Coordinating private class action and public agency enforcement of antitrust law

"This essay sketches a new approach to ameliorating the problem of coordinating the use of private class actions and public policing to enforce American antitrust law. Achieving the optimal joint level of enforcement from any system that teams public and private law enforcers requires a coordination mechanism to assure not only that each makes the appropriately motivated and proportionate investment of resources and effort, but also that their respective contributions are properly synchronized and combined. Our proposal addresses this double-sided coordination problem. Its key elements are (i) mandatory-litigation class action; (ii) total enforcement license initially vested with the public enforcer; (iii) auction of private license to enforce class action; (iv) auction proceeds deposited with and distributed by the court for compensatory purposes; and (v) public enforcer option to buy back the private license at the winning bid price. We suggest that our approach is superior to the current practice of judicial coordination (through, for example, statutory interpretation, pre-emption, and class action prerequisites), which suffers from high information costs, and to proposals for reform that give public enforcers the option of “first refusal” or of intervening to take some control over the class action, which regulate only private enforcers"--John M. Olin Center for Law, Economics, and Business web site.