Judgment-Sharing Agreements: Fair to Defendants or Another Anticompetitive Restraint?
Competition, Vol. 17, No. 1, pp. 21-28
8 Pages Posted: 18 Sep 2009
Date Written: 2008
Abstract
This article begins with a discussion of how judgment-sharing agreements function generally and with examples drawn from antitrust cases. The article describes how sharing percentages constitute extra-judicial attempts to fix liability among defendants. It also discusses provisions in some judgment-sharing agreements that limit or even cut off signatories’ ability come to individual settlements with plaintiffs. Next, the article treats plaintiffs’ arguments that judgment-sharing agreements allow defendants guilty of profiting from an agreement in restraint of trade to benefit from a further agreement restraining settlement. The article examines the argument that judgment-sharing agreements remove any incentive that defendants have to cooperate with plaintiffs in exchange for favorable settlement terms. On the defendants’ side, the article examines the contention that antitrust penalties create a coercive settlement environment where plaintiffs are able to poach defendants from the herd with less oppressive settlement offers in order to secure evidence against the remainder. The article examines the notion that such agreements further the public policy favoring settlements by ensuring all parties have a chance to settle and by eliminating the “game theory” aspect of the settlement process. Finally, the article distills what aspects of judgment-sharing agreements tend to be least controversial and lays out a framework for developing an agreement that is most likely to survive review in an antitrust proceeding.
Keywords: Antitrust, competition, judgment sharing, anticompetitive, restraint, game theory, settlement
JEL Classification: K21, K41
Suggested Citation: Suggested Citation