Restraint Of Trade

A New Model for Global Cartel Settlements

An increasingly global world brings an increasing potential for anticompetitive actions (such as price-fixing agreements) that affect companies on an international scale.  As many have recognized, the potential for international price-fixing agreements creates challenges of deterrence and compensation. In turn, this poses the practical question of how to achieve the global resolution of cartel liability when it is present.  

Hausfeld LLP recently announced that it has negotiated the first private resolution of a company's global cartel liability without arbitration, mediation, or litigation. 

The private global settlement agreement was reached with Parker ITR regarding the company's involvement in the marine hose cartel, which occurred between 1986 and 2007.  See news link here.

The Parker Marine Hose settlement presents the first private resolution of a cartelist’s global cartel liability, by settlement offer and without litigation. This is the first commercial non-court-based agreement of its kind and provides an entirely new model for global cartel settlements. 

As Michael Hausfeld told RestraintOfTrade:  "This model gives cartelists the opportunity to settle on a worldwide basis and achieve global peace.  Because the settlement does not require a court approval process and fees and costs are on top of the settlement amount, cartel victims can recover their entire losses caused by the cartel’s overcharges without reduction and more expeditiously."

Class Arbitration Remains Vital

The Second Circuit ruled on election day that the plaintiffs in the long-running Parcel Tanker antitrust litigation could seek to proceed on a class-wide basis before the arbitration panel overseeing the case.  This sends a strong indication that the trend toward courts and arbitrators permitting class arbitration is likely to continue.

The decision is here: Download parcel_tanker_2d_cir.pdf

The case was brought in federal district court by direct purchasers of parcel tanker transportation services globally against parcel tanker companies, alleging a global conspiracy to restrain competition in the world market for parcel tanker shipping services.  Parcel tankers are special ships designed to transport certain speciality liquids, such as chemicals, edible oils, and acids. 

After the suit was filed, the defendants convinced the Second Circuit (on appeal from an earlier ruling) that the parties' shipping transactions were governed by contracts with enforceable agreements to arbitrate and that the antitrust claims were arbitrable.  The arbitration clauses in question were silent, however, on whether arbitration may proceed on a class-wide basis.

Plaintiffs filed a demand for class arbitration, and the panel determined that the arbitration clauses permitted class arbitration.  The defendants petitioned the district court to vacate the ruling, arguing that it showed a "manifest disregard" for the law.  The district court agreed and vacated the ruling.  However, on appeal, the Second Circuit has now upheld the panel's ruling.  The case (which my firm but not me) works on, will now go back to the panel, which will decide whether, in fact, the case should be arbitrated on a class-wide basis.

In a context where companies are seeking to slip arbitration clauses ever more widely into contracts with purchasers, the Second Circuit's ruling importantly affirms that the arbitration proceeding can accomodate class-wide relief.

AAI Releases Antitrust Recommendations

The American Antitrust Institute has published a comprehensive report outlining its policy recommendations for the next administration.

Chapter One of the report - on Cartels - is particularly deserving of attention.  AAI questions, for example, whether the Antitrust Division of the US Department of Justice has been unduly "indifferent or even hostile to private litigation." 

"While it is not uncommon for the FTC to join with the state attorneys general in antitrust prosecutions, we are not aware of a single instance of such an alliance involving the Division and the 'private attorneys general.'  On the contrary, we have heard many informal reports that when private suits are initiated, plaintiffs experience unnecessary delays and blockages initiated by the Division.  Legal impediments are particularly severe in international cartel actions.  We note that some courts have overriden concerns about comity and required foreign antitrust authorities to produce documents held abroad to plaintiffs in private suits.  Yet, the Division typically resists turning over amnesty application documents."  (48.)

We applaud the AAI's focus on the importance of constructive cooperation between the Antitrust Division and private actions, and echo the hope that the next administration will take steps to improve this working relationship - which will benefit consumers in this country and, in an era of increasingly international cartels, other countries as well.

Ex-BA Executive Pleads Guilty to Price Fixing

The DOJ announced today that Keith Packer, former Commercial General Manager for British Airways World Cargo, has agreed to plead guilty, serve eight months in jail and pay a criminal fine for participating in a conspiracy to fix rates for international air cargo shipments.

Packer is the first foreign national and third individual charged as part of the Antitrust Division's ongoing investigation into price fixing in the air transportation industry.  Nine compnies have also been charged. 

Private actions on behalf of air cargo purchasers are pending in the EDNY.

"Bloody Marvellous" - Progress in UK on collective redress for price-fixing

The financial times is reporting (here) that the UK Department for Business, Enterprise & Regulatory Reform is close to publishing its proposals to facilitate actions for collective redress for price-fixing violations in the UK, with a view to changing the law next year. 

The proposals are expected to mirror those the Civil Justice Council made last month, including an automatic opt-in to lawsuits for consumers.

As the article notes, while US consumers and purchasers have received on several occasions significant payouts as a result of illegal price-fixing conspiracies, those in the UK have trouble getting any redress at all, because of legal impediments. 

   "Deborah Prince, head of legal affairs for Which?, the consumer group, said it would be 'bloody marvellous' if the government followed the thrust of the CJC recommendations, which were 'absolutely spot on.'"

Clearing the Air on SAS Suits

Reuters reported Friday that several major Swedish companies had sued Scandinavian airline SAS for price fixing of air cargo services, based on a report on Swedish television news.

The story has been picked up by several other news sources, some of whom have suggested that these suits are new.  In fact, the suits referred to were filed in 2006, when numerous airlines around the world were sued in the United States following a global investigation into price fixing of air cargo shipments.  See discussion here. 

There have been no new lawsuits filed by the Swedish companies mentioned in the Reuters report.

[disclosure note:  Cohen Milstein (my employer) is involved in prosecuting these air cargo cases on behalf of several clients worldwide.  We'll be posting a standing disclosure about Cohen Milstein cases soon.]

OFT announces criminal charges in air passenger fuel surcharge case

The UK Office of Fair Trade announced that it has charged four men, formerly employed by British Airways, under the UK Enterprise Act in connection with the OFT's criminal investigation into price-fixing of fuel surcharges for long haul passenger flights. 

OFT press release here.

The civil case resulted in a ground-breaking settlement for air passengers that for the first time ever resolves a class action suit under both UK and US law.  Information is available here.