31 Oct, 2019

All for One and One for All! – Antitrust Class Action: Part I

We all love to see the famous musketeer whoop, as a true stalwart of modern society.  Notwithstanding a reality check which may be otherwise, it does not necessarily mean that society is not continually aiming to reverse such “otherwise” state of affairs.

Is it really: every man for himself and the Devil take the hindmost?  … even before the eerie courts?

Well, fortunately not always.

Casting an eye over justice systems around the world, one bumps into something called class action, or collective redress.  In common law systems, with the United States as their standard-bearer, class action is currently in the limelight.  However, both at the EU and Member States level, this collective litigation is availed of on a much smaller scale. 

Specially designed in the US, class action is inherent to a group of people who find themselves in a similar situation and, in most cases, whose piece of cake has been barely scratched.  So, instead of filing separate lawsuits, a class action allows a court to hear the claims of all class members unless individual class members opt out of the class.  “Opt-out” is, in fact, an assumption that all putative class members form a part of a certified class unless and until they opt-out or leave.  Of late, opting out is mostly associated with individuals with large claims who attempt to maximize the value of their individual claims.

Imagine having a hundred or a thousand injured parties and all of them filing claims arising from the same situation.  If this isn’t judicial overload, then what is?

The logical response was to join forces and try to achieve greater success with the lawsuits.  As you can imagine, the process is much cheaper and less stressful for an average class member than navigating an individual lawsuit, especially in cases in which the defendant is a large-scale corporation, as is often the case.  In light of modern developments, the question remains as to whether this mechanism pays off compared to private lawsuits?  Legally, the question is, class action or private action?  And what if the nature of the lawsuit in question is antitrust?

Being welcome in most US federal states, class actions, not surprisingly, do happen a lot in antitrust.  However, studies have shown that, in recent years, class actions are being limited by the US courts.

Yet, some exciting precedented antitrust litigations have arisen in the past.  We thought of presenting a number of them involving indirect purchasers (consumers).

We note one of the cartel cases that was closed recently by way of a settlement agreement between the claimants and defendants.  In the case at hand, a class action was brought on behalf of indirect purchasers of electrolytic and film capacitors which claimed that the defendants and co-conspirators engaged in an unlawful conspiracy to fix, raise, maintain, or stabilize capacitor prices.  Seeing that class certification is mandatory in the US, if all prerequisites are satisfied, the court gives priority to a class action where questions of law and fact common to the settlement classes are seen as predominant over individual issues.  In this case, the court found that resolution via class settlements is superior to individual settlements.  What makes this settlement such a milestone is its departure from the stereotype that settling with a class is a big to-do.

The ruling in this case adduces the precedent from 2001.  This eye-catching antitrust litigation addressed price-fixing allegations occasioned by the class motion.  Particularly riveting is the court’s rationale supporting the decision: the antitrust laws require for a successful claimant to suffer “antitrust injury”.  If the antitrust law has not been violated, the purchasers did not suffer any antitrust injury.  Proving this kind of injury is a Herculean task, particularly if claimants rely entirely upon circumstantial evidence of conspiracy.  Now, dare to have a go at fending and proving your stance before the court! 

United Kingdom

Following the US example and being guided by the success in implementing a class action as a very much needed mechanism, United Kingdom has amended and renewed its legislation.  Private actions in competition law are based on the Competition Act from 1998, amended in the Consumer Rights Act (2015).  Accordingly, any person who has suffered loss or damage may commence proceedings by way of private action, while collective proceedings may be initiated by combining two or more claims known as collective actions.  This Act introduces various changes and goes for the “opt-out” collective claims, real US-style!

We are staying the course on the class action, though next time, we will be taking our business overseas to our little oasis called Serbia…

Authors: Ivana Stojanović and Nadja Kosić