Civil Antitrust Litigation in the United States: Implications for Ireland and the European Community

Transcription

1 Civil Antitrust Litigation in the United States: Implications for Ireland and the European Community Joseph T. McLaughlin Heller Ehrman, LLP Prepared with the assistance of: August T. Horvath Daniel Sheridan Gregory P. Kochansky Dublin, Ireland Irish Competition Authority June 17, 2005

2 Civil Antitrust Litigation in the United States: Implications for Ireland and the European Community I. Introduction to U.S. Civil Antitrust Litigation II. III. IV. Extraterritorial Reach of U.S. Antitrust Jurisdiction Discovery Outside the U.S. in U.S. Antitrust Matters Discovery by Non-U.S. Plaintiffs in U.S. Courts V. Role of Expert Witnesses in U.S. Civil Litigation VI. Review

3 I. Introduction to U.S. Civil Antitrust Litigation

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5 The U.S. Supreme Court on Antitrust Laws Antitrust laws are: Fundamental national economic policy. Carnation Co. v. Pacific Westbound Conference (1966) A comprehensive charter of economic liberty. Northern Pacific Railway Co. v. United States (1958) "As important to the preservation of economic freedom and our freeenterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. United States v. Topco Associates (1972)

6 The Sherman Antitrust Act (1890) Purportedly applied common law principles Led to a sea change in U.S. competition policy First employed to bring down meat, oil and tobacco "trusts"

7 The Clayton Act (1914) Allowed civil or private "enforcement" of Antitrust laws Treble damages and injunctive remedies

8 The Clayton Act: Standing Any person injured in his business or property by reason of anything forbidden in the antitrust laws Most commonly competitors, customers, or suppliers of the defendant firms

9 Antitrust Plaintiff Standing Protection of competition, not competitors: the goal is to increase competition. Only direct customers may sue for damages in federal court. In state court, indirect customers may sue for damages. Result: Potentially duplicative recoveries.

10 Class Actions Encourages enforcement Promotes efficiency Class must be certified Numerous plaintiffs Common issues Representatives' claims must be typical of class Representative must protect the interests of the entire class

11 Prevalence of Antitrust Lawsuits in the U.S. Between 500 and 850 cases filed each year. Less than 1% of all actions in U.S. federal courts. Increase in filings since Number of state actions is large and growing.

12 Relationship to Government Enforcement Antitrust Division of the Department of Justice prosecutes cartels, some monopolization Federal Trade Commission focuses on key industries Private Plaintiffs Broader class of violations Private lawsuits often leverage government evidence

13 Relationship to Government Enforcement: Remedies Antitrust Division of the Department of Justice (injunctive relief, fines) Federal Trade Commission (injunctive relief, consumer restitution) State Attorneys General (parens patriae recovery for consumers) Private Plaintiffs (monetary damages)

14 Relevance of U.S. Framework for Practitioners in Ireland and the EU Confidence in free markets. Treble damages and multiple recovery provides strong deterrence. The consumer's interests are paramount. However, excessive litigation may impair U.S. productivity and subject companies to excessive litigation risks that chill some lawful conduct.

15 II. Discovery Outside the U.S. in U.S. Antitrust Matters

16 Basic Overview Federal Rules of Civil Procedure govern. U.S. discovery requirements are intrusive. Relevance defined broadly Discovery tools Depositions Interrogatories Document Requests Requests for Admissions Initial disclosures Expert disclosures

17 Example: "Document" Defined Broadly The terms document or documents are used herein in the broadest sense permissible under Fed. R. Civ. P. 34(a) and Local Civil Rule 26.3 (c)(2), and includes, without limitation, any writing as that term is defined in Rule 1001 of the Federal Rules of Evidence, and any computer, mechanical, photographic, printed, magnetic, audio, video and other electronic recordings or records and/or other tangible records and forms of recorded information, however produced or reproduced, including but not limited to: all letters, correspondence, inter-office communications, electronic correspondence such as , and other communications recorded in any form or medium; records, memoranda, notes, telegrams, summaries, computer printouts or disks or any information retained in a computer database which can be reproduced; records of telephone calls and meetings, calendar and diary entries, notebooks, schedules, reports, studies, appraisals, analyses, lists, surveys, deeds; budgets, financial statements, ledgers, returns, financial projections, comparison between budgets, projections and actual results, working papers, financial calculations and other records of financial matters and commercial transactions; contracts, agreements, legal and accounting opinions, analyses and research; periodicals, charts, diagrams, graphs, and other drawings; interviews, speeches, transcripts, press releases, advertisements, brochures and books of account; plans and specifications; publications; photocopies, microfilm, and other copies or reproduction, and computer printouts; all drafts, outlines and proposals of any such documents (whether or not actually used), and all non-identical copies (whether different from the original by reason of notations made on such copies or otherwise) are separate documents within the meaning of the term. The term also includes information stored in, or accessible through, computer or other information retrieval systems, together with instructions and all materials necessary to retrieve, use or interpret such data.

18 Example: "Document" Defined Broadly including but not limited to: The terms document or documents are used herein in the broadest sense permissible under Fed. R. Civ. P. 34(a) and Local Civil Rule 26.3 (c)(2), and includes, without limitation, any writing as that term is defined in Rule 1001 of the Federal Rules of Evidence, and any computer, mechanical, photographic, printed, magnetic, audio, video and other electronic recordings or records and/or other tangible records and forms of recorded information, however produced or reproduced, including but not limited to: all letters, correspondence, Correspondence, inter-office communications, electronic correspondence such as , and , other communications recorded in any form or medium; records, memoranda, notes, telegrams, summaries, computer printouts or disks or any information retained in a computer database which can be reproduced; records of telephone calls and meetings, calendar and diary entries, notebooks, schedules, diary reports, studies, entries, appraisals, analyses, lists, surveys, deeds; budgets, financial statements, ledgers, returns, financial projections, comparison between budgets, projections and actual results, working papers, financial calculations and other records of financial matters and commercial comparison transactions; contracts, between agreements, budgets, legal and accounting opinions, analyses and research; periodicals, charts, diagrams, graphs, and other drawings; interviews, speeches, transcripts, press releases, advertisements, brochures and books of account; plans and specifications; publications; Drawings, photocopies, interviews, microfilm, and other speeches, copies or reproduction, and computer printouts; all drafts, outlines and proposals of any such documents (whether or not actually used), and all non-identical Microfilm, copies (whether different from the original by reason of notations made on such copies or otherwise) are separate documents within the meaning of the term. The term also includes information stored in, or accessible through, computer or other information retrieval systems, together with instructions and all materials necessary to retrieve, use or interpret such data. and all materials necessary to retrieve, use or interpret such data.

19 Common Discovery Requests in U.S. Antitrust Cases Interrogatories, document requests and depositions often seek information regarding: Corporate organizational structure Policies and procedures Evidence of collusion or conspiracy Sensitive strategic documents Pricing and profitability information All relevant internal communications Pleadings in related lawsuits

20 The Consequences of Not Complying Failure to produce or preserve documents (or destroying documents) may result in: Sanctions Unfavorable inferences at trial Default judgment

21 Videotaped Depositions Video can be used at trial Witness must be telegenic and well-prepared Witness must seem cooperative Attorneys should avoid overly aggressive tactics Cautionary Tale: Bill Gates' deposition in the Microsoft suit.

22 Discovery Outside the U.S. Under the U.S. Federal Rules U.S. Federal Rules of Civil Procedure apply to foreign parties. The U.S. Federal Rules generally do not apply to foreign non-parties. Discovery outside U.S. permitted even if violation occurred in the U.S. Documents of foreign affiliates are discoverable.

23 Depositions in Foreign Countries International treaties or conventions (e.g. the Hague Convention) Letters of request ("letters rogatory") Depositions on notice Deposition before person commissioned by a foreign court

24 Discovery Under Relevant International Treaties The Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters Foreign court conducts proceedings under its own rules Evidence taken before local diplomatic or consular officer Commissioner appointed in foreign jurisdiction Inter-American Convention on Letters Rogatory

25 The Hague Convention, Compared to the Federal Rules Under Hague Convention: Countries may refuse to submit to document discovery. Both requested and requesting parties must be parties to the convention. Permissible scope of document requests may be narrower. The Convention applies only to "civil and commercial matters" The discovery request must originate from a judicial authority.

26 IV. Discovery by Non-U.S. Plaintiffs in U.S. Courts

27 Discovery by Non-U.S. Plaintiffs in U.S. Courts: 28 U.S.C and Intel v. AMD, Inc. 28 U.S.C empowers federal courts to aid foreign litigants. Intel: irrelevant that material sought is not discoverable in the requester's jurisdiction Factors: Whether the foreign tribunal has jurisdiction to compel production Nature of the proceeding, tribunal and foreign discovery system Whether request is an attempt to circumvent restrictive foreign rules Whether the request is unduly burdensome or intrusive

28 V. Role of Expert Witnesses in U.S. Civil Litigation

29 Subjects of Expert Economic Testimony Conditions for class certification Econometric analysis of whether conduct occurred Defining product and geographic markets Feasibility of anticompetitive conduct in a particular market Computation of damages Administrability of proposed settlement Commercial quality of a party's product

30 Importance of Expert Witnesses Crucial to most complex U.S. civil litigation Especially true for antitrust law, which relies on economic theory Experts often must instruct the trial judge about basic concepts in antitrust law and economics. Sometimes judges retain neutral experts for this purpose.

31 Admissibility of Expert Testimony U.S. federal judges have considerable latitude The Federal Rules of Evidence govern: Subject matter must be helpful to the trier of fact Factual basis for testimony must be adequate Testimony must be presented in appropriate form

32 The Daubert Standard for Admissibility Four factors in admissibility: 1) Expert's technique has been tested 2) Technique subjected to peer review 3) Technique's rate of error 4) Technique generally accepted in field The factors are to be applied flexibly, non-exclusively.

33 Daubert and Antitrust Experts Courts have excluded expert testimony for: Failing to use market data Failure to account for alternative explanations Applying guidelines too mechanically Wrongly applying an accepted methodology Failing to define important factors Making unsubstantiated assumptions Potential bias of the expert

34 Example: Conspiracy "Experts" Economic expert testimony on whether a conspiracy exists: Formerly employed in many price-fixing cases under the Sherman Act "Conspiracy" is a legal concept, not economic Accordingly, some federal courts have limited economic experts to testimony about apparent "collusion" or whether an "inference" of conspiracy can be supported.

35 Thank You. Joseph T. McLaughlin Heller Ehrman, LLP