Antitrust Agency Insights: Developments at the US Antitrust Enforcement Agencies—Fourth Quarter 2022
Successfully navigating antitrust agency investigations requires a familiarity with Department of Justice and Federal Trade Commission processes, as well as insight into those agencies and their leaderships’ current priorities for enforcement and competition policy. This newsletter will provide periodic updates on both, offering an analytical look at how the antitrust agencies are approaching important competition issues and what current investigations may mean for potential future enforcement. We hope our experience—both inside and outside these agencies—will provide insights that help you make more informed decisions for your business.
Letter from the Editors
Time to revisit antitrust compliance? Agencies’ efforts to expand antitrust enforcement mean existing antitrust compliance programs may require a refresh.
Since Jonathan Kanter and Lina Khan took their respective positions as Assistant Attorney General for the Department of Justice’s Antitrust Division (DOJ) and Chair of the Federal Trade Commission (FTC), the federal antitrust agencies have pursued an expanded antitrust enforcement agenda. The DOJ and FTC have announced, among other developments, that they are revising the Merger Guidelines,1 focusing on how competition affects wages and labor conditions,2 and studying the pharmaceutical sector to consider whether the supply chain and contracting practices impact competition.3
In the last quarter of 2022, the antitrust agencies have continued apace. The DOJ secured its first plea for a criminal charge of attempted monopolization under Section 2 of the Sherman Act in more than forty years.4 The FTC has filed suit to block Microsoft’s proposed acquisition of gaming company Activision Blizzard, Inc., indicating the agencies will continue to pursue vertical theories of harm despite facing challenges in other recent enforcement efforts relating to vertical transactions.5 And the DOJ made clear that enforcement of Section 8 of the Clayton Act is alive and well.6
As they say, the only constant in life is change. Indeed, change is an apt way to summarize the agencies’ most recent outlook: prosecutions that were civil may now be criminal; conduct that was unlikely to give rise to antitrust risk may now do so under Section 5 of the FTC Act; and the Robinson-Patman Act has found favor again with FTC enforcers. With expanded enforcement, there is a greater chance that existing antitrust compliance programs may require a refresh to ensure that policies and procedures are equal to the task of flagging antitrust risk. In the spirit of the new year—a time to look back in review and forward in preparation—we want to highlight below a few specific agency actions that occurred in the last quarter and their implications for antitrust compliance programs:
As the agencies increasingly look past traditional consumer welfare standards, compliance programs should take a holistic approach to competitive impact in antitrust risk analysis. While the traditional consumer welfare standard continues to guide US antitrust analysis in the courts, FTC and DOJ leadership have consistently pushed for a more holistic analysis that considers effects beyond those on price, output and quality. AAG Kanter has said that the “overarching problem” with the consumer welfare standard “is that it does not reflect the law as passed by Congress and interpreted by the courts.”7 He has also asserted that “[t]he irony of the consumer welfare standard is that consumers have been harmed in its name by underenforcement of the antitrust laws.” Chair Khan has noted that “efficiency doesn’t appear anywhere in the antitrust statutes” and “it’s really up to the FTC to be defining what is fair and what is unfair when it comes to competition. It’s not that any business practice that increases welfare or increases efficiency is fine.”8
This approach is exemplified by the FTC’s recent policy statement regarding its views on the scope of “unfair methods of competition” proscribed by Section 5 of the FTC Act.9 The FTC explained that it will forgo applying either the “rule of reason” or the “consumer welfare standard” in its Section 5 analysis. Instead, the agency laid out a two-part test to determine whether conduct falls within Section 5’s unfair method of competition: first, the FTC will assess whether conduct is a “method of competition,” defined as “conduct undertaken by an actor in the marketplace—as opposed to merely a condition of the marketplace, not of the respondent’s making”; second, the FTC will determine whether method of competition is “unfair,” meaning the “conduct goes beyond competition on the merits.” The FTC further outlined that conduct is “unfair” when it is “coercive, exploitative, collusive, abusive, deceptive, predatory, or involve[s] the use of economic power of a similar nature” and “the conduct must tend to negatively affect competitive conditions.” Beyond these specific prohibitions, the FTC policy statement indicated that “unfair” conduct can be conduct that “violates the spirit of the antitrust laws.” Similarly, in its policy statement addressing unfair, deceptive and anticompetitive practices in the gig economy, the FTC committed to coordinating its consumer protection and competition enforcement efforts, as well as efforts across other government agencies, to protect gig workers. Accordingly, compliance programs should take a broad view of competitive impact to ensure that conduct that may be the target of enforcer scrutiny is flagged to compliance counsel.
Board entanglements continue to face potential scrutiny. Section 8 of the Clayton Act prohibits, subject to certain exceptions, a person from serving “as a director or officer in any two corporations . . . that are . . . competitors. . . .”10 In October, the DOJ announced that seven directors resigned their positions from five corporate boards to address antitrust concerns relating to their simultaneous service on multiple corporate boards.11 This followed AAG Kanter explaining that the DOJ is “ramping up efforts to identify violations . . . and  will not hesitate to bring Section 8 cases to break up interlocking directorates.”12 Further, consistent with the FTC’s long-standing position, the FTC’s Section 5 policy statement indicates that the FTC views “interlocking directors and officers of competing firms not covered by the literal language” of Section 8 to potentially constitute an unfair method of competition.13 While the “literal language” of Section 8 applies only to officers and directors of corporations, the FTC’s policy statement suggests that compliance counsel should look to interlocks involving partnerships and LLCs in addition to corporations.
These developments highlight continued antitrust scrutiny of interlocking directorates and underscores the need to maintain an effective antitrust compliance program to mitigate antitrust risks in choosing directors or when existing corporate directors and officers join other boards, as well as other issues that might arise from interlocking board service.
Pricing practices should be considered. In the coming year, it appears that price discrimination enforcement actions under the Robinson-Patman Act may also come to the foreground. The FTC last brought a Robinson-Patman case in 2000, and since that time the threat of a Robinson-Patman price discrimination challenge has come solely from private plaintiffs in recent years. But echoing prior statements by Chair Khan, FTC Commissioner Alvaro Bedoya has also advocated for a renewed focus on Robinson-Patman Act enforcement. Commissioner Bedoya’s calls for Robinson-Patman Act enforcement actions echo the FTC’s assertion in a recent policy statement that it can use the Act to challenge rebates paid to pharmacy benefit managers.14 No matter the industry, companies should examine their antitrust compliance programs to ensure they include training to facilitate issue spotting for Robinson-Patman risks.
DOJ has raised the stakes of potential monopolization or attempted monopolization violations. After repeatedly suggesting that there is a role for criminal enforcement of Section 2 of the Sherman Act, the DOJ recently announced its first criminal Section 2 enforcement action in decades, resulting in a guilty plea by the owner and president of a paving and asphalt contracting business to attempting “to monopolize the markets for highway crack-sealing services in Montana and Wyoming by proposing that his company and its competitor stop competing and allocate regional markets.”15 Had the rival actually agreed to the proposal, the case would have fit neatly within DOJ’s existing Section 1 enforcement program (and with the “conspiracy to monopolize” prong of Section 2. However, without an agreement Section 1 cannot apply. In recent years, such failed conspiracies have been pursued civilly by the FTC as “invitations to collude” in violation of Section 5 of the FTC Act and occasionally as criminal wire fraud by the DOJ. Since these attempts at collusion—even if unsuccessful—give rise to potential criminal exposure, companies should ensure their employees recognize the risks inherent in any inappropriate communications.
Antitrust assessments for potential transactions should account for a range of effects on competition, including effects on suppliers and labor, as well as competitors from vertical entanglements. Both agencies continue to be focused on a range of harms in merger enforcement. The FTC’s Section 5 policy statement highlighted potential concerns with “mergers, acquisitions, or joint ventures that have the tendency to ripen into violations of the antitrust laws.”16 Further, both the DOJ and FTC have challenged transactions with allegations of harm to employees and input suppliers in 2022,17 and it is likely that the agencies will issue new merger guidelines addressing a range of harms that have only recently been the focus of merger investigations.
Transactions involving vertical entanglements between the parties, in particular, have been met with increasing skepticism by the agencies. For example, the FTC’s recent action challenging Microsoft’s acquisition of Activision Blizzard alleged that the proposed deal would allow Microsoft to suppress competitors to its Xbox gaming consoles and its growing subscription content and cloud-gaming business. Similarly, notwithstanding a loss in the trial court in its challenge to the acquisition of Change Healthcare Inc. by UnitedHealth Group Inc., in which the DOJ alleged that the acquisition would incentivize UnitedHealthcare to improperly favor its own business, the DOJ has noticed its intent to appeal.18 Therefore, merging parties may need to consider a range of horizontal theories of harm, as well as the potential risks from vertical transactions.
Additional Agency Updates
FTC Staffing Updates
- On October 3, 2022, Chair Lina Khan announced the appointment of two new senior agency leaders: Chief Technology Officer Stephanie Nguyen and Public Affairs Director Douglas Farrar.
- On October 15, 2022, Chair Lina Khan announced the appointment of Aviv Nevo as the Director of the FTC’s Bureau of Economics.
FTC Cases and Proceedings
- By a 5-0 vote, FTC finalized consent order requiring divestiture and other approval requirements in connection with private equity firm’s acquisition of veterinary services clinics company. On October 10, 2022, the FTC issued a final consent order against JAB Consumer Partners (JAB) resolving concerns about the private equity firm’s proposed $1.65 billion acquisition of the parent company Ethos. In June 2022, the FTC had ordered JAB to divest clinics in certain geographic markets and imposed prior approval and notice requirements on JAB and its divestiture buyers for future acquisitions of specialty and emergency veterinary clinics. According to the FTC, the proposed acquisition was part of a growing “rollup” trend toward consolidation in the emergency and specialty veterinary services markets by large chains.
- FTC further modified final order requiring industrial gas suppliers to sell assets. On November 15, 2022, FTC announced that it had again modified the consent order in the Matter of Linde AG and Praxair, Inc., two industrial gas suppliers who entered into a proposed merger agreement in 2017 that resulted in an initial consent order requiring divestment of certain assets. In 2018, the FTC modified that consent order to specify the scope of the intellectual property that the newly merged Linde must divest and to give the FTC prior approval rights in relation to a proposed joint venture by two divestiture buyers to effectuate purchase of the Linde entity’s divested assets. The latest modification to the consent order came in response to a petition submitted by the companies—it permits the company now known as Linde PLC to modify a lease and shared facilities agreement and a framework product supply agreement between Linde and Messer Industries GmbH. Chair Khan and Commissioner Slaughter issued a statement criticizing consent orders like this for their complexity and repeated modifications.
- By a 3-1 vote, the Commission sued to block Microsoft Corp.’s acquisition of Activision Blizzard, Inc. On December 8, 2022, the FTC issued an administrative complaint seeking to block Microsoft from acquiring Activision Blizzard, alleging that the proposed deal would allow Microsoft to suppress competitors to its Xbox gaming consoles and its growing subscription content and cloud-gaming business. The FTC specifically alleged past examples of Microsoft withholding access to popular gaming titles from rivals. The FTC further cited the popularity of Activision’s gaming products, characterizing the company as one of only a very small number of top video game developers in the world that create content for multiple devices. Commissioner Christine S. Wilson voted no on the enforcement action.
- By a 4-0 vote, the FTC approved a final consent order addressing concerns related to Tractor Supply Company’s acquisition of retail chain Orscheln Farm and Home LLC. On December 9, 2022, the FTC announced the proposed consent order following a public comment period. The consent order requires that Tractor Supply divest certain Orscheln stores to two third-party market participants and agree to certain restrictions on future acquisitions.
DOJ Cases and Proceedings
- Contractor pleads guilty to bid rigging and bribery in connection with Caltrans contracts. On October 3, 2022, William D. Opp, a former construction contractor, pled guilty to rigging bids for the California Department of Transportation (Caltrans) improvement and repair contracts. Opp also pled guilty to paying bribes to Choon Foo “Keith” Young, a former contract manager for Caltrans (Young pled guilty to similar bid rigging charges in April 2022). In connection with Opp’s plea, AAG Kantor stated that the “Antitrust Division and its Procurement Collusion Strike Force are redoubling efforts to enforce the law against bid-rigging and fraud that steals taxpayer dollars.”
- Booz Allen Hamilton closes Everwatch acquisition after court denies DOJ injunction. On October 11, 2022, US District of Maryland Judge Catherine C. Blake denied DOJ’s motion for a preliminary injunction to stop Booz Allen Hamilton’s proposed acquisition of Everwatch, holding that DOJ failed to prove a likelihood of success on the merits. On October 14, 2022, the parties completed their acquisition. On the same day, DOJ moved for a two-week injunction of the deal while it decided whether to appeal Judge Blake’s decision. The court then denied that motion on October 31, 2022.
- DOJ’s Section 8 concerns result in resignation of directors at seven companies. On October 19, 2022, the DOJ announced that seven directors at different companies resigned after the DOJ raised concerns that their positions violated Section 8 of the Clayton Act’s ban on interlocking directorates. According to AAG Kanter, “[t]he Antitrust Division is undertaking an extensive review of interlocking directorates across the entire economy and will enforce the law.”
- Healthcare company pleads guilty to conspiracy to allocate employee nurses and fix employee wages. On October 27, 2022, VDA OC LLC (VDA), a healthcare staffing company of contract nursing services to the Clark County (Nevada) School District, pled guilty to charges that the company, through one of its employees, conspired to suppress competition agreeing with another healthcare staffing company to allocate nurses and fix nurses’ wages. VDA was sentenced to pay a criminal fine of $62,000 and restitution of $72,000 to victim nurses.
- Paving and asphalt contracting executive pleads guilty to criminal attempted monopolization. On October 31, 2022, DOJ announced that Nathan Nephi Zito pled guilty to a one-count felony charge of attempted monopolization of the markets for highway crack-sealing services in Montana and Wyoming by proposing that his company and its competitor allocate regional markets. For the first time in decades, the DOJ charged the conduct criminally under Section 2 of the Sherman Act. According to AAG Kanter, “Congress criminalized monopolization and attempted monopolization to combat criminal conduct that subverts competition,” and “the Justice Department will continue to prosecute blatant and illegitimate monopoly behavior that subjects the American public to harm.”
- DOJ obtains injunction against Penguin Random House’s proposed acquisition of Simon & Schuster. On October 31, 2022, US Judge Florence Pan (D.C. Cir., sitting by designation at D.D.C.) held that the proposed acquisition of book publisher Simon & Schuster by fellow book publisher Penguin Random House would likely lessen competition in the market for book rights in violation of Section 7 of the Clayton Act and consequently granted a request by the DOJ for a permanent injunction against the transaction.
- Insulation contracting firm sentenced for bid rigging. On November 7, 2022, Axion Specialty Contracting LLC (Axion) was sentenced to pay a criminal fine of $1,001,989 and restitution of $313,121 after pleading guilty to participating in a bid-rigging scheme. Axion participated in a five-year conspiracy to rig bids in the insulation contracting industry.
- Owner of construction company pleads guilty to bid rigging and bribery. On November 14, 2022, Bill R. Miller pled guilty to bid rigging and bribery for efforts to block competitive bidding of California Department of Transportation (Caltrans) improvement and repair contracts. Miller’s role in the conspiracy included recruiting others to submit sham bids on Caltrans contracts and to paying bribes to the Caltrans contract manger Choon Foo “Keith” Yong, who also pled guilty for his role in the conspiracy. At the time of Miller’s plea, AAG Kanter noted that “bid-rigging and bribery schemes that target public works” would “remain[s] a top priority for the [Antitrust] division and its Procurement Collusion Strike Force partners” given how critical transportation infrastructure is.
- DOJ appeals decision by US district court rejecting DOJ’s challenge to UnitedHealth Group/Change Healthcare deal. On November 21, 2022, the DOJ filed notice in District Court that it will appeal the final judgment rejecting the DOJ’s challenge to the acquisition of Change Healthcare Inc. by UnitedHealth Group Inc. US District Judge Carl J. Nichols ruled against DOJ in September 2022, rejecting the government’s concerns that the vertical acquisition would incentivize UnitedHealthcare to improperly favor its own business. The District Court found such concerns rested on speculation, and the government failed to demonstrate the transaction would likely substantially lessen competition.19
- Real estate workers plead guilty to bid rigging auctions for farmland. On November 30, 2022, two real estate professionals in Kentucky, Barry Dyer and Mackie Shelton, pled guilty to charges that they entered into a conspiracy to rig bids at an estate auction for farmland and timber rights. Dyer and Shelton took a $40,000 payoff from competing auction participants to stop bidding, which resulted in lowered sales price of the farmland at auction.
- DOJ requests additional time to review proposed divestiture in response to its challenge to Assa Abloy’s $4.3 billion proposed purchase of Spectrum Brand’s hardware and home improvement division. At a December 5, 2022 hearing before Judge Amy Berman Jackson (D.D.C.), the DOJ disclosed that it is still reviewing a divestiture proposal by the parties. The DOJ filed a complaint to block the transaction in September 2022, citing the potential lessening of competition in the markets for premium mechanical door hardware and for smart locks. A trial on the issue is currently set to begin April 2023.
- DOJ charges twelve with scheme to monopolize the transmigrante forwarding industry. On December 6, 2022, the DOJ announced the unsealing of an 11-count indictment charging 12 individuals for conspiracy to monopolize transmigrante forwarding agencies—businesses that provide migration services such as customer paperwork to export vehicles. The DOJ charged the case under Sections 1 and 2 of the Sherman Act. According to the DOJ, the individuals entered into price-fixing agreements and created a centralized entity to collect and distribute revenues among the conspirators. The conspirators further threatened, and committed violent acts against, other transmigrante industry participants who refused to adhere to the fixed prices or pay into the collective entity.
- FTC Commissioners unanimously respond to Wall Street Journal article regarding FTC ethics. On October 13, 2022, following publication of a Wall Street Journal article tracing stock trading by senior FTC staff, the FTC Commissioners, in a joint statement, said: “The Federal Trade Commission is composed of dedicated, honest career civil servants who provide a vital service to protect Americans from unlawful business practices. As commissioners, we frequently disagree with one another about policy questions. But we stand behind our career staff. We demand compliance with the FTC’s ethics rules, set clear expectations of staff behavior, and swiftly refer any violations of these rules to the proper authorities.”
- FTC staff submits comment to New York State Department of Health opposing the state’s potential issuance of a certificate to shield proposed health system merger. On October 7, 2022, FTC staff formally submitted a comment to the New York State Department of Health in response to the Certificate of Public Advantage (COPA) submitted by State University of New York Upstate Medical University (SUNY Upstate) and Crouse Health System, Inc. (Crouse). SUNY Upstate and Crouse announced a proposed merger in April 2022 and filed a COPA application in July. New York’s COPA law permits the state to shield proposed collaborations among healthcare providers, including hospital mergers, from antitrust review. FTC staff raised concerns that COPAs frequently lead to higher prices, lower quality of care and lower wage growth for nurses, pharmacy workers and certain other non-medical skilled workers. FTC staff also cited to evidence suggesting SUNY Upstate and Crouse vigorously competed in the market and the proposed merger would result in a combined market share of nearly 67 percent of commercially insured inpatient hospital services in the county where the effects of the merger would most likely be felt.
- FTC previews increased used of Section 5 of the Federal Trade Commission Act in its enforcement efforts. By a 3-1 vote, on November 10, 2022, the FTC issued a policy statement regarding its views on the scope of “unfair methods of competition” proscribed by Section 5 of the Federal Trade Commission Act. Notably, the FTC indicated it will forgo applying either the “rule of reason” or the “consumer welfare standard” in its Section 5 analysis. Instead, the agency laid out a two-part test to determine whether conduct falls within Section 5’s unfair method of competition: first, the FTC will assess whether the conduct is a “method of competition”—defined as “conduct undertaken by an actor in the marketplace—as opposed to merely a condition of the marketplace, not of the respondent’s making” and second, the Commission will analyze whether the method of competition is “unfair,” meaning the “conduct goes beyond competition on the merits.” The FTC further outlined that conduct is “unfair” when it is “coercive, exploitative, collusive, abusive, deceptive, predatory, or involve[s] the use of economic power of a similar nature” and “the conduct must tend to negatively affect competitive conditions.” Commissioner Christine S. Wilson dissented, citing concerns that the adopted standard for Section 5 analysis gave the agency carte blanche control over the economy and decisions on what is considered “unfair.”
- FTC submits views on alleged abuse of FDA “Orange Book” and potential anticompetitive effect on drug competition. On November 10, 2022, the FTC, by a 4-0 vote, filed an amicus brief in Jazz Pharmaceuticals v. Avadel CNS Pharmaceuticals, No. 21-691-GBW (D. Del.), asserting that patents that claim a distribution system do not meet the Orange Book listing criteria as any claim they may assert is a method of distributing a drug rather than a method of using one. While Orange Book listing criteria are typically an area of FDA focus and there is an ongoing dispute on this topic currently on expedited appeal in the Federal Circuit, the FTC advocated the court should take up a delisting counterclaim if it finds that the patent at issue claims a distribution system.
- FTC issues its Fiscal Year 2022 Agency Financial Report. On November 15, 2022, the FTC issued is annual Agency Financial Report for FY 2022.
- FTC issues Annual Report on Ethanol Market Concentration. On December 2, 2022, the FTC, by a 4-0 vote, approved issuance of its 2022 Report on Ethanol Market Concentration. Issuance of such reports is required by the Energy Policy Act of 2005. Consistent with prior years’ findings, the FTC concluded that “[t]he low level of concentration and large number of market participants in the US ethanol production industry continue to suggest that the exercise of market power to set prices, or coordinate on price or output levels, is unlikely on a nationwide basis.”
- DOJ files amicus brief on standard for Section 2 analysis of unilateral refusals to deal. On October 12, 2022, the DOJ filed an amicus brief in support of neither party in Chase Manufacturing, Inc. v. Johns Manville Corporation, No. 22-1164 (10th Cir.). The case involved defendant Johns Manville Corporation’s alleged efforts to prevent its customers from dealing with a new rival by pressuring its distributors not to purchase hydrous calcium silicate thermal insulation (clasil) and other products from plaintiff Chase Manufacturing, Inc., in violation of Section 2 of the Sherman Act. Citing Novell, Inc. v. Microsoft Corp., 731 F.3d 1064 (10th Cir. 2013), which addressed refusals to deal with rivals, the District Court required plaintiff to show that “(1) the monopolist had a preexisting voluntary and presumably profitable course of dealing (2) which the monopolist willingly discontinued and gave up short-term profit from it in order to achieve an anticompetitive end,” and ultimately found that plaintiff failed to satisfy the second element. In its amicus brief, the DOJ argued that the District Court erred in applying Novell’s test because that test applies “solely to the unique circumstances of a refusal to deal with rivals” as opposed to a monopolist’s imposition of anticompetitive conditions on customers, as was the case in the instant action.
- DOJ announces addition of four new partners to the Procurement Collusion Strike Force. On November 15, 2022, the DOJ announced that four additional law enforcement partners had joined the strike force, bringing the total number of participating agencies to 34. The new partners include the Offices of Inspector General for the United States Department of Energy, Department of the Interior, Department of Transportation and Environmental Protection Agency.
- DOJ and Office of the Inspector General of the Department of Health and Human Services partner to address competition in healthcare markets. On December 9, 2022, the DOJ announced that it had entered into a memorandum of understanding with the HHS OIG to take new steps to jointly combat anticompetitive conduct in healthcare markets, including information sharing, enforcement activity and training. The agencies also noted that the memorandum of understanding specifically allows the two agencies to make referrals of potentially illegal activity to each other.
- The FTC and DOJ met with fellow G7 enforcement partners to discuss competition in digital markets. On October 12, 2022, FTC Chair Lina Khan and DOJ AAG Jonathan Kanter participated in a G7 Joint Competition Policy Makers & Enforcers Summit as part of the 2022 G7 Digital and Technology Track. In advance of the summit event, the agencies contributed to the “Compendium of Approaches to Improving Competition in Digital Markets,” which highlighted agency work in digital markets.
- FTC, DOJ and the European Commission hold joint US-EU technology competition policy dialogue. On October 13, 2022, FTC Chair Lina Khan, DOJ AAG Jonathan Kanter and European Commission Executive Vice President Margrethe Vestager met for the second time to discuss developments since the agencies launched the Technology Competition Policy Dialogue a year prior. Topics discussed included “horizon scanning to identify key technologies and issues that may raise competition concerns in the future, the adoption of effective remedies in digital cases and the forthcoming update to the US Merger Guidelines.”
- FTC and DOJ file joint amicus brief supporting workers’ challenge to McDonald’s “No Hire” franchise terms. On November 9, 2022, the DOJ filed an amicus brief, which the FTC joined, in Deslandes v. McDonald’s USA, LLC, No. 22-2333 (7th Cir.). At issue on appeal was whether the District Court misapplied the ancillary-restraints doctrine and whether the District Court misread NCAA v. Alston, 141 S. Ct. 2141 (2021) as changing the legal standards governing when a restraint is per se unlawful or can be condemned after a quick look, in its review of certain no-hire and no-solicitation terms within McDonald’s franchise agreements. The agencies argued that horizontal no-hire restrictions are per se illegal unless the employer can show that the provision is ancillary to the franchise agreement itself, which in this case depends on whether the hiring restriction is “reasonably necessary” to a pro-competitive benefit of the franchise agreements. The agencies further argued that the District Court erred in dismissing the cases, holding that the no-hire provision was not illegal per se and could not be assessed under a “quick look” legal analysis and requiring plaintiffs to show the restriction was unlawful under a “rule of reason” analysis, which plaintiffs could not do. The FTC voted to join the DOJ’s brief by a 3-1 vote, with Commissioner Christine S. Wilson voting no.
- Commissioner Noah Joshua Phillips delivers “How (Not) to Regulate Technology.” On October 6, 2022, Commissioner Phillips addressed The Hudson Institute to discuss regulation of the tech industry. Commissioner Phillips spoke about getting back to basics on regulation (defining a problem, proposing a solution calibrated to address that problem, and recognizing that all policy involves tradeoffs, and grappling honestly with the tradeoffs). Commissioner Phillips also spoke about proposals to regulate big tech via content moderation, privacy rules and new regulatory agencies.
- Daniel Glad, Director of the Procurement Collusion Strike Force, delivered “The Procurement Collusion Strike Force: A Whole-of-Government Approach to Combating a Whole-of-Government Problem.” In his October 13, 2022 speech to the ABA Section of Public Contract Law’s Public Procurement Symposium, Director Glad provided an overview of the Procurement Collusion Strike Force’s (the Strike Force) enforcement activity to date. Glad also outlined the Strike Force’s enforcement priorities, which include traditional per se violations of the antitrust laws but also 1) “procurement collusion and fraud in government programs that are designed to facilitate the participation of underserved communities and individuals—which is commonly termed ‘set-aside fraud’ and 2) infrastructure spending.
- DOJ Policy Director David Lawrence Delivers Keynote “Tech Platforms in a New Age of Competition Law.” On October 21, 2022, David Lawrence, DOJ Policy Director, gave the keynote at the Brigham Young University Law Conference outlining what he sees as growing consensus among lawmakers and antitrust experts about “tech platforms in the new age of competition law.” These emerging areas of common ground include: 1) “that antitrust support not only our welfare as consumers, but our liberty as Americans”; 2) “that enforcers need to stop trying to get it wrong and just try to get it right”; 3) “that the law forbids mergers that pose incipient threats to competition”; and 4) “that new market realities in the digital economy have increased the urgency of action and demand we adapt our new analysis.”
- DAAG Michael Kades delivered Keynote Address at ABA Antitrust Fall Forum. On November 22, 2022, DAAG Michael Kades spoke at the ABA Antitrust Fall Forum, outlining his thoughts on what the President’s July 2022 Executive Order on Competition, the President’s related speech and other changes at the DOJ “means for competition policy and antitrust enforcement specifically.” Kades highlighted the holistic nature of President Biden’s directive, noting that “antitrust enforcement is a critical tool . . . but not the only one to promote competition in the economy.” Kades also spoke about his interest in focusing on competition in the Agriculture industry, citing the effects consolidation and anticompetitive conduct has had on rural and agriculture communities.
© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
US Dep’t of Justice & Fed. Trade Comm’n, Request for Information on Merger Enforcement (hereinafter RFI) (January 18, 2022) available here.
See former Acting Assistant Attorney General Richard A. Power’s Remarks to Fordham’s 48th Annual Conference on International Law and Policy (Oct. 1, 2021), available here. The agencies, for example, have continued to weigh in with their view on the appropriate standard of review for alleged no-poach agreements in ongoing third-party litigation against non-compete and non-solicitation language in McDonald’s franchise agreements. See Motion for Leave to File Statement of Interest by United States of America, Deslandes v. McDonald’s USA, LLC, et al., Case No. 19-cv-05524 (N.D. Ill. Feb. 17, 2022) and Brief for the United States of America and the Federal Trade Commission as Amici Curiae in Support of Neither Party, Deslandes v. McDonald’s USA, LLC, No. 22-2333 (7th Cir.).
See Policy Statement of the Federal Trade Commission on Rebates and Fees in Exchange for Excluding Lower Cost Drug Products (Jun. 16, 2022), available here and FTC Press Release, FTC Launches Inquiry Into Prescription Drug Middlemen Industry (Jun. 7, 2022), available here.
Matter of Microsoft Corp. & Activision Blizzard, Inc., No. 9412 (FTC 2022). See also Arnold & Porter Advisory, FTC Sues to Block Microsoft’s Acquisition of Activision-Blizzard, Challenging a Vertical Transaction in the Video Game Industry (Jan. 4, 2023), available here.
DOJ Press Release, Directors Resign from the Boards of Five Companies in Response to Justice Department Concerns about Potentially Illegal Interlocking Directorates (Oct. 19, 2022), available here.
Assistant Attorney General Jonathan Kanter Delivers Remarks at New York City Bar Association’s Milton Handler Lecture (May 18, 2022), available here.
Guy Rolnik, Q&A With FTC Chair Lina Khan: “The Word ‘Efficiency’ Doesn’t Appear Anywhere in the Antitrust Statutes”, ProMarket (Jun. 3, 2022), available here.
Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act (Nov. 10, 2022), available here (Section 5 Policy Statement). See also Arnold & Porter Advisory, FTC Announces New Guidelines for its Section 5 Enforcement Efforts (Nov. 17, 2022), available here.
15 USC § 19 (“No person shall, at the same time, serve as a director or officer in any two corporations (other than banks, banking associations, and trust companies) that are . . . by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.”). In Bankamerica Corp. v. United States, 462 US 122, 129 (1983), the Supreme Court clarified that the exclusion regarding “two corporations (other than banks . . .)” means “two or more corporations none of which is a bank.” However, the Depository Institutions Management Interlocks Act, 12 USC §§ 3201–08, prohibits one person from serving as a “management official” of two depository institutions or depository holding companies, subject to certain exceptions.
DOJ Press Release, Directors Resign from the Boards of Five Companies in Response to Justice Department Concerns about Potentially Illegal Interlocking Directorates (Oct. 19, 2022) available here.
Jonathan Kanter, Assistant Attorney General, Dep’t of Just., Opening Remarks at 2022 Spring Enforcers Summit (Apr. 4, 2022), available here.
Policy Statement of the Federal Trade Commission on Rebates and Fees in Exchange for Excluding Lower Cost Drug Products (June 16, 2022), available here.
DOJ Press Release, Executive Pleads Guilty to Criminal Attempted Monopolization (Oct. 31, 2022), available here.
See, e.g., United States v. Bertelsmann Se & Co. KgaA, et al., No. 21-2886-FYP (D.D.C. 2022) and FTC Press Release, FTC Sues to Block Lockheed Martin Corporation’s $4.4 Billion Vertical Acquisition of Aerojet Rocketdyne Holdings Inc. (Jan. 25, 2022), available here.