Legal finance trends: Antitrust

As appetite for antitrust litigation continues, clients’ competition strategies must increasingly cater to coordinating proceedings in multiple jurisdictions.

 

The EU antitrust damages directive is changing the status quo

The EU antitrust damages directive—which seeks to facilitate claims for competition law breaches and remove some of the obstacles created by individual national legal systems—has now been implemented by 25 EU member states. The directive promises to change the European competition landscape, despite experiencing some growing pains.

The EU antitrust damages directive will change the way law firms do business, because actions can now be brought either in the jurisdiction in which the defendant is domiciled or in the jurisdiction where the harmful event occurred. As a result, law firms that may previously have been limited to operating where they have expertise may henceforth implement a global strategy to bring actions in multiple jurisdictions on behalf of their clients.

The directive hasn’t yet succeeded in leveling the playing field, but it nevertheless lays the groundwork for significant changes across the region. In 2019, we expect EU legislators to pave the way for further large-scale antitrust litigation, and we anticipate legal finance playing a key role in the resulting mass damage claims.

Separately, although the collective actions regime in the UK is still in its early days, and neither of the first claims continued past the class certification stage, Pride[1] and Mastercard[2] have clarified crucial information about the Competition Appeal Tribunal process. Notably, in the £14 billion claim against Mastercard, the Tribunal did not disagree that third-party funders could be paid from any unclaimed damages. Thus, despite the Tribunal’s slow start, the door remains open for funded antitrust class actions.

 

Antitrust claims are on the rise in Asia

A growing number of Asian jurisdictions now provide a forum for antitrust claims, and China and Hong Kong in particular are poised to see increased activity in the coming months and years.

China has established dedicated antitrust courts across each of its major administrative regions—making it an increasingly important battlefield for companies or individuals seeking antitrust damages. In addition, following the Hong Kong Competition Ordinance in 2015, there is an expectation that follow-on damages litigation could lead Hong Kong to become an important venue in Asia for antitrust damages claims.

For the time being, the size of Asian antitrust claims remains generally small, but this is expected to change. As antitrust damages claims continue to rise in Asia, companies doing business in the region will need to be prepared to manage the increasing antitrust litigation risks.

 

Increased activity anticipated in the US

In 2018, the number of antitrust class actions with settlement damages was consistent with 2016 and 2015 levels—but notably the total dollar value of damages is on the rise.[3] Although antitrust activity has remained relatively flat, there is an overarching sense that that may soon change.

At the state level, following the midterm elections, Democrats now hold a 27-24 majority of the nation’s attorneys general offices. As a result, there is a potential for increased activity, as state attorneys general have expanded their roles in recent years to fill a void left by the US Department of Justice and the Federal Trade Commission to enforce against companies engaged in unfair, deceptive or abusive acts or practices. At the federal level, there is a less immediate but no less palpable potential for increased activity given both an overarching “new populism” on both the left and right, as well as an uncertain political climate. Since the 1980s, the prevailing approach to antitrust thought has been the consumer welfare standard, which emphasizes economic benefits over structural presumptions. However, in the wake of the Great Recession, an emerging antitrust populist movement has criticized that approach as having resulted in under-enforcement, industry concentration, and greater wealth inequality.

Although it is unclear how quickly—and to what extent—these changes will impact the volume of antitrust cases, companies should nevertheless be prepared for increased enforcement activity.

 

Preparing for further changes in 2019

The antitrust space has evolved rapidly in recent years. As new opportunities arise related to the EU antitrust damages directive and as a result of increased antitrust activity in emerging and established markets, we anticipate legal finance being an important tool for law firms and claimants alike.

Working with the right financing partner can help law firms implement an ambitious global competition strategy. In addition to providing capital that can be used across jurisdictions, the right finance provider can offer even more value to law firms. A strategic partner like Burford has extensive experience reviewing legal matters all over the world and can offer deep insights for firms embarking on matters in new jurisdictions.

Meanwhile, businesses looking to defend themselves against global anti-competitive behavior—matters that are almost always expert-intensive and extraordinarily expensive—will increasingly utilize legal finance as a better path to recovery. Burford has the capacity to commit for the long-term—ensuring that clients have the resources they need to see a matter through to conclusion.

There is no question that antitrust law remains a growing area of need and opportunity that is still largely underserved by the funding industry. But as more law firms and businesses embrace external finance as a tool, they will be better positioned to navigate a quickly changing global antitrust landscape.

 


[1] Dorothy Gibson v Pride Mobility Products Ltd [2017] CAT 9.

[2] Walter Hugh Merricks CBE v MasterCard Incorporated and Others [2017] CAT 16.

[3] 2018 End-of-Year Practice Area Report. LEX MACHINA. http://pages.lexmachina.com/Email_Year-End-Practice-Area-Report-2018_LP-Banner.html.


Additional reading

Disclaimer

This section of Burford’s website is intended for the use of Burford’s public investors and is required to be provided under AIM Rule 26. Burford also maintains a separate private funds business. Information presented here is not intended for the use of private fund investors, nor is it presented in the appropriate form for such investors. Moreover, Burford does not present this information as a solicitation of private fund investment, which occurs only through appropriate offering documents.