Antitrust Experts Review New Data on Private U.S. Antitrust Enforcement, Identify Trends That Must Be Reversed For Private Enforcement to Fulfill Its Increasingly Vital Role

The American Antitrust Institute and Professor Joshua P. Davis at USF Law have released a Commentary on the 2020 Antitrust Annual Report: Class Action Filings in Federal Court (2020 Report). The goal of the Commentary, The Critical Role of Private Antitrust Enforcement in the United States, is to identify major implications for private enforcement in the U.S. Like the 2018 and 2019 Reports, the 2020 Report relies largely on data for private U.S. antitrust class actions available through Lex Machina, as well as supplemental data analysis. The 2020 Report extends the dataset to the eleven-year period covering 2009-2020, thus allowing for a deeper analysis of private enforcement trends and their implications. The analysis provided in the AAI-USF Commentary highlights the importance of private antitrust enforcement in the U.S. system and the particularly important role played by the antitrust class action.

The Commentary explains that the 2020 Report provides further evidence of a divergence between public and private enforcement trends. As public enforcement has waned, private filings have waxed, undermining the notion that class actions simply ride the coattails of public enforcement. On the contrary, the data suggest that as lax public enforcement fosters higher market concentration and invites bad behavior, private filings may compensate for under enforcement in an effort to address the resulting antitrust violations.

Looking beyond the number of enforcement actions filed and focusing on the results of the actions, the data on which the 2020 Report are based reveal more nuance to the foregoing narrative. Despite increased private actions in the face of decreased public enforcement, the amount of money recovered from violators by both public and private enforcers has diminished. For public enforcers, this diminution is to be expected, as fewer cases have been brought. For private enforcers, though, the explanation likely lies with other trends, most notably the increasing headwinds faced by private enforcers due to heightened pleading and class certification standards. If these explanations are correct, the clear implication is that for private enforcement to fulfill its increasingly vital role as a complement and a backstop to public enforcement, these trends must be reversed.

A theme highlighted in the AAI-USF commentary on the 2019 Report, and that continues to feature in the 2020 Report, is the tremendous variability in the data on some measures related to settlement size. Aggregate settlement amounts over the period vary widely from year to year. By disaggregating the settlements by size, however, it is clear that settlements at different levels trend somewhat independently. Very large settlements, which are few in number, drive most of the variability in the aggregate data. But trends and anomalies in very small settlements cannot be entirely discounted, as they are the force behind one of the highest recovery years in the period, 2018.

Finally, building on analysis from the AAI-USF 2019 commentary, the 2020 Commentary takes a deeper dive on attorneys’ fees and how they correspond to settlement amounts. AAI-USF findings reinforce the tentative conclusion from last year’s analysis that the so-called “megafund doctrine”—a dramatic decrease in attorneys fee percentages on settlements above a threshold of about $100 million—does not operate in federal antitrust cases in a significant way. Rather, decreases in the fee award percentage in antitrust cases are not discrete and drastic, but rather gradual, much like marginal tax rates in the United States.

The AAI-USF Commentary on the 2020 Report discusses each of the above observations in more detail and provides analysis of their implications for private enforcement, many of which suggest fertile areas for additional study.

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Based in Washington, D.C., the American Antitrust Institute is an independent, nonprofit organization devoted to promoting competition that protects consumers, businesses, and society. It serves the public through research, education, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.

Founded in 1912, the University of San Francisco School of Law provides a rigorous education – from intellectual property law to litigation and more — with a global perspective in a diverse, supportive community. It is fully accredited by the American Bar Association and a member of the Association of American Law Schools.