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The Biden Administration made it clear from the outset that it would bring a higher level of scrutiny to the enforcement of competition laws compared with their predecessors from both political parties.
In the year plus since Lina Khan took over as Chair of the Federal Trade Commission (FTC) in June 2021 and Jonathan Kanter was sworn in as Assistant Attorney General for the Antitrust Division at the U.S. Department of Justice (DOJ) in November 2021, it is clear that the enforcement agencies are taking a more aggressive approach to transactions and other corporate activity — and antitrust lawyers have responded by quickly recalibrating their counsel to clients.
“The Biden Administration’s competition officials have now been fully in place for a year, and antitrust merger professionals are adjusting to their new, aggressive approach and attempts to rewrite the rules of U.S. enforcement,” Law360 reported.
One of the most notable federal antitrust enforcement developments in 2022 was issued just last month by the FTC.
“The FTC and DOJ continued to push the envelope with antitrust enforcement this year, but perhaps the most consequential move was the FTC’s recent statement regarding its expanded approach to enforcement of Section 5 of the FTC Act, which prohibits unfair methods of competition,” said Matthew Tabas, partner in the Washington, D.C. office of Arnold & Porter. “The agency made it clear that it plans to scrutinize a wide range of conduct not thought previously to violate the antitrust laws.”
Another notable antitrust development in 2022 was the return of criminal enforcement for violations of Section 2 of the Sherman Act.
“Despite its statutory language, the DOJ had not brought a criminal case under Section 2 since the 1970s,” said Andre Geverola, partner in the Chicago and Washington offices of Arnold & Porter. “But in 2022, just months after announcing that it would resume criminally prosecuting Section 2, the DOJ pursued two criminal Section 2 cases and obtained one guilty plea.”
Beyond the increased focus on enforcement by the federal antitrust authorities, the past year was also extremely active with private sector antitrust litigation.
“Something that I paid very close attention to this year was the Ninth Circuit en banc ruling in Olean Wholesale Grocery Cooperative, Inc. et al. v. Bumble Foods LLC et al, which involved a civil lawsuit alleging a price fixing conspiracy in violation of state and federal antitrust laws,” said Margaret Rogers, partner in the New York office of Arnold & Porter. Ms. Rogers notes that the court rejected a “bright line” rule in favor of a case-by-case analysis as to whether a class can be certified when a class potentially includes more than a “de minimis” number of uninjured class members in the proposed class.
Antitrust law experts identified three major areas of activity in 2022 that should be on the radars of practitioners and in-house counsel:
“It’s been well-documented that there is increased antitrust scrutiny of the tech industry right now,” Tabas said. “This year we saw a major FTC challenge to the proposed Microsoft-Activision merger, which is especially notable because it is a vertical acquisition that the FTC alleges would enable Microsoft to harm competition.” Rogers also noted activity in private sector antitrust litigation in the industry, highlighted by the ongoing litigation of the Epic Games-Apple lawsuit.
Although no cases immediately followed the 2016 joint announcement by the DOJ and FTC that wage-fixing and no-poach agreements could be prosecuted criminally, DOJ was active in this area in 2022 with trials involving wage-fixing and non-solicit allegations, according to Geverola. Tabas noted that FTC Chair Kahn and Commissioner Rebecca Kelly Slaughter have spotlighted the issue of labor markets in merger analysis, and have taken concrete steps to pursue labor market issues in their merger reviews.
Healthcare & Life Sciences
“The Biden Administration has made clear that the life sciences industry is right behind tech as a top antitrust priority,” Tabas said. “The focus of the FTC and DOJ in this space continues to be on innovation and the agencies are examining any overlaps between early-stage drugs in transactions within the pharmaceuticals industry.” Geverola noted that the year closed with news that the DOJ signed a memorandum of understanding with the Department of Health and Human Services to strengthen cooperation between the two federal agencies on the enforcement of antitrust laws in the health care market. Health care defendants have seen some success in court, however, as Rogers pointed to a key class action litigation win for the healthcare industry in 2022, when Sutter Health defeated a $411 million lawsuit alleging that it used its market power to negotiate restrictive contracts with major insurers.
Another intriguing development in antitrust enforcement this year is one that is often overlooked by corporate executives.
“Many companies are increasing their focus on ESG issues, but it’s important to understand that business activities motivated by ESG priorities are not immune from antitrust enforcement risk,” said Francesca Pisano, senior associate in the Washington office of Arnold & Porter. “Business leaders should keep this in mind when they are collaborating with competitors on industry-wide issues and be sure they have a comprehensive antitrust compliance program in place to help employees navigate the potential antitrust risks associated with ESG business initiatives.”
Tabas, Rogers, Geverola and Pisano shared their insights during a recent Emerging Issues webinar hosted by LexisNexis. Watch the recording of the webinar, “Enforcement Insights: The 2022 Antitrust Year in Review,” to learn more about the fast-changing legal and regulatory landscape regarding antitrust law.