Beating the competition

To avoid the pitfalls experienced by many US firms expanding into the London market, those opening in the UK capital should focus on core practice areas where the firm is strong in the US.

Multinational cartel cases

One hot area this year has been ­multinational cartel cases. Cartel fines are increasing on both sides of the Atlantic and individuals now face the prospect of jail sentences for cartel offences in the US and the UK. Following the implementation of the much-debated UK-US extradition treaty, UK nationals also face extradition to the US for cartel offences. The flow goes both ways and three UK citizens recently sentenced in the US as part of the marine hose investigation have been sent back to the UK to face charges here and to serve their US sentence.

All this serves to increase pressure on cartel members to blow the whistle on other ­members and seek immunity from fines. On the back of that, European expansion allows the representation of clients in ­multinational criminal and civil ­investigations and follow-on private ­damages ­litigation. To handle such work, both US and EU firms need lawyers with experience as senior officials in criminal cartel ­prosecutions in US and EU ­enforcement agencies.

A transatlantic presence not only ­facilitates the development of defence strategies, it also brings efficiencies in cartel work such as employee interviews and document review, two of the key cost elements in any cartel investigation. The fact that UK firms, with few exceptions, do not practise ­competition law in the US increases the attractiveness of this client proposition.

Intellectual property and competition law

Another hot area is the interface between intellectual property and competition law.

New cases are regularly brought by the European Community (EC), including two new Microsoft investigations and the recent ­sector inquiry into the pharmaceutical industry. This is the area that gives rise to the most work outside cartels and mergers, both in pharmaceuticals and technology, ­especially involving ‘dominant’ companies.
Technology and life sciences is also one of those areas where EU law is in a state of flux and US firms with strong antitrust and IP litigation practices can add value.

Private damages actions

Finally, private damages actions are ­generally predicted as the next ‘hot’ area.

Civil antitrust litigation is an area where US antitrust firms have valuable experience to contribute and it is an obvious area on which to stay focused if a US firm is interested in opening a London branch.

Serious obstacles remain, however, before the volume of competition cases brought before English courts can reach meaningful levels. Although changes in UK legislation have made it easier for companies to seek damages, in particular where the Office of Fair Trading (OFT) or E­C has issued an infringement decision, the barriers to launching a claim continue to remain high.

To address this, both the OFT and the Commission have launched initiatives aimed at facilitating private competition litigation. In particular, we are likely to see UK legislation that allows class actions based on the ‘opt-out’ principle (where members of a class have to take positive action not to be included in a class) instead of the existing ‘opt-in’ system, (where members have to confirm participation in a class).

Together with more flexible fee structures than current rules allow, this will permit plaintiffs’ firms to come into actions in the UK, with increased litigation as a result.
Also the choice of the English High Court as the relevant forum to enforce undertakings given by private parties to the ­Commission should also increase litigation in the ­competition field.

By launching a competition practice in Europe, firms can build on these cutting-edge enforcement priorities. For existing clients, a firm’s knowledge and experience in prior engagements can be leveraged to ­provide a valuable service in multi­jurisdictional matters while providing a transatlantic perspective for UK and EU-based clients, especially in cartel cases.

Ted Henneberry and Douglas Lahnborg are antitrust partners at Heller Ehrman