressing the various issues raised by the Directive (liability and compensation, joint liability, statute of limitations, quantification of harm, passing-on defence and indirect purchasers claims, access to evidence and collective redress).

The Principle of Relative Responsibility in Antitrust Damages

The present work focuses on the principle of relative responsibility set in the Damage Directive 2014/104/EU. The principle of relative responsibility “supposes a modulation (that does not qualify) to the principles of full compensation and joint and several liabilities insofar as it channels that responsibility, on the one hand, according to the criteria of the participation of the offender in the conduct that violates the rules of competition from its infringing participation fee; and on the other, it delimits and limits this responsibility based on the cooperation that the aforementioned offender has had on the basis of the leniency programs or the possible agreements reached with the injured parties.

Assessment of Collusion Damages in First Price Auctions

We propose a structural method for estimating the revenue losses associated with bidding rings in symmetric and asymmetric first-price auctions. It is based on the structural analysis of auction data and is consistent with antitrust damage assessment methodologies: we build a but-for (competitive) scenario and estimate the differences between the two scenarios. We show in a Monte Carlo exercise that our methodology performs very well in moderate size samples. We apply it to Ohio Milk Data Set analyzed by Porter and Zona (1999) and find that damages are around 7%. Damages can be assessed without any information about unaffected markets.

Experiences in the Netherlands

This contribution discusses the recent Dutch case-law regarding competition damages cases and evaluates the changes brought about by the implementation of the Antitrust Damages Directive.

Measuring Antitrust Damages in the Presence of Foreign Government Regulation

The U.S. Supreme Court on June 14, 2018, reversed the Second Circuit’s 2016 decision to vacate a $147 million judgment against two Chinese companies, who allegedly fixed vitamin C prices. The high court held that courts should give foreign governments’ statements “respectful consideration” but are not bound by another country’s description of its own laws. Going forward, courts will need to evaluate a foreign government’s statements when defendants claim a contradiction between U.S. law and foreign regulations as a defense. When government regulation and private cartelization overlap, complications arise because the foreign companies may be liable for their anticompetitive conduct that was beyond the requirement of and might even have influenced foreign government policies. Using two illustrative cases ( In Re Vitamin C Antitrust Litigation and Resco Products v. Bosai Minerals), we analyze the impact of the price floor and export quotas and propose a new, workable methodology for measuring antitrust damages attributable to the private cartel in the presence of foreign regulation.

Leniency–asiakirjojen suoja Suomessa — erityisesti suhteessa kilpailuoikeudelliseen vahingonkorvaukseen

During leniency procedure, the participating companies are obliged to give self-incriminating statements to antitrust authorities. There is a risk that those statements will be utilized as evidence in a court of law by a party who was damaged by the spoken trust arrangement. These actions for damages can impose heavy financial losses to the participating companies. Therefore, to secure the attractiveness of the leniency procedure, the self-incriminating documents should be exempted from the disclosure of evidence or discovery. The purpose of this article is to scrutinize the effects of the new EU directive 2014/104/EU on national regulations which are located in the Finnish Act of Antitrust Damages Actions (laki kilpailuoikeudellisista vahingonkorvauksista, 1077/2016), and review what this means for the incentives to participate in leniency procedure. The Directive made the rules of disclosure of leniency documentation more stringent in comparison with the preceding legislation. Therefore, the legal position of the participating company has weakened. These are the main findings.

Apple v. Pepper: Rationalizing Antitrust's Indirect Purchaser Rule

In Apple v. Pepper the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s iStore could sue Apple for antitrust damages because they were “direct purchasers.” The decision reflects some bizarre complexities that have resulted from the Supreme Court’s 1977 decision in Illinois Brick, which held that only direct purchasers could sue for overcharge injuries under the federal antitrust laws. The indirect purchaser rule was problematic from the beginning. First, it was plainly inconsistent with the antitrust damages statute, which gives an action to “any person who shall be injured in his business or property” by an antitrust violation. Second, the Court exaggerated the difficulty of “tracing” indirect purchaser damages. By using the most common “yardstick” methods of estimating damages, an expert can compute indirect purchaser damages by engaging in two relatively simple horizontal comparisons. Third, if we were going to give the overcharge to a single set of buyers it should be the end users, not the direct purchasers. End users bear most of the brunt of an unlawful overcharge. Further, they are the only persons in the distribution chain who are unable to pass anything on. In fact, intermediaries, including direct purchasers, typically are not injured by the “overcharge” at all. Their injury results from loss of sales volume that the cartel imposes. Thus the correct damages rule in indirect purchaser cases is lost profit damages for intermediaries, including the direct purchaser, and overcharge damages for the end user. The Supreme Court’s Daubert decision, which came fifteen years after Illinois Brick, should be the controlling mechanism for evaluating expert models rather than anything as blunt, categorical, and frankly wrong as the indirect purchaser rule. Daubert rulings, which are generally not subject to jury control, should provide judges with an adequate mechanism for ensuring that expert damages reports are based on reliable and relevant assumptions, methodologies, and data. Antitrust damage formulations, even for indirect purchasers, need be no more complex or speculative than damages for a large number of business violations, including such things as patent infringement and breach of contract. The Apple dissenters adopted a distinctively noneconomic approach that dispensed entirely with analysis of pass-on. They reasoned that only the direct purchaser had an injury that was “proximately caused” by the defendant’s antitrust violation. This view harkens back to a nineteenth century tort law concept that was widely used by courts to limit tort liability, particularly in railroad cases. Under this rule only a single entity could be said to have an injury that was proximately caused by the defendant’s conduct. That rule was properly abandoned in tort cases and should be laid to rest. It makes even less sense in antitrust cases. In an effort to identify some conception of “proximity” it typically awards damages to those who were injured the least, or in some cases not at all.

The Antitrust Damages Directive: Facilitating Private Damages Actions in the EU?

The Antitrust Damages Directive: Facilitating Private Damages Actions in the EU?

Civil Law Liability of Parent Companies for Infringements of EU Competition Law by Their Subsidiaries

The article investigates the impact of the use of the concept ‘undertaking’ in the EU Antitrust Damages Directive on the civil law liability of parent companies for infringements of their subsidiaries and more general on other natural and legal persons forming part of the same undertaking. The research shows that the Directive and other rules of EU competition law leave room for an interpretation that allows Member States to maintain additional criteria for liability such as imputability, adequacy or culpability to prevent the transposition of the competition law theory of parent company liability into civil law. The way in which Member States have dealt with the issue of the civil law liability of parent companies when transposing the Antitrust Damages Directive differs. Some Member States explicitly introduced a system of parent company liability, others remain intentionally or unintentionally vague about the question. Ultimately, it will be up to the Court of Justice do decide whether the Antitrust damages directive read together with other rules of EU competition law requires Member States to transpose the competition law theory of parent company liability into civil law. To prevent parent companies from using subsidiaries to limit their competition law liability and to encourage them to ensure competition law compliance by their subsidiaries, the transposition into civil law of a slightly amended competition law theory of parent company liability appears desirable.

Disclosure rules of the Antitrust Damages Directive: finding the balance between public and private enforcement

The paper investigates to what extent the principles of private and public enforcement are adhered to in antitrust damages actions. The Antitrust Damages Directive eliminated the uncertainty created in the wake of the Pfleiderer judgment and reasonably limited national judges’ scope of discretion. Competition authorities tend to rely very heavily on leniency procedures so paradoxically it is in the claimants’ interest to prevent access to and disclosure of leniency documents in follow-on actions. The paper argues that the rules applied for contemporary documents can be regarded as the major weakness of the Directive.

Apple v. Pepper: The Unintended Fallout in Europe

In Apple v. Pepper, the US Supreme Court held that iPhone users were direct purchasers of apps from Apple, which, according to precedent set by Illinois Brick v. Illinois, made them the proper plaintiffs to sue Apple for antitrust damages. The damages were the result of Apple’s alleged monopolization of the app distribution aftermarket through imposing a supra-competitive 30 percent commission fee to the price of each downloaded app. The case was closely watched because the Court’s decision controlled whether plaintiffs could proceed with the substantive issues in their complaint, namely whether Apple is a monopolist and whether it has monopolized the app distribution market. The decision was positively received by the public, for it gave standing to consumers against big tech, but scholarly commentary has been more reserved and even critical. This note adds to the ongoing debate on the case by showing how the Court’s decision, whose effects are seemingly confined in US antitrust law, can have an impact on EU competition law and its enforcement. The two ways by which the case can have an unanticipated fallout in Europe relate to the Court’s implicit rejection of indirect purchasers’ right to claim damages, and the Court’s implicit designation of Apple as an intermediary instead of an agent of app developers.

Supply Chains and Antitrust Governance

Antitrust regulations are meant to promote fair competition in the market, but balancing administrative and legal costs with enforcement can be difficult when multi-layered supply chains are involved. The canonical example of this challenge is the landmark Illinois Brick ruling, which limits antitrust damages to only the direct purchasers of a product; for instance, consumers can file antitrust claims against colluding retailers but not against colluding manufacturers -- only retailers can file claims against manufacturers. This controversial ruling was meant to reduce legal costs, but it can clearly lead to missed enforcement opportunities. In this paper we demonstrate how the Illinois Brick ruling interacts with contracts adopted in the supply chain and we show that otherwise equivalent supply chain arrangements can have markedly different effects. In particular, we find that wholesale price, minimum order quantity, revenue-sharing and quantity discount contracts lead retailers to take legal action against manufacturers in the event of collusive behavior. However, the wholesale price plus fixed fee contract structure (a.k.a. a two-part tariff or slotting fee contract) facilitates collusion among the manufacturers with retailers compensated by the fixed fee and not filing the antitrust litigation. We further demonstrate that collusion is more likely under high demand uncertainty and high competition at the retail level but is less likely under high competition at the manufacturer level. Our paper helps public enforcers identify market conditions conducive to antitrust violations.

Cartel dating

SummaryThe begin and end dates of cartels are often ambiguous, despite competition authorities stating them with precision. The legally established infringement period(s) from documentary evidence need not coincide with the period(s) of actual cartel effects. In this paper, we show that misdating cartel effects leads to a (weak) overestimation of but‐for prices and an underestimation of overcharges. Total overcharges based on comparing but‐for prices to actual prices are a (weak) underestimation of the true amount overcharged, irrespective of the type and size of the misdating. The bias in antitrust damage estimation based on predicted cartel prices can have either sign. We extend the before‐during‐and‐after method with an empirical cartel dating procedure, which infers structural breaks of unknown number and dates that mark the actual begin and end dates of the collusive effects. Empirical findings in the European Sodium Chlorate cartel corroborate our theoretical results.