Thursday, November 7, 2013

Chile and Competition Part Tres

Like the band Greenday, I have now come out with three items that sounds really similar in a very short time.  For my final post reflecting on my visit to Chile I will focus on private rights of action for damages in competition cases which was the subject of the conference in Santiago two weeks ago.  While I spoke about the Rise and Fall of the US Class Action (slides available upon request), I spent most of my time trying to understand the state of play of private actions in Chile. 

Its not so good.  Private parties can bring actions directly before the Tribunal (the specialized antitrust court) but the Tribunal cannot hear actions for damages.  But if the Tribunal finds a violation, a private party can use that finding as basis for an action of or damages before the general civil courts and the defendants cannot relitigate liability.  It is currently up for grabs whether a private person had to have been a party before the Tribunal in order to bring a follow on action for damages although it is theoretically possible to just file an action and start from scratch in the civil courts.

The problem with the civil courts is a rigid formalism that makes it difficult from judges to accept expert economic testimony about causation and damages.  Testimony as to a range of damages or loss profits from market exclusion is viewed very skeptically and the courts have not yet accepted the US view that fact of damage must be strictly proven but amount of damages can be shown through good faith estimates.

So there are not many private damages cases and fewer successful ones.  One of the first was a $2 million award in a case between British American Tobacco and Phillip Morris for dirty tricks in the retail cigarette market (think Conwood).  For consumer cases, there is a pending follow on damages case to a FNE case involving retail pharmacies which so far isn't going so well.

For class actions, it is even worse.  The available statute allows such cases for consumer cases but not competition cases.  the consumer agency has tried to smuggle in some competition cases into that statute but so far hasn't been successful to my knowledge.

The Chilean are looking to the US and the EU in particular for guidance for a way out of this fix.  When they find one, I will let you know.  This is typical of competition law outside of the US where competition enforcement so far is almost entirely a matter of public enforcement.

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