Settling competition concerns

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CHAPTER V

SETTLING COMPETITION CONCERNS

A. Introduction

Experienced antitrust practitioners representing businesses,

individuals, and public entities routinely dicompetitive concerns by

agreement to avoid litigation. Most competitive concerns are addressed

without litigation and most antitrust litigation, including cases brought by

public enforcers, is resolved by agreement among the parties before trial.

One study found that more than 70 percent of antitrust cases brought by

government agencies between 1973 and 1983 were resolved through

consent decree.1 Another study estimated that 70 to 90 percent of cases

brought by federal enforcement agencies between 1987 and 1996 were

resolved through decree.2 Understanding the process of reaching a

resolution with state enforcers, including both strategic issues and the

nuts and bolts of reaching and documenting the agreement, is thus

crucially important for practitioners.

Settlement takes on added importance in antitrust cases because of

the magnitude of th e issues and damages claims often at stake and the

burdens antitrust litigation imposes. The threat of automatic trebling of

already sizeable potential damages sometimes leads to settlements that

include substantial monetary relief. One study calculated the average

settlement or judgment in an antitrust multidistrict litigation case

between 1973 and 1984 was almost $90 million in 2007 dollars.3

1. Jeffrey M. Perlo ff & Daniel L. Rub infeld, Settlements in Private

Litigation, in PRIVATE ANTITRUST LITIGAT ION 149, 163 (Lawrence J.

White ed., 1988).

2. See Lloyd C. Anderson, Uni ted States v. Microsoft: Antitrust Consent

Decrees and the Need for a Proper Scope of Judicial Review, 65

ANTITRUST L.J. 1, 4 (1996); see also ANTITRUST DIV., U.S. DEP’T OF

JUSTICE , WORKLOAD STATISTICS FY 2005–2014 (2015), available at

http://www.justice.gov/atr/antitrust-division-workload-statistics-fy-2005-

2014 (stating cur rent figures).

3. See Steven C. Salop & Lawrence J. White, Economic Analysis of Private

Antitrust Litigation, 74 GEO. L.J. 1001, 1009, 1012 (1986) (reporting a

122 State Antitrust Enforcement Handbook

Antitrust settlements and judgments in the hundreds of millions of

dollars are common today.

Antitrust settlements, of course, also can raise numerous issues

besides the amount of compensation to be paid to resolve an alleged

violation of the antitrust laws. They also can include injunctive relief that

imposes ongoing limitations on conduct, the impact of which can be

significant. Another often contentious issue is the scope of the release,

including the scope of the claims released; whether the release extends to

officers, directors, and employees; and the potential preclusive effect of

the release on claims asserted by other plaintiffs. Finally, state attorneys

general can issue settlement-related press releases that can create public

relations issues.

This Chapter focuses on (1) issues to consider when developing a

settlement strategy, (2) the forms that settlement payments can take, (3)

the process of obtaining court approval for a settlement, and (4) the nuts

and bolts of specific settlement provisions. The Chapter primarily

focuses on the settlement of civil claims brought by state enforcers under

federal antitrust law. State antitrust enforcement has traditionally focused

and still primarily focuses on federal civil antitrust law; and state

antitrust law is often quite similar to federal antitrust law. Merger

settlements are discussed in Chapter VI. State criminal antitrust

enforcement is discussed in Chapter VIII.

Most of the settlement agreements referred to in this Chapter are

available from the National Association of Attorneys General (NAAG)

State Antitrust Litigation Database.4 Pre-2006 settlements are included

among the Committee Resources of the State Enforcement Committee of

the ABA Section of Antitrust Law.5 All of the settlements may also be

found in court dockets and on individual states’ websites.

figure of $44.5 million i n 1984 dollars). The Salop & White study

remains the best large-scale, quantitative analysis of antitrust litigation.

See ABA SECTION OF ANTITRUST LAW, CONTROLLING COSTS O F

ANTITRUST ENFORCEME NT AND LITIGATION 59 (2012), available at

http://www.americanbar.org/content/dam/aba/ad ministrative/antitrust_la

w/2013_agenda_cost_efficiency_kolasky.authcheckdam.p df.

4. NAT’L ASS’N OF ATTORNEYS GEN., NAAG State Antitrust Litigation

Database, http://app3.naag.org/antitrust/search/index.php.

5. ABA SECTION OF ANTITRUST LAW, Antitrust Documents,

http://www.americanbar.org/content/dam/aba/publicat ions/antitrust_law/a

t325000_documents_settlements_litigation.authcheckdam.pdf.

Settling Competition Concerns 123

B. Strategic Considerations

1. Factors That Favor Settlement

a. The Time and Expense of Antitrust Litigation

As the Supreme Court has noted, antitrust litigation can be quite

burdensome.6 According to one study of antitrust litigation in the federal

courts, conducted by Steven Salop and Lawrence White, the average

multidistrict antitrust litigation between 1973 and 1983 lasted

approximately 5.7 years and had 968 docket entries per consolidated

litigation.7 The study also estimated that a large antitrust litigation

generated, on average, legal fees of over $800,000 in 2007 dollars.8

Antitrust litigation remains lengthy and complex today, and a significant

antitrust litigation today will routinely generate millions of dollars in

legal fees.

Moreover, estimates of the burdens of antitrust litigation often

understate the time and expense of an antitrust matter as as they account

for only the costs of civil litigation in the federal courts. The matter as a

whole now often may also include related investigative or criminal

proceedings and separate civil actions in state courts. The cost of

economic and other experts, whose involvement is almost mandatory in

antitrust cases today, is significant and growing. Moreover, the costs of

clients’ executive time consumed by antitrust litigation might well be on

6. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007) (“[P]roceeding to

antitrust discovery can be expensive.”). Even ultimately successful

plaintiffs bear significant burdens. The bundled rebates challenged in

LePage’s Inc. v. 3M were implemented in 1992, challenged in 1997, and

resolved after the denial of certiorari in 2004. 324 F.3d 141 (3d Cir.

2003), cert. denied, 542 U.S. 953 (2004).

7. See Salop & White, supra note 3, at 1009. One example of a particularly

protracted case is Matsushita Electric Industrial Co. v. Zenith Radio

Corp., 475 U.S. 574 (1986), in which twelve years elapsed between the

filing of the original complaints and a decision by the Supreme Court that

upheld summary judgment for the defendants. The average private

antitrust litigation these days takes over six years to reach resolution.

Daniel A. Crane, Optimizing Private Antitrust Enforcement, 63 VAN D. L.

REV. 675, 692–93 (2010).

8. See Salop & W hite, supra note 3, at 1012–13 (stating an average fee of

$400,000 in 1984 dollars).