Impact: Injury and Causation

• Pages: 3-18

CHAPTER 1

IMPACT:

INJURY AND CAUSATION

Section 4 of the Clayton Act establishes a treble damages remedy for

any person who is “injured in his business or property by reason of

anything forbidden in the antitrust laws.”1 While this statutory language

has spawned a host of judicial elaborations and limitations, this chapter

addresses the minimum requirement for recovery: whether the plaintiff can

prove an injury that was caused by an antitrust violation.

Antitrust violations may inflict harm in a number of ways. Collusive

or monopolistic practices may increase the price that consumers or

businesses pay for what they buy. Suppliers’ refusals to deal may limit or

deny access to inputs that businesses purchase to use in their operations or

for resale. Businesses also may suffer in their output markets because of

violations that limit or foreclose access to customers, such as a

competitor’s exclusive contracts, or violations that force reductions in

their selling prices, such as a competitor’s predatory pricing or collusion

among purchasers. An exhaustive list of how antitrust violations inflict

private harm on consumers and commercial enterprises would be a long

one.

These various types of harm produce tangible financial consequences.

Paying more than they otherwise would for what they buy takes money

out of consumers’ pockets and cash out of firms’ coffers. Disruptions in a

business’s input and output markets may produce lower revenues or higher

expenses, which translate into lower profits and, in some cases, losses, as

well as an inability to continue operations. For a start-up business, the

consequences may include a failure to begin what would otherwise be

profitable operations, or wasted sunk costs. Efforts to counteract or

minimize the effect of a violation may entail substantial disruptions and

out-of-pocket costs.

1. 15 U.S.C. §15. If liability can be e stablished, the Clayton Act provides

mandatory attorneys’ fees and costs as well as damages. A settlement with

one defendant that gi ves plaintiffs more t han the damages the y could

recover at trial—and thus moots a claim for compensatory damages—does

not impair their right to recover attorneys’ fees and co sts against another

defendant. Funeral Consumers Alliance v. Service Corp. Int’l, 695 F.3d

330, 340-42 (5th Cir. 2012).

3

4 Proving Antitrust Damages

These potential financial effects of antitrust violations suggest a

comparison: if the violation had not occurred, the plaintiff would be better

off than it actually is. This is the familiar “but-for” proposition, and it is

the central analytical approach to determining the impact of an antitrust

violation.2 The but-for principle requires one to envision exactly how the

world would be different without (“but for”) the challenged conduct. An

antitrust plaintiff is harmed by a violation when the plaintiff would be in a

better financial position but for the violation; conversely, if the plaintiff

would be in the same position without regard to whether the violation

occurred, the violation produced no harm.3

The but-for principle fuses into one inquiry the concepts of injury and

causation, the subjects of this chapter, and the measurement of damages,

the subject of Chapters 4 to 6. If the plaintiff’s actual condition is worse

than what it would have been in the hypothetical but-for world, a violation

can be said to have “caused” an “injury” in but-for terms. Likewise, a

damages award measures the extent of the difference in outcomes between

the actual world and the but-for world to compensate the plaintiff for this

injury. See Chapters 4 to 6 for a more thorough discussion of the

2. See, e.g., Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433-34 (2013)

(damages resulting fr om an antitrust inj ury measured by co mparison to a

“but-for” world that reflects conditions in the actual world in all resp ects

except the alleged anticompetitive conduct); J. Truett Payne Co. v.

Chrysler Motors Corp., 451 U.S. 557, 566 (1981) (damages turn on “what

plaintiff’s situation would have been in the absence of the defendant’s

antitrust violation”); Reiter v. Sonotone Corp., 442 U.S. 330, 340 (1979)

(a price-fixing conspiracy injures a consumer when it causes the consumer

“to pay a higher price . . . than it otherwise would have paid”); Story

Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 561-62

(1931) (the harm of a predatory pricing conspiracy is measured by “the

difference between the prices [plaintiff] actually received and what would

have been received but for the unlawful conspiracy”); In re Cardizem CD

Antitrust Litig., 332 F.3d 896, 904 (6th Cir. 2003); Greater Rockford

Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 401-02 (7th Cir.

1993); Rose Confections, Inc. v. Ambrosia Chocolate Co., 816 F.2d 381,

394 (8th Cir. 1987); Argus, Inc. v. Eastman Kodak Co., 80 1 F.2d 38, 41

(2d Cir. 1986).

3. See, e.g., Warrior Sports, Inc. v. Nat’l Collegiate Athletic Ass’n, 623 F.3d

281, 285 (6th Cir. 2010) (rule changes that never went into effect d id not

cause or threaten any injury); MetroNet Servs. Corp. v. US West

Commc’ns, 329 F.3d 986, 1009 (9th Cir. 2003), superseded on other

grounds sub nom. MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124

(9th Cir. 2004).