In the United States, a private litigant’s choice of the court in which to bring a claim for violation of antitrust laws is an important decision. Rather than a single, unitary body, the antitrust laws in the United States are a mix of various federal and state laws, deliberately drafted to empower the courts to flexibly interpret and apply their principles to changing real-world markets. As such, different courts can and do present different interpretations of the antitrust laws.

Private antitrust litigation in New York is primarily decided by the federal courts of the New York region, known as the Second Circuit.

New York’s Antitrust Laws and Legal Framework

The predominant antitrust law in private litigation is the federal Sherman Act, 15 U.S.C. § 1 et seq. In substance, the Sherman Act consists merely of two sentences. The first (“Section 1”) states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” (15 U.S.C. § 1). The second (“Section 2”) penalises “[e]very person who shall monopolize, or attempt to monopolize, or combine to conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.” (15 U.S.C. § 2). 

A separate law called the Clayton Act provides the federal courts jurisdiction over all private litigation brought under the Sherman Act. The Clayton Act seeks to incentive private enforcement of the Sherman Act in a number of ways, most significantly by directing courts to award triple the amount of any damages sustained to a successful plaintiff. (15 U.S.C. § 15).

The primary state antitrust law in New York is the Donnelly Act, N.Y. Gen. Bus. Law § 340(6). For purposes of private litigation, the Donnelly Act, in substance, largely mirrors Section 1 of the Sherman Act and broadly prohibits agreements in restraint of trade in or affecting the territory of the state of New York. It also provides that a litigant may recover treble damages. The Donnelly Act does not contain a provision allowing for private litigation for single-firm monopolisation conduct analogous to Section 2 of the Sherman Act.

The Donnelly Act’s private litigation provision was enacted to fill a gap in the coverage of Section 1 of the Sherman Act. The United States Supreme Court has determined that in most instances, only the first purchaser to whom an alleged conspirator directly sold goods or services may pursue a claim under the Sherman Act. The Donnelly Act, however, additionally allows litigation to be brought by so-called indirect purchasers – often consumers – who purchased from the first buyer or an intermediate buyer, such as a distributor or retailer, so long as their harm occurred in New York. These indirect purchasers must prove that any increased prices caused by an alleged antitrust violation were passed down to them by the purchaser(s) above them in the supply chain.

While New York state courts have jurisdiction over Donnelly Act claims, most private litigation brought under the Donnelly Act occurs in the federal courts. Several jurisdictional statutes give federal courts jurisdiction over the type of sizeable disputes typically pursued under the Donnelly Act. In addition, federal courts may exercise supplemental jurisdiction over state law claims like those under the Donnelly Act where federal claims, such as under the Sherman Act, are also asserted.

The Donnelly Act has been interpreted to prohibit class-action litigations in New York state courts but not in federal courts. See, eg, Asher v. Abbott Lab’ys, 290 A.D.2d 208 (1st Dep’t NY 2002). As a result, a common strategy used by class-action litigants pursuing indirect purchaser claims is to (i) seek an injunction under the Sherman Act to obtain federal question jurisdiction in a federal case and (ii) simultaneously invoke the federal court’s supplemental jurisdiction over the Donnelly Act state law class action.

The Second Circuit’s Unique Approach to Antitrust Leads to Divergence from Other Courts

The simplicity of the language used in both the Sherman Act and the Donnelly Act means that the federal courts have latitude in their interpretations. The main federal courts in the Second Circuit of the federal judicial system are those encompassed in the New York region, consisting of the United States Court of Appeals for the Second Circuit and the New York district courts under its jurisdiction: the United States District Court for the Southern District of New York, the United States District Court for the Eastern District of New York, the United States District Court for the Northern District of New York, and the United States District Court for the Western District of New York. The Second Circuit also covers district courts for the District of Connecticut and the District of Vermont.

The Second Circuit courts have long been recognised for their expertise in antitrust. At the 100th anniversary of the Sherman Act, the Second Circuit courts were noted as having decided more antitrust cases than any other circuit courts. Hundreds of antitrust cases are currently being litigated in New York, with the majority handled by the Southern District of New York in the borough of Manhattan, New York City, followed by the Eastern District of New York across the bridge in the borough of Brooklyn.

Under the precedent of the Second Circuit Court of Appeals, these courts are known for a practical approach to antitrust analysis. This approach favours detailed and factual considerations of economic relationships and consequences over bright-line rules and presumptions. This sophisticated but fact-intensive approach distinguishes the Second Circuit from many others and, in some cases, has led to long-standing conflicts or “splits” with other circuits in their interpretation of the Sherman Act and other antitrust laws.

Notable splits involving the Second Circuit courts exist in diverse areas ranging from the interpretation of the Foreign Trade Antitrust Improvements Act (FTAIA) – a statute that governs the application of the Sherman Act to conduct outside the United States – to how to approach litigation in regulated industries. Numerous differences exist in the Second Circuit’s approach to antitrust standing, which is a doctrine that considers who is the proper litigant to pursue an antitrust litigation. Moreover, the Second Circuit has numerous differences with other circuits in interpreting non-antitrust laws and procedural rules that often arise in antitrust litigation, such as the proper means to examine potentially uninjured class members for purposes of certifying a class under the Federal Rules of Civil Procedure and how to approach certain foreign laws which seek to prohibit discovery or judgments from their territory.

A notable split involving the Second Circuit that has garnered recent attention involves “conspiracy jurisdiction”. The Second Circuit courts will assert jurisdiction over a foreign defendant with no independent presence or contacts with New York where it is alleged that the defendant participated in a conspiracy with at least one conspirator who did have such a presence or who acted in furtherance of the conspiracy in New York. See Charles Schwab Corp. v. Bank of America Corp., 833 F.3d 68 (2d Cir. 2018). While some circuits have followed this approach, others do not. In 2024, the United States Supreme Court declined to hear an appeal brought by two London-based metals trading banks that had been subject to conspiracy jurisdiction in the Second Circuit, leaving the split unresolved. See BASF Metals Ltd. et al v. KPFF Investment, Inc., U.S. Supreme Court Case No. 23-232 (2024).

As in BASF, it is not unusual for the United States Supreme Court to decline to resolve differences among the circuits in their interpretation or approach to adjudication under the antitrust laws. Compared to other areas of the law, there is little guidance from the Supreme Court in the area of antitrust law overall. It is, therefore, especially important to investigate and understand a circuit’s approach and decisions in antitrust law when selecting it as a venue for litigation or in a contract’s forum selection or choice of law clause.

The Expanding Influence of the Second Circuit in Multi-District Litigation

The Second Circuit’s reach extends beyond disputes arising within its jurisdictional boundaries by means of its large role in resolving multi-district litigation (MDL) involving the Sherman Act.

It is common that numerous plaintiffs file related litigation under the Sherman Act against the same or similar defendants in multiple courts in different parts of the United States. When this happens, the US federal court system provides a mechanism to consolidate the related cases into a single multi-district litigation (MDL) court for pre-trial proceedings. See 28 U.S.C. § 1407. Pre-trial proceedings involve all aspects of the case except trial, including motions to dismiss, discovery, summary judgment, questions of expert admissibility, and pre-trial settlement.

At present, there are forty MDLs involving the Sherman Act pending in the US federal courts. A single MDL may have dozens or even hundreds of separately filed actions. These actions include class-actions and private litigations brought by customers, consumers, and competitors. The only requirement for consolidation is that the litigations involve “one or more common questions of fact.” (28 U.S.C. § 1407(a)).

Because of their convenient geographic location and expertise in handling large, complex proceedings, the district courts of the Second Circuit are consistently a top choice for MDL of all types, including antitrust MDL. The Southern District of New York alone regularly manages an antitrust law MDL caseload larger than that of most circuits and, as of 1 July 2024, had more antitrust MDLs than any other single court in the country.  Its current MDL roster includes allegations of international conspiracy regarding London Interbank Offered Rate (“Libor”)-based financial instruments, interest rate swaps, and concrete and cement additives and single-firm monopoly violations regarding Google’s digital advertising practices and Keurig Green-Mountain’s single-serve coffee pods. For its part, the Eastern District of New York has for over a decade managed an MDL involving allegations of conspiracy and monopolisation in the area of credit card interchange fees and merchant discounts brought against some of the world’s largest banks.

The selection of a court to oversee an MDL is at the discretion of the judicial panel convened for this purpose. It is not necessary that the chosen MDL court have independent jurisdiction or venue over the litigations transferred to it. Significantly, where there are differences in interpretation of the federal law, the MDL court will apply its own interpretations rather than that of the court where the litigation was actually filed. In this way, MDL is a means by which the decisional law of a circuit may be applied to numerous litigations to which it otherwise would not apply.

The MDL procedures mean that New York will apply its own interpretations to the antitrust laws, even if it splits with interpretations that would otherwise govern the litigations sent to it. For example, the Libor-Based Financial Instruments Antitrust Litigation involves over 120 separate litigations originally filed in numerous courts. Once before the New York court, these and other cases became subject to a new decision by the Second Circuit allowing plaintiffs to litigate under a theory called “umbrella” standing. Umbrella standing enables a litigant who purchased products from non-conspirators to recover from defendants for market-wide overcharges resulting from defendants’ price fixing. Such umbrella standing is not accepted by all circuits and would not necessarily apply if the MDL were located elsewhere or if there were no MDL at all.

Of note, the Second Circuit district courts are managing half of all MDLs where the predominant claim is for monopolisation under Section 2 of the Sherman Act. The biggest trend in the United States competition landscape has been the revival of interest and litigation in the area of monopolisation, an area in which decisional precedent is often decades old – much of it having its origins in the Second Circuit. Despite this resurgence, monopolisation MDLs remain relatively rare, and the Second Circuit courts are, therefore, exercising an outsized influence in this area.

For example, in a decision generated from the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation MDL, the Second Circuit Court of Appeals distinguished digital platforms from traditional value chains. In its analysis of digital platforms, it held that because a two-sided marketplace draws costs and generates revenue from both sets of users on each side of the platform, a court must consider the relationship and feedback effects of both sides of the platform for purposes of market definition and an analysis of power and harm. On appeal, the U.S. Supreme Court, for the first time, issued a decision regarding digital market definition, endorsing the Second Circuit’s reasoning in Ohio v. American Express and making it binding on the other circuits.

The Second Circuit set the standard for all monopolisation analysis in the United States decades ago. Its nationally adopted recent jurisprudence regarding digital markets is evidence that it continues not only to influence but to continue to set the standard for the decisional law in the area of monopolisation. Given its outsized role in resolving novel monopolisation claims in MDLs and its own dockets, this leadership is expected to continue.

The Second Circuit Court of Appeals’ Recent Competition Decisions

The Second Circuit has recently issued several decisions in the area of antitrust law indicative of its approach to favouring detailed and real-world economic considerations over bright line rules. These decisions bind the New York district courts under its jurisdiction and influence the other circuits.

• In re Bystolic Antitrust Litigation: The Second Circuit, for the first time, interpreted the Supreme Court’s guidance for analysing allegations that patent infringement settlements between branded and generic drug suppliers constitute anticompetitive agreements. The Second Circuit determined that it should consider whether the settlements reflected a fair value for goods and services in the first instance and then further ensure that on the merits, they were not made “to bring about anticompetitive harm.”
• In re Mexican Government Bonds Antitrust Litigation: The Second Circuit held that a district court had jurisdiction over foreign banks for transactions that occurred in New York even though broker intermediaries were used. Although the brokers were separate legal entities, the facts showed that the banks ultimately controlled their actions.
• In re Treasury Bonds: The Second Circuit affirmed the dismissal of a complaint alleging a conspiracy among banks to manipulate U.S. Treasury auctions. Among other reasons for dismissal, the court noted that statistical information presented in the complaint was insufficient to support inferences of parallel economic behaviour because it was not focused enough on the defendant banks individually as compared to the entire purchasing market generally.
• In re AMR Corporation: In a rare case in which private plaintiffs challenged a merger after it had happened, the Second Circuit affirmed the use of a burden-shifting framework at trial in which the market share of American Airlines after its acquisition of U.S. Airways served as prima facie evidence of a violation of the antitrust laws. American Airlines was allowed to rebut that presumption with other evidence. Noting the lack of an existing standard for the latter, the Second Circuit deemed it appropriate to rely heavily on the airline’s economic evidence of increased output on a route-by-route basis for that purpose.
• Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG: In a complicated litigation involving the intersection of competition and intellectual property laws, the drug maker Regeneron alleged that defendant Novartis fraudulently obtained a patent related to pre-filled syringes for purposes of monopolisation and in conspiracy with a company providing pharmaceutical filling services. At issue for purposes of market definition was whether Regeneron had adequately supported the existence of a market for pre-filled syringes containing a certain drug. The Second Circuit reversed the dismissal of the complaint, concluding that the district court erred by focusing too heavily on the functional similarities between the drug when distributed in vials as compared to syringes, rather than on the economic analysis of the circumstances under which physicians were willing to substitute between the two drug delivery types.

Proposed Revisions to the New York Donnelly Act

In 2022, for the first time since the Donnelly Act’s passage over one hundred years ago, a major legislative effort was undertaken to revise the law to include prohibitions on monopoly conduct. The proposed legislation, called the “21st Century Antitrust Act”, would create a presumption of market power for any business with forty percent or greater share of a relevant market. It would also authorise private class-action lawsuits, which currently are not permitted under the Donnelly Act.

After a previous failed attempt, on 4 June 2024, the New York Senate approved the legislation. Another proposed legislation that would prevent rental property owners from using algorithmic pricing systems in the New York residential rental market was also approved. To become law, proposed legislation in New York must also be approved by the New York Assembly and New York’s Governor, meaning that enactment into law is a lengthy process and far from certain.

The proposed revisions to the Donnelly Act have received strong support and opposition. If enacted, they would dramatically alter the antitrust law landscape in New York, reflecting a departure from the approach to monopolisation offences currently used for purposes of the federal Sherman Act Section 2 in New York federal courts and elsewhere and necessitating new interpretations and decision precedents.