Competition Litigation Is Increasing—What Does It Mean for Experts?

New cases are pushing the boundaries of competition law—how can experts best assist the courts?

In the United States, antitrust issues have long been decided in the courtroom. But across the Atlantic, competition litigation has only proliferated more recently. Are the United Kingdom and European Union (EU) playing catchup, or are we heading in a different direction?

Over the last couple of decades, the UK’s specialist court—the Competition Appeal Tribunal (CAT)—has grown from a relatively niche litigation venue to hosting some of the largest claims going, collectively worth tens of billions in potential damages. Over the last five years, this has been driven by a burgeoning class action regime that has seen over fifty claims filed, mostly on an opt-out basis. Many UK readers of this article are likely to be a member of several classes.

In the EU, the European Commission (the “Commission”) has an established track record of bringing high-profile public enforcement actions against large multinationals, some of which have spent years making their way through the courts.

The EU has sought to stimulate more private litigation within member states (both follow-on and standalone)—first with the Damages Directive and then the Representative Actions Directive. In anticipation, the Commission has issued guidance to national courts on how they should assess common economic issues in competition litigation. This may be bearing fruit, although the picture varies across individual member states. Countries such as Germany have relatively active and mature competition litigation regimes, while others are more nascent.

From the perspective of competition experts, two key questions emerge from this proliferation of litigation, which I address below:

• As new cases test the boundaries of competition law, what tools do experts need to address the economic issues which arise?
• As experts take centre stage in increasingly large and complex cases, what should their role be—and how can they best give evidence that assists the court?

New Cases Push Boundaries of Competition Law

BRG experts are increasingly seeing competition cases push into new areas such as intellectual property (IP), economic regulation, sports governance and consumer protection. In these cases, we have been challenged to develop analyses that reconcile competition principles with other economic and legal issues that may arise.

Competition and IP Rights

IP law is perhaps the most obvious area in which tensions can arise with the precepts of competition law.

Principles of economics underpin both competition law and IP law. Competition theory explains the benefits that can flow from fostering competitive and contestable markets, while IP law recognises the need for innovators and creators to earn just reward for their investment and risk-taking—without the risk of others free-riding on their investments. Both objectives have sound motivations in economic theory but come into tension when enforcement in one area trespasses on the other. This trade-off is recognised explicitly within the competition law on “essential facilities” arising from Bronner, though it also arises more widely.

BRG experts have been appointed on behalf of both defendants and claimants in matters concerning the design of—and terms of access to—markets within which firms may also hold IP rights. BRG experts are also involved in cases where the crossover occurs in the opposite direction, where competition issues arise in the context of an IP case (e.g. counterclaims in response to litigation seeking to enforce IP rights that argue such enforcement forecloses competition because the rights-holder is also a dominant firm).

In these cases, experts must unify and reconcile competition economics analysis with the analytical frameworks typically deployed in IP licensing and valuation contexts, particularly with regard to identifying the relevant IP and source of any returns it may generate.

Competition and Ex Ante Regulation

At first glance, one might be surprised to find ex post private enforcement cases being brought in a regulated market, as one would assume that effective regulation would preclude anticompetitive conduct. However, several UK class actions have been brought against regulated businesses where the claimants seek competition law to intervene, broadly because the regulation was alleged to have been deficient or absent, or because the regulated business was allegedly dishonest. In most cases, the courts have been open to such cases proceeding beyond the certification stage, absent a specific legal exemption.

In these cases, the experts must combine competition economics expertise with a deep understanding of often complex regulatory mechanisms which must be analysed to assess the effects of conduct, identify which parties have been affected and quantify a robust counterfactual scenario. BRG experts have given evidence in several such cases on behalf of both defendants and claimants.

Competition and Sports Governance

Sport may not seem an obvious flashpoint for competition law, but the EU and UK have seen multiple competition cases concerning football, golf, rugby union and ice skating, among others. Most sports in most countries have a single governing body, typically a member of some multinational institution that recognises only a single member for each country. There may be sound reasons for this in many aspects of sports governance. However, recent judgments have held that governing bodies are “dominant” within UK and EU law and have limited the scope of competition law exemptions for sports governance.

In these cases, experts must combine the tools of competition economics with a thorough understanding of the particular economic incentives arising in sports, as well as a detailed factual understanding of the governance process. This combination of expertise is important in defining the scope of the relevant market(s); analysing the constraints on the governing body; explaining procompetitive implications of having a clear set of rules providing a “level playing field”; and explaining how resulting economic effects are distributed between the governing body, clubs, players, sponsors, broadcasters and, not least, sports fans. BRG experts have been appointed on behalf of governing bodies, clubs and other parties in sports competition matters.

Competition and Consumer Protection

Consumer protection has become a hot topic in the EU and UK, particularly in relation to digital markets with the EU Digital Services Act and UK Digital Markets, Competition and Consumers Act. The crossover between competition and consumer protection has long been recognised, with competition policy objectives typically stressing the potential benefits of competition for the consumer and competition regulators often also being responsible for consumer protection. However, consumer protection regularly embeds wider objectives, such as duties in relation to “fairness,” which can come into tension with competition policy.

BRG experts have been appointed on behalf of both defendants and claimants in consumer cases that have been formulated as competition claims (typically abuse cases brought against allegedly dominant firms) but which embed consumer protection issues.

In these cases, the usual competition economics analyses must be combined with a careful assessment of the extent to which the effects on competition in the counterfactual flow through consumers, which may then be quantified based on a robust analysis of consumer preferences.

Summing Up

It seems likely that we will continue to see new cases that push boundaries, and the economic analyses in such cases will require versatile experts with broad expertise who are able to present compelling and broad-based economic analyses of the relevant markets and conduct.

Expert Evidence in the Spotlight

Economics lies at the heart of competition law, and hence liability often turns on the courts’ assessment of complex economic questions. The Academy of Experts defines an expert as anyone with “knowledge or experience of a particular field or discipline beyond that to be expected of a layman”. Thus, while reliance on expert evidence is common in civil litigation, expert evidence on economics often takes on prominence in competition litigation. This remains true at the CAT, where the three-member tribunals typically include an economist.

As competition litigation proliferates, more questions have been raised about the role of experts and how their evidence should be given. In a notable judgment in the long-running trucks cartel litigation, the CAT remarked in relation to the expert evidence that “it appeared quite marked to us in this case that all the experts…came to conclusions that favoured their clients”. The CAT emphasised the importance of the expert evidence to their decision-making: “[when] there are fine and difficult issues for us to decide, it is important that we are able to trust the independence of the experts” but also commented that “the volume of such evidence was huge and, in our view, excessive”.

This begs the question: How can experts provide economic evidence on complex matters in a way that assists the court most effectively?

BRG experts have given evidence in numerous cases that have involved significant procedural innovations in relation to the nature of disclosure, the format and sequence in which expert evidence is given, and the ways in which different parties are represented. These innovations have included:

Conclusions

It seems likely that experts will remain central to competition cases. When it comes to changing how expert evidence is given, it is fair to say that some innovations have worked better than others. Economists generally welcome innovation and hope that, as in competitive markets, the best ideas succeed. With that said, procedure need not always be reinvented for courts to produce sound judgments in complex competition cases. Case in point: BRG experts were involved in two recent cases that followed the customary routine of disclosure, exchanges of reports and cross-examination, which ultimately yielded detailed and well-reasoned judgments that engaged carefully with the economic issues.