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The staff of the Federal Trade Commission has joined the U.S. Department of Justice (DOJ) in filing an amicus brief with the U.S. Supreme Court concerning the right of private parties to pursue relief under the antitrust laws.

At issue is whether courts should enforce an arbitration agreement under the Federal Arbitration Act (FAA) when that agreement effectively prevents a prospective litigant from pursuing its rights under the Sherman Act.  The brief states that federal statutory claims are generally arbitrable, but only if the applicable arbitration procedures offer plaintiffs a practical opportunity to vindicate their federal rights.

The FTC and DOJ submitted the brief in response to a ruling by the U.S. Court of Appeals for the Second Circuit, which invalidated an arbitration agreement containing a class action waiver and other prohibitions on cost sharing among the plaintiffs, because the plaintiffs showed that they would incur “prohibitive costs” if compelled to arbitrate individually against American Express (Amex) (No. 03 CV 9592, 2006 WL 662341 (S.D.N.Y. Mar. 16, 2006)).  In that case, several merchants alleged Amex engaged in an illegal tying agreement, in violation of Section 1 of the Sherman Act.  Amex subsequently invoked a mandatory arbitration clause in its commercial contract.

In the brief, the DOJ and FTC staff state that the Second Circuit acted correctly, and that enforcement of the arbitration clause would effectively deny the merchants the right to seek relief under the Sherman Act.  Accordingly, the staff concludes that the judgment of the court of appeals should be affirmed, to ensure that private parties are not denied the opportunity to vindicate their rights under the antitrust laws.

The Commission vote authorizing the staff to join in the amicus brief filing was 3-2, with Commissioners Maureen Ohlhausen and Joshua D. Wright voting no.  (FTC File No. P028105; the staff contact is Michele Arington, Office of the General Counsel, 202-326-3157.)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action.  To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20580.  To learn more about the Bureau of Competition, read Competition Counts.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.