When Antitrust Disputes Loom, Businesses Need to Make Savvy Arbitration Decisions

By on December 23, 2013

December/January 2014

Carl L. Blumenstein and Farschad Farzan, Nossaman LLP

Arbitration agreements are now commonplace in contracts, and so are global antitrust lawsuits, especially multi-party lawsuits alleging price-fixing cartels. The possibility of antitrust claims raises special concerns in drafting arbitration agreements.

Because antitrust claims may encompass a broader time period than the time the contract was in effect, businesses should draft agreements to encompass transactions that occurred both before the agreement was signed and after contract termination. An antitrust plaintiff will typically try to avoid arbitration by filing claims in court where the prospect of jury trial likely yields larger results.

Plaintiffs will typically try to avoid arbitration, and the authors outline various options they can consider for doing so. From the defendants’ perspective, a company sued for antitrust violations by a party with which it may have a contractual relationship needs to review all pertinent contracts to determine whether the claim is arbitrable. Cases involving multiple defendants present a “two-front battle” scenario. This can happen where some defendants have arbitration agreements with the plaintiff and some do not. The plaintiff may be able to use the arbitration as a “trial run,” testing its case, so that it is better positioned to try the case against remaining defendants.

When a party gets pulled into an antitrust dispute, a preexisting arbitration agreement with an adverse party offers several potential advantages. However, businesses need to carefully consider all angles before proceeding.

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