Antitrust litigation is, fundamentally, regulatory law, largely waged as a complex battle of economic experts. Threats of civil damages are in the hundreds of millions. Joint and several liability in the face of potentially huge recoveries creates both distrust and odd allies among class action defendants. Often a defendant has secured a detrebling of private class action damages for self-reporting to government investigators. All this presents unusual challenges for the mediation of private anti-trust disputes.
Given that antitrust law addresses markets and effects on them, antitrust litigation, domestic or international, involves large numbers of plaintiffs – consumers, distributors, institutional buyers, indirect purchasers that are resellers or end-users, foreign purchasers. Where price-fixing and similar anti-competitive agreements are concerned, defendants, often from different countries, are differently situated, with widely ranging market shares, various states of economic health, varying degrees of “fault” and “ring-leader” roles. The common expectation of defendants that a mediated settlement should achieve “global” and “final” peace starts to look naïve.
Pre-mediation discussions are essential for discovering the factors truly driving groups of particular defendants and attempting early allocations among them. Still, the mediator should be wary of striving too hard to come to an agreed fixed formula that gives specific weight, for example, to factors such as numbers of units sold, length of time in the “conspiracy,” revenues during a relevant period, market share, worldwide sales figures or some culpability measure. The effort can lead too soon to haggling ad infinitum.
Rather, a sense that flexibility remains reassures those entering the negotiation. It may be efficient to deal strictly in numbers and percentages at the outset, rather than attempting to assign inevitably controversial values to factors. An agreed upon percentage allocation at this early stage gives the mediator a lot of information and gets defendants actively engaged for the first real mediation session. Although everyone realistically expects a higher settlement figure, they may only be able to begin agreeing to relative shares when the hypothetical amounts at stake are more palatable. Negotiations proceed, and allocation adjustments become necessary as company cultures and institutional imperatives assert themselves.
Click here to read Part II of Mediating in the World of Antitrust.
About the author:
Lizbeth Hasse, Esq., a principal at Creative Industry Law, has based her practice in San Francisco for 30 years. A Fellow of the Chartered Institute of Arbitrators, she regularly mediates cases in the antitrust, complex business and intellectual property areas in the U.S. and internationally. She serves on BASF’s Mediation Services panel of mediators.