Private Enforcement of Antitrust Law in the EU, UK and USA

281 Pages·1999·0.56 MB·English

by  Clifford A. Jones

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Introduction
A current judge of the European Court of Justice has said that this work 'focuses on one of the most fundamental and
difficult problems of law enforcement in the European Union'.1 The Commission's then Director-General for
Competition expressed:
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[T]he conviction that competition law enforcement based almost exclusively or even mainly on administrative
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action is not enough. Like other legal rules, competition law will only be efficiently applied if there is also
private action. Private action complements the activities of administrative agencies. In periods of weak
administrative enforcement, it is even a substitute for action by the State. We tend to consider private action to
be a peculiarity of the USA. We should not.2
This work examines the legal basis for private EC antitrust enforcement in the courts of the United Kingdom by
comparison to the litigation oriented system in the USA. It does not compare the substantive competition law in the EC
or UK with that of the USA, but attempts to analyse and compare private enforcement in two systems which have at the
same time great similarities and great differences. The last several years have seen increased interest on the part of the
Commission and others in encouraging the development of private antitrust litigation in national courts. This work seeks
to clarify and apply the foundational principles of Community law which enable private antitrust litigation to exist in the
EC and UK, show how important issues have been dealt with in the US system, and test US approaches for possible
application in the UK and Community legal orders.
Chapter 1 contains an introduction to the benefits and pitfalls of comparing the EC and US antitrust systems and
introduces the antitrust laws of the USA. Chapter 2 describes the multiple processes of antitrust enforcement in the USA
and features of the US Federal court system pertinent to antitrust litigation and an understanding of US precedents.
Chapter 3 describes the origins of the main EC Treaty rules on competition and a summary of their content and history
relevant to private actions. Chapter 4 describes the UK competition systems and their features pertaining to private
actions, including the new UK Competition Act 1998. Experienced practitioners already quite familiar with these
systems may wish to skim one or more of these initial segments.
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1 Judge David A. O. Edward, European Court of Justice (extra-judicially), unpublished letter to the author, 23
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Aug. 1995.
85df20 C7.a D29. E46hlce0rmbfa5nen6, '3D3eare7g1uela9t1iodna a9n7da Edn.forcement of Competition Laws', Proceedings of the Second Seminar on
gif European Union/Japan Competition Policy (Luxembourg, 1995), 26.

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Chapters 5 and 6 trace in detail the development of the foundations of private antitrust action in the Community through
application of the principles of direct effect, supremacy, national remedies, and Community remedies to competition
law. Chapters 7 and 8 consider the role of private enforcement in the USA and the EC and offer some partial solutions
to the problems of enforcement pluralism and concurrent jurisdiction in private Community antitrust litigation. Chapters
9 to 12 study how EC and UK competition law damages actions fit into the UK legal system. Chapter 12 in particular
describes what it is submitted constitutes the optimal approach to actions based on EC competition rules.
Chapters 13 to 15 address some important prudential limitations on private antitrust litigation which have developed in
the USA, including standing and antitrust injury, and Chapter 16 suggests how these issues might be resolved in the
Community system. Chapters 17 and 18 discuss the principles of antitrust damages and methods of proof in the USA
and their application in particular cases. Chapter 19 examines and describes how these principles apply in the
Community system.
The Treaty of Amsterdam (ToA) signed in 1997 entered into force on 1 May 1999. The renumbering of EC Treaty
Articles in the ToA is taken into account by referring to ToA numbering as 'now' or 'new' and the pre-Amsterdam
numbering as 'former' or 'old'. For example, Article 85 is now renumbered Article 81 in the ToA. Depending on the
context, the reference will be to Article 81 (formerly or old Article 85) EC or Article 85 (now 81) EC.

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1
Introduction to Comparative Antitrust Systems
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1.1 The Rationale for Comparative Analysis
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1.1.1 Foundations of Comparative Antitrust
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1.1.2 Pitfalls of Similarity
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1.2 The US System: The Federal Antitrust Laws
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1.2.1 The Trust Problem
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1.2.2 The Sherman Act
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1.2.3 The Clayton Act
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1.2.4 Other Antitrust Legislation
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1.1
The Rationale for Comparative Analysis
1.1.1
Foundations of Comparative Antitrust
There are a number of reasons for conducting a comparative analysis of EC and US private antitrust litigation. First, despite the
pronounced differences between legal systems in the USA and the EC, the US system for the enforcement of Federal antitrust
law is the paradigm of private antitrust enforcement. The utility of private enforcement in the USA has been cited by one
Advocate General as grounds for belief that such actions would assist in making EC competition rules more 'operational'.1
Secondly, as Whish and Sufrin have noted, '[m]uch can be learnt from a system of law that in 1990 celebrated its centenary'.2
This means, among other things, that there are few 'commercial phenomena' which have not been treated in the cases and
literature concerning American antitrust.3 In the early years of EC competition law there were few precedents, and it was
natural to look to US case law as the Advocates General did in a number of cases.4 Lord Slynn
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1 Opinion of Van Gerven AG, Case C128/92 H.J. Banks & Co. Ltd v. British Coal Corp. [1994] ECR I1212, I12502.
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85df20 R7.a W29h4is6hc a0nbdf 5Be. 6S3u3frain7,1 Ceo9m1pdeat9it7ioand L.aw (3rd edn., London, 1993), 16.
g8i5fdf30S7uap2ra9, 4a6t c1081b9f.5e633a71e91da97ad.
g8i5fdf40 A7a.D2.9 N4e6acle0 banf5d eD6.3G3. aG7o1yed9e1r,d Tah9e7 Aandt.itrust Laws of the United States of America: A Study of Competition Enforced by
gif Law (3rd edn., Cambridge, 1980), 491. See also René Joliet, The Rule
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of Hadley more recently noted that '[w]e have in Europe a lot to learn from comparisons with United States law in
relevant areas (e.g., . . . competition law) . . .'.5
Thirdly, the genealogy of the Treaty of Rome includes an American professor of antitrust law at Harvard University,
Robert Bowie, who was identified by Monnet as the draftsman of what became the competition provisions of the ECSC
and EEC treaties.6 This surely legitimizes consideration of US precedent as persuasive authority where applicable.
Fourthly, the role of national courts in the Member States in private enforcement of EC law makes a UK/US
comparison particularly apt, not only because of the generally higher level of comparability of two common law
systems, but especially because the US Sherman Antitrust Act was said at the time of its enactment to represent a
Federal declaration of illegality of practices which the common law of England and the American states (which had
adopted the English common law) 'had always prohibited'.7
Any meaningful comparative analysis obviously and necessarily considers textual differences between the antitrust laws
of the USA and the competition rules of the EC Treaty, but this is only the beginning. There are also systemic structural
differences which must be considered, such as the fact that the antitrust laws of the USA are statutory, whereas the
competition rules of the EC are at the level of a treaty which 'constitutes the constitutional charter of a Community
based on the rule of law'.8 There are underlying policy goals which are often similar but may diverge in ways that
would prompt a different result when EC principles are applied in UK courts from that which would obtain in a US
court.9
However, comparability in the area of private enforcement is enhanced by the fact that at times both the US Supreme
Court and the European Court of Justice have
(footnote continued from previous page)
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of Reason in Antitrust Law: American, German and Common Market Laws in Comparative Perspective
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(Liège, 1967), 1601.
85df50 T7hae2 R94t.6 Hco0nb. fT5hee6 L3o3rad7 S1ley9n1n doaf 9H7aaddle.y, 'Foreword' in G.A. Bermann, R.J. Goebel, W.J. Davey, and E.M. Fox,
gif Cases and Materials on European Community Law (St Paul, Minn., 1993), p. x.
85df60 J7. aM2o9n4n6ect,0 Mbfe5meo6ir3s3 (atr7a1nes.9 R1.d Ma9a7ynaed,. New York, 1978), 3523.
g8i5fdf70 W7a. 2L9e4tw6icn0, bLfa5we 6an3d3 aE7co1neo9m1idca P9o7laicdy. in America: The Evolution of the Sherman Antitrust Act (New York,
gif 1965), 18, 98; J. Sherman, speech to the US Senate, 21 Mar. 1890, 21 Cong. Rec. 3: 24567 (1890)('It does not
announce a new principle of law, but applies old and well recognized principles of the common law . . .'). It was
considered, at least in 1890, that there was no Federal common law as such. Ironically, Senator Sherman's
perception of the state of the English common law in the area of monopolies and restraints of trade seems to have
been somewhat erroneous: Letwin, supra, at 512.
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8Opinion 1/91, Draft Agreement between EEC and EFTA, [1991] ECR 6079, at 21.
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85df90 S7eae2, 9g4en6ecr0alblyf5, Be6. 3va3na 7de1re E9s1cdha, 9'E7Ca dR.ules on Undistorted Competition and U.S. Antitrust Laws: The Limits of
gif Comparability' (1989) 15 Fordham Corp. L. Inst. 181 (B. Hawk, ed.) and B. Hawk, 'The American (Antitrust)
Revolution: Lessons for the EEC?', (1988) 9 Eur. Competition L. Rev. 53, 5462.

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been known to bring a teleological approach to interpretation of general provisions of law. In particular, the European
Court has since the early days of the EC favoured the protection of the rights of citizens of Member States in national
courts when pure textual interpretation could have brought about a different result.10 The Supreme Court of the USA
similarly has shown an interest at times in interpretations which protect the ability of private citizens injured by reason
of violations of the antitrust laws to maintain damages actions in their own and the public interest.11 The convergence
of EC and US antitrust thinking in the area of private enforcement may be substantially greater than some might have
thought.
1.1.2
Pitfalls of Similarity
Nonetheless, comparisons of EC and US law are to be approached with caution, as there is a very human tendency on
the part of commentators trained primarily in one system to see issues in the second system in the terms of their native
system. For example, a classic caution in comparing the US and EC systems is the influence of the goal of single market
integration in the stricter treatment of export bans in the EC as opposed to the more lenient attitude currently taken in
the USA where limits on intra-brand competition are often seen as beneficial to promoting vigourous inter-brand
competition.12 In the EC, the 'first principle' of competition law is single market integration and the elimination of
private practices which interfere with integration.13
Yet, a leading work on EC law by distinguished academics and practitioners seems at times to view US antitrust law
through the single market lens in a manner which does considerable violence to history and precedent on the Western
side of the Atlantic:
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To take an example from the anti-trust (the US term for competition law) history of the United States: in its
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early days (at the end of the nineteenth century and the beginning of the twentieth), American anti-trust was
renowned for its vigour. Enormous fines were imposed upon companies; treble-damage suits proliferated and
recalcitrant managers and directors spent time in goal. The law started life as an instrument designed to
ensure that businessmen did not, by private conduct, hinder the political forces seeking to integrate the vast
continent of America. Railway companies that, through their trading policies, obstructed the passage of goods
from coast to coast, felt the weight of the Sherman Act 1890 brought to bear upon them.14
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10 See, e.g., Case 26/62, Van Gend en Loos v. Nederlandse Tariefcommissie [1963] ECR 1, 12.
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85df1017 Sae2e9, 4e.6gc.,0 Bblfu5e eS6h3ie3lda 7v1. Me9c1Cdraea9d7ya, d4.57 US 465, 472 (1982).
g8i5fdf1027 Ea.2g9., 4H6acw0kb, fs5uep6ra3 3nao7te1 9e,9 a1t d5a49. 7ad.
g8i5fdf1037 Ba.2 H9a4w6kc,0 Ubfn5itee6d 3S3taat7es1, eC9o1mdma9on7 aMda.rket and International Antitrust (3 vols, 2nd edn., Englewood Cliffs, NJ,
gif Supp., 1990), ii, 6.
85df1047 Na.2 G94re6ecn0, Tbf.C5.e H63ar3tlae7y1, ean9d1 dJ.aA9. 7Uasdh.er, The Legal Foundations of the Single European Market (T.C. Hartley,
gif ed.) (Oxford, 1991), 198 (emphasis supplied). Not surprisingly, no supporting references are given by the authors.
Moreover, this passage also suffers from temporal compression, as is made clear later. E.g., until 1955 the
maximum fine was just $5,000.00 and only 175 private actions were brought in the first 50 years of the Sherman
Act (3.5 per year).

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There have been many treatments of the legislative history of the Sherman Act and its purposes,15 but there is no
known support for the proposition that the Act was designed to prevent private conduct from hindering the political (or
economic) integration of the United States. That such a uniquely European Community concept should surface as a
description of the aims of a US law adopted more than half a century before even the ECSC came into existence is a
sign that even the most meticulous writers can fall prey to the ailment of projection. This author is no more immune
than others and can only hope to avoid similar misperceptions.
Nearly 30 years ago, an important comparative study examined US, EC, and German treatment of the American Rule of
Reason, an issue which continues to be debated. What then Professor, later Judge, Joliet had to say about comparative
antitrust law retains its force today:
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In the field of antitrust law, the comparative method has a more useful function to perform than merely to
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describe what is the applicable law in different countries without questioning why it is so. Antitrust law is an
American tradition, as should always be remembered when comparisons are made and guidance is sought for
the European law. Comparative law in this area is more than a fascinating intellectual game; it is a valuable
tool; and indeed to the European lawyer an essential one.16
1.2
The US System:
The Federal Antitrust Laws
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The popular mind is agitated with problems that may disturb social order, and among them all none is more
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threatening than the inequality of condition, of wealth, and opportunity that has grown within a single generation
out of the concentration of capital into vast combinations to control production and trade and to break down
competition. These combinations already defy or control powerful transportation corporations and reach State
authorities. They reach out their Briarean arms to every part of our country. They are imported from abroad.
Congress alone can deal with them, and if we are unwilling or unable there will soon be a trust for every
production and a master to fix the price of every necessity of life.
US Senator John Sherman,
March 21, 189017
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15 See, e.g., Neale and Goyder, supra note 4; Letwin, supra note 7; H.B. Thorelli, The Federal Antitrust
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Policy: Origination of an American Tradition (Baltimore, 1954); R.H. Bork, The Antitrust Paradox: A Policy
at War with Itself(New York, 1978); R.J.R. Peritz, Competition Policy in America 18881992: History,
Rhetoric, Law (Oxford, 1996), 926; R.H. Lande, 'Wealth Transfers as the Original and Primary Concern of
Antitrust: The Efficiency Interpretation Challenged', (1982) 34 Hastings LJ67; E.M. Fox, 'The Modernization
of Antitrust: A New Equilibrium', (1986) 66 Cornell L Rev. 1140.
85df1067 Jao2li9et4, 6sucp0rbaf 5noet6e3 43, aa7t 119e19.1da97ad.
g8i5fdf1077 Ja. 2S9h4er6mca0nb, f(51e86903)3 2a17 1Ceo9ng1.d Rae9c7. a3d: .245662.
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1.2.1
The Trust Problem
Rapid industrialization took place in the USA following the close of the American Civil War (1865) to the point that by
the 1880s problems of overcapacity affected a number of industries, resulting in frequent consolidations, pools, and
cartels intended in one form or another to control competition, output, and prices. When some of these mechanisms
turned out vulnerable18 to cheating, causing pools to collapse, an innovative lawyer conceived and implemented the
Standard Oil Trust,19 the best known (and perhaps least popular20) of the great American business trusts of the late
nineteenth century. The trust was a tighter form of combination than a pool or cartel. It was created by having
participating corporations turn their stock over to a board of trustees and receive in turn trust certificates of equivalent
value.21 Each corporation retained its state charter, but was subject to centralized control by the unincorporated trust
entity holding the stock.22
The Standard Oil Trust was formed in 1882, but was soon copied by others, resulting in the Cotton Oil Trust (1884),
Linseed Oil Trust (1885), Sugar and Whisky Trusts (1887), and numerous others.23 In the late 1880s the term 'trust'
became a popular term denoting all types of monopoly24 or combinations or arrangements restraining trade, even
though only a few of the most obnoxious technically made use of the trust device.25 Of course, it was the use of the
trust device which gave the Sherman Anti-Trust Act its name and US antitrust law its label.
By the US Presidential election of 1888, all four major political parties included in their platforms planks against trusts
and combinations.26 It was commonly acknowledged that the public 'had found the trusts to be a growing and
intolerable
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18 See Thorelli, supra note 15, at 756.
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85df1097 Lae2t9w4in6,c s0ubprfa5 en6o3te3 7a,7 a1t e5951. da97ad.
g8i5fdf2007 Sao2m9e4 6ofc 0thbef n5oet6o3ri3ouas7l1y er9ap1adcaio9u7sa cdo.nduct of the Standard Oil Trust, under the guidance of John D.
gif Rockefeller, is detailed in M. Josephson, The Robber Barons: The Great American Capitalists, 18611901 (New
York, 1962), 11219, 1613. See also Thorelli, supra note 15, at 916. The Standard Oil Trust was depicted in the
popular press 'as a menacing octopus with tentacles stretching across the country': Peritz, supra note 15, at 9.
85df2017 Aa.2D9.4 C6hca0nbdfle5re, 6T3h3e aV7is1ibel9e1 Hdaan9d7:a Tdh.e Managerial Revolution in American Business (Cambridge, Mass.,
gif 1977), 319.
85df2027 Tah2e9 a4c6tuca0lb trfu5set 6a3g3reae7m1een9t 1isd rae9p7roaddu.ced in I.M. Tarbell, The History of the Standard Oil Company (2 vols.,
gif New York, 1904), ii, 36473. A summary of the salient features is found in Thorelli, supra note 15, at 778.
85df2037 Lae2t9w4in6,c s0ubprfa5 en6o3te3 7a,7 a1t e699170d;a T9h7oardel.li, supra note 15, at 769. The Standard Oil Trust was first created in 1879,
gif but it was the second agreement which became the model for other trusts: supra, at 767.
85df2047 'Ha2a9tr4ed6 co0f bmfo5neo6p3o3lya 7is1 oen9e1 odfa t9he7 aodld.est American political habits. The trust was popularly regarded as nothing
gif but a new form of monopoly': Letwin, supra note 7, at 59.
85df2057 Tah2o9r4el6lic, 0subpfr5ae 6no3t3e a1751, eat9 116d1a.97ad.
g8i5fdf2067Sau2pr9a4, 6act 015b0f15.e T6h3e3 tah7e1n ef9ou1rd ma9aj7oar dp.arties were the Democratic, Republican, Union Labor, and Prohibition
gif parties. Supra.

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evil'.27 Congress passed the Sherman Act in response to 'real public feeling against the trusts'.28
1.2.2
The Sherman Act
The Sherman Act29 was initially introduced by US Senator John Sherman of Ohio in 1888, although by the time of its
passage in 1890, it was an entirely different piece of legislation of which, paradoxically, almost none was written by
Senator Sherman.30 It contained seven sections, the most important of which were no doubt the first and second.
Section 1, as amended, provides in pertinent part that:
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Every contract, combination in the form of trust, or otherwise, or conspiracy, in restraint of trade or commerce
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among the several States, or with foreign nations, is hereby declared to be illegal . . . Every person who shall
make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed
guilty of a felony. . . .31
Section 2 of the Sherman Act32 provides in pertinent part that:
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Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person
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or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations,
shall be deemed guilty of a felony. . . .
Section 7 of the Sherman Act, now repealed, contained the original provision for private enforcement of the antitrust
laws. As replaced by section 433 of the Clayton Antitrust Act, as amended, it provides in pertinent part '[t]hat any
person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue
therefor in any district court of the United States . . . and shall recover threefold the damages by him sustained, and the
cost of suit, including a reasonable attorney's fee'. The US government may now recover treble damages in an action for
pecuniary loss to the government from an antitrust violation.34
Section 1 of the Sherman Act originally provided that violations were misdemeanours punishable by a maximum fine of
$5,000 and not more than one year in prison, or both. In 1955, the statute was amended to increase the maximum
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27 See W.H. Taft, The Anti- Trust Act and the Supreme Court (New York, 1914), 2. Taft was a former federal
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judge, President of the United States, and later Chief Justice of the United States.
85df2087 Lae2t9w4in6,c s0ubprfa5 en6o3te3 7a,7 a1t e5941. da97ad.
g8i5fdf2097 Aac2t9 o4f6 2c J0ublyf5 1e869303, ca.7 611e79, 12d5 aS9ta7ta. d20.9, 15 USC §§ 17.
g8i5fdf3007 Sae2e9 L4e6twc0inb,f s5uep6ra3 3nao7te1 7e,9 a1t d8a79957;a Tdh.orelli, supra note 15, at 166214.
g8i5fdf3017 1a52 U94S6Cc §0 b1.f5e633a71e91da97ad.
g8i5fdf3027 1a52 U94S6Cc §0 b2.f5e633a71e91da97ad.
g8i5fdf3037 1a52 U94S6Cc §0 b15f5(ae)6. 33a71e91da97ad.
g8i5fdf3047 1a52 U94S6Cc §0 b15f5a.e F6o3r3mae7rl1ye, 9th1ed gao9v7earndm. ent was limited to single damages, and originally none at all, due to not
gif being considered a 'person'.

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fine to $50,000.35 The statute was again amended in 1974 to reclassify violations as felonies and to increase
permissible fine amounts to $100,000 for individuals and $1,000,000 for corporations, and increase the maximum
prison term from one to three years.36 In the centenary year 1990, maximum fines were again increased to $10,000,000
for corporations and $350,000 for individuals.37 The statutory $10,000,000 maximum fine was levied for the first time
in 1995 against ICI Explosives USA, Inc., a manufacturer of commercial explosives which pleaded guilty to conspiracy
to fix prices.38
In addition to the specific criminal penalties provided in the Sherman Act, other general Federal criminal law sanctions
may apply to violations of the Sherman Act. One provision of the Comprehensive Crime Control Act of 1984 permits
the assessment of a fine based on twice the gross pecuniary gain enjoyed by the perpetrators or twice the loss to the
victims caused by the violation,39 as an alternative to the maximum fine contained in the Sherman Act itself. This
permits the government to ask the trial court to levy an increased fine in cases involving large amounts of commerce. In
1995, Dyno Nobel, the world's largest manufacturer of commercial explosives, pleaded guilty to conspiring to fix prices
and paid a $15,000,000 fine, the first fine to exceed the Sherman Act's maximum.40
In October 1996, Archer Daniels Midland Co. agreed to plead guilty to two counts of price-fixing, one involving
synthetic lysine, a livestock feed additive, and one involving citric acid, a flavouring used in beverages. The agreed fine
amounts to $100 million, the largest to date in a criminal antitrust case, and another $90 million has already been agreed
to be paid in civil settlements.41 Other companies in the same industry are the subject of ongoing investigation and the
plea agreement left the Justice Department free to indict company executives. The Antitrust Division of the Justice
Department, which prosecutes all criminal cases for violation of the Sherman Act, has announced a policy of
concentrating on cases involving larger amounts of commerce and seeking increased fines and longer terms of
imprisonment.42
85df07a2946c0bf5e633a71e91da97ad. 85df07a2946c0bf5e633a71e91da97ad.
35 Act of 7 July 1955, c. 281, 69 Stat. 282.
gif gif
85df3067 Aac2t9 o4f6 2c10 Dbef5c.e 1693734a, 7P1ueb.9L1. d9a395728a,d 8.8 Stat. 1708.
g8i5fdf3077 Pau2b9.L4.6 1c001b5f858e, 643(a3)a, 71014e 9S1tadt.a 29878a0d (.1990).
g8i5fdf3087 Aa.2K9.4 B6icn0gabmf5aen6, '3T3hae7 C1lein9t1ond aA9d7maidn.istration: Trends in Criminal Antitrust Enforcement', Address to the
gif Corporate Counsel Institute, San Francisco, California, 30 Nov. 1995.
85df3097 1a82 U94S6Cc §0 b35f571e 6(d3)3 (a17919e3 9S1udpap9.)7. Saede. also 18 USC §§ 36214; Criminal Fines Improvement Act of 1987 (re-
gif enacted), 101 Stat. 1279, 1289.
85df4007 Bai2n9g4am6ca0n,b sfu5per6a3 n3oate7 138e.91da97ad.
g8i5fdf4017 Sa.2 K9i4lm6can0 banf5de T6.3M3.a B7u1reto9n1, d'AaD97Ma'ds .Guilty Plea Could Doom Andreas Reign', The Wall Street Journal, 15 Oct.
gif 1996, col. 1, p. A3.
85df4027 Bai2n9g4am6ca0n,b sfu5per6a3 n3oate7 138e.91da97ad.
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