Economics and the Rigorous Analysis of Class Certification in Antitrust Cases

Posted: 14 Jul 2008

Date Written: September 2007

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.

Suggested Citation

Johnson, John H. and Leonard, Gregory K., Economics and the Rigorous Analysis of Class Certification in Antitrust Cases (September 2007). Journal of Competition Law and Economics, Vol. 3, Issue 3, pp. 341-356, 2007, Available at SSRN: https://ssrn.com/abstract=1159261 or http://dx.doi.org/nhm009

John H. Johnson (Contact Author)

Edgeworth Economics ( email )

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Suite 200
Washington, DC 20036
United States

HOME PAGE: http://www.edgewortheconomics.com

Gregory K. Leonard

Charles River Associates ( email )

601 12th Street
Ste. 1500
Oakland, CA 94607
United States
510-595-2706 (Phone)

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