Not Treble Damages: Cartel Recoveries Are Mostly Less Than Single Damages

• Author: John M. Connor & Robert H. Lande
• Position: Senior Fellow, American Antitrust Institute and Professor Emeritus, Purdue University/Venable Professor of Law, University of Baltimore School of Law; and a Director of the American Antitrust Institute
• Pages: 1997-2023

1997

Not Treble Damages: Cartel Recoveries

Are Mostly Less Than Single Damages

John M. Connor* & Robert H. Lande**

ABSTRACT: Antitrust law provides treble damages for victims of antitrust

violations, but the vast majority of private cases settle. The average or median

size of these settlements relative to the overcharges involved has, until now,

been only the subject of anecdotes or speculation. To ascertain what we term

“Recovery Ratios,” we assembled a sample consisting of every completed

private U.S. cartel case discovered from 1990 to mid-2014 for which we could

find the necessary information. For each of these 71 cases we collected, we

assembled neutral scholarly estimates of affected commerce and overcharges.

We compared these to the damages secured in the private cases filed against

these cartels. Our main findings are that the victims of only 14 of the 71

cartels (20%) recovered their initial damages (or more) in settlement. Only

seven (10%) received more than double damages. The rest—the victims in

57 cases—received less than their initial damages. In four cases the victims

received less than 1% of damages and in 12 they received less than 10%.

Overall the median average settlement was 37% of single damages. The

unweighted mean settlement (a figure that gives equal weights to the cartels

that operated in large markets and to those that operated in small markets)

was 66%. However, because plaintiffs tend to be rewarded relatively poorly

in the largest cases, the weighted mean (a figure that weights settlements

according to cartels’ sales) was only 19%. The mean and median average

Recovery Ratios are higher (81.2% and 52.4%, respectively) for the 36 cases

that followed criminal convictions of U.S. antitrust law. The conclusion of

this Essay briefly discusses some of the implications of these findings.

* Senior Fellow, American Antitrust Institute and Professor Emeritus, Purdue University.

** Venable Professor of Law, University of Baltimore School of Law; and a Director of the

American Antitrust Institute. The authors are grateful to Joshua Davis, Albert Foer, Herbert

Hovenkamp, and Daniel Mogin for their extremely helpful suggestions, and to Graham Bennie

for his valuable research assistance.

1998 IOWA LAW REVIEW [Vol. 100:1997

I. INTRODUCTION ........................................................................... 1998

II. ALMOST EVERY SUCCESSFUL ANTITRUST DAMAGES ACTION

SETTLES....................................................................................... 1999

III. ARE SETTLEMENTS LIKELY TO BE AT THE “RIGHT” LEVEL? ........ 2002

IV. ANALYSIS OF THE SETTLEMENTS: THE RECOVERY RATIO ............ 2008

V. ANTITRUST’S NEED FOR MULTIPLE DAMAGES ............................ 2014

VI. CONCLUSIONS ............................................................................. 2018

APPENDIX .................................................................................... 2023

I. INTRODUCTION

In theory, victims of antitrust violations receive treble damages.1 In

practice, however, almost every successful antitrust damages action settles.

Because final verdicts in antitrust cases are exceptional, it may be more

accurate to describe the antitrust damages level not as “treble” damages, but

as the average or median percentage of damages successful antitrust cases

actually settle for.

Until now the actual average or median size of antitrust settlements has

only been a matter of speculation. To bring empirical analysis to this issue, we

assembled a sample of 71 cartels for which we could find the necessary

information. We believe that the sample includes every completed private

U.S. cartel case since 1990. For each cartel a neutral scholar calculated the

firms’ United States overcharges. We compared these results to the damages

secured in the private cases filed in the United States against these cartels. We

find that the victims of only 14 of the 71 cartels (20%) recovered their initial

damages (or more) in settlement; of these, only seven (10%) received at least

double damages. The rest—the victims in 57 cases—received less than their

initial damages. Four received less than 1% of their damages and 12 received

less than 10%. Overall, the median average settlement was 37% of single

damages. Because the distribution of settlement percentages is so skewed, the

weighted mean (a figure that weights settlements according to their sales) is

much lower (19%) than the unweighted mean settlement of 66% (which

gives equal weights to the cartels that operated in large markets and those that

operated in small markets), because plaintiffs tend to be rewarded relatively

poorly in the biggest cases.

1. 15 U.S.C. § 15(a) (2012). Successful victims also receive “the cost of suit, including a

reasonable attorney’s fee.” Id.