Analysis: Private antitrust lawsuits on the decline in U.S.

SAN FRANCISCO Mon Jun 13, 2011 9:08am EDT

SAN FRANCISCO (Reuters) - Price-fixing lawsuits against the air-cargo industry have produced steady cash flow for U.S. plaintiff lawyers and their clients, with total settlements topping $367 million last week after British Airways (ICAG.L) announced an $89.5 million deal.

But pacts resolving antitrust litigation could become rarer, as the number of large-scale private antitrust lawsuits in federal courts is declining, according to a Reuters analysis of court filings available on Westlaw, a Thomson Reuters Corp legal database.

Companies can face criminal or civil penalties if the Department of Justice charges them with violating antitrust law by working together to artificially raise prices at the expense of customers. After government probes are made public, plaintiffs lawyers jump in, seeking damages in class-action or other lawsuits on behalf of consumers or corporate buyers who say they were harmed by antitrust activity.

In 2006, when the air-cargo private plaintiffs' litigation was consolidated into one multi-district proceeding in federal court in Brooklyn, New York, 18 other consolidated antitrust cases were brought against industries such as SRAM computer chip makers and pharmacy benefit managers.

By 2010, the number of multi-district lawsuits consolidated in U.S. district courts had dropped to four, down from 12 the previous year, Westlaw data shows. Reuters examined antitrust lawsuits combined into multi-district proceedings, which occur when several similar lawsuits filed in courts around the country are knit together before a single judge.

This year, three cases have been tagged as multi-district proceedings, according to the Westlaw data.

REASONS FOR THE DROP

A key reason for the decline in large multi-district cases, according to several plaintiff lawyers, is a less aggressive Justice Department, which they argue has not been as vigorous launching new antitrust probes in the past two years as it was previously.

"There has been very little -- from my perspective, precious little -- government activity," said Joseph Saveri, a partner at Lieff Cabraser Heimann & Bernstein LLP, who represents antitrust plaintiffs.

The Department of Justice disputes that notion. The government continues to "vigorously pursue" antitrust crimes, said department spokeswoman Gina Talamona.

Prosecutors currently are litigating three of the biggest criminal investigations ever -- in the municipal bond, air cargo and liquid crystal display (LCD) panel markets -- and are investigating a range of other cartel allegations, she said.

"These large-scale investigations, coupled with our intensive litigation efforts, utilize significant division resources," Talamona said.

Some legal experts attribute the drop in multi-district cases to a series of defense-friendly rulings from the U.S. Supreme Court.

That has been a prime reason for the decline in case filings, said D. Daniel Sokol, an associate professor at University of Florida Levin College of Law. It is unclear, though, whether the decline is ultimately bad for antitrust enforcement, he said.

"What is clear is that there are fewer dead-bang loser plaintiff cases being filed," he said.

The Supreme Court ruled in 2007 that plaintiffs must demonstrate stronger facts for their lawsuits to proceed. Those kinds of hurdles lengthen the time that plaintiff lawyers must devote to individual class actions, said Brian Ratner, a partner at plaintiffs firm Hausfeld LLP.

"Things just take longer, even in cases that are incredibly strong," Ratner said.

Even in cases such as the air-cargo litigation, where guilty pleas leave no doubt as to whether improper conduct occurred, it still takes several years to secure settlements in the private litigation. And the tougher rules can make a case that once took three years last as much as five.

"If you've got 10 cases taking five years instead of three, there's a different impact on everything you're doing," Ratner said.

LOOKING ABROAD

One of the largest private antitrust cases involved a conspiracy in the 1990s among the world's largest vitamin manufacturers, which led to more than $1 billion in penalties and settlements.

More recently, some of the biggest cases grew out of an investigation by antitrust prosecutors in the San Francisco Bay area into DRAM memory chip price fixing that began in 2002, involving manufacturers including Samsung (140700.KS) and Hynix (000660.KS).

That case led to several spin-off investigations -- involving many of the same companies -- into products such as SRAM computer chips, flash memory and LCDs.

Since then, though, new U.S. private antitrust lawsuits have waned. That has led the Hausfeld firm to start looking abroad for more antitrust work.

Michael Hausfeld, who represents the air-cargo plaintiffs, also represents Volvo and other car manufacturers in Britain that are suing car glass companies for price fixing. Four corporate groups discussed target prices, market sharing and customer allocation in a series of meetings and other illicit contacts, according to the European Commission.

The U.S. trends have contributed to a growing focus by antitrust lawyers on the rest of the world, Hausfeld said.

"It fostered and enabled an acceleration of private enforcement on a more global level," he said.

(Reporting by Dan Levine; editing by John Wallace)

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