Tuesday, September 18, 2007
Posted by D. Daniel Sokol
If you thought it was tough to get class cert in a Sherman Section 1 case, it turns out it is even harder to do so in a Sherman Section 2 case, according to a forthcoming article in the Journal of Competition Law and Economics by John H. Johnson and Gregory K. Leonard of NERA Economic Consulting titled Economics and the Rigorous Analysis of Class Certification in Antitrust Cases.
ABSTRACT: Defendants in Sherman Act Section 1 class action cases have historically faced a low likelihood of success in their attempts to defeat class certification, in part because courts often started from a presumption that all class members were harmed by price-fixing. Recent trends in recent judicial decisions, however, have suggested that courts are starting to take a harder look at whether classes should be certified in Section 1 cases. In this paper, we demonstrate that the presumption of harm on all class members is not justified in many cases. Instead, given the economic characteristics of many industries, a rigorous economic analysis will be required to determine whether antitrust impact for each proposed class member can be established using common proof. What is more, determining whether this condition holds in a given situation generally requires that analyses based on individual data be performed—exactly the outcome that the use of the class action mechanism is intended to avoid. This creates a "common proof paradox" in Section 1 cases. We go on to show that the potential hurdles for class certification are even greater in Sherman Act Section 2 cases.