ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
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States Want in on the Merger Review Fun

by , and | Aug 8, 2024 | , , , ,

WHAT HAPPENED

While they have long taken a back seat to federal merger reviews, US states are becoming increasingly involved in merger reviews, including potentially requiring premerger notifications on a broad scale. On July 24, 2024, the Uniform Law Commission adopted its Uniform Antitrust Pre-Merger Notification Act (Model Act) as model legislation for states to use to implement premerger filing regimes.

  • The Act functions as a template for states to adopt their own premerger notification legislation and provides uniform suggested guidance to states that are considering their own premerger notification regimes.
  • The Model Act requires parallel filing of the Hart-Scott-Rodino (HSR) form in a state when:
    • The filing person has its principal place of business in the state; or
    • The person “directly or indirectly had annual net sales in [the] state . . . of at least 20 percent” of the threshold mandated under the HSR Act. §3(a)(1)-(2). Under the current HSR thresholds, that means sales of approximately $24 million in a state would satisfy the state-level filing requirement.
  • The Model Act also provides for automatic confidential treatment of materials submitted to the state.
    • Additionally, the attorneys general may communicate with the federal agencies about filing materials.
    • This can avoid the current practice of having to negotiate individual confidentiality agreements with any state interested in reviewing a transaction.
  • The Model Act does not impose any waiting or suspension period for notified transactions.
  • This continues a trend of government agencies obtaining more notice of M&A transactions. At the end of last year, Congress inserted Section 857 into the National Defense Authorization Act, which requires parties to provide their HSR materials to the US Department of Defense (DoD) for any proposed merger or acquisition that will require DoD review.

BACKGROUND

State attorneys general have broad investigatory and enforcement powers with respect to transactions implicating local competition concerns. States generally have the authority to issue investigative subpoenas, compelling production of documents and information to parties who merely sell products in a state without any further physical connection to the state.

  • Typically, states focus their efforts on transactions that have a particular impact on the state’s consumers or an industry important to the state’s economy.
    • For example, transactions involving hospitals or retail locations are traditionally more likely to draw the attention of a state’s attorney general than transactions involving national markets or consumer goods.
  • However, state enforcers have increasingly initiated their own efforts to challenge transactions.
    • This trend is illustrated by the Colorado attorney general’s lawsuit that seeks to block the Kroger-Albertsons merger.
      • Colorado is seeking a nationwide injunction and not merely an injunction on the acquisition in the state, raising a novel question with potentially significant impact on antitrust enforcement by the states.
      • Colorado is [...]

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Antitrust M&A Snapshot | Q2 2024

by , , , , , and | Jul 25, 2024 | , , , , , ,

Topics covered in this edition:

UNITED STATES

  • US agencies are increasingly scrutinizing consummated mergers from years past, including Live Nation’s purchase of Ticketmaster and Meta’s acquisitions of Instagram and WhatsApp.
  • Reports indicate that, over the past three years, companies have abandoned 37 deals in the face of Federal Trade Commission pressure.
  • Merger activity in oil and gas markets remains high, and although agencies are scrutinizing these deals, they engaged in minimal enforcement activity this quarter.

EUROPEAN UNION

  • Court of Justice of the European Union Advocate General Nicholas Emiliou issued his opinion in the Illumina/Grail case, concluding that Article 22 of the EU Merger Regulation is not the European solution for dealing with “killer acquisitions.”
  • The European Commission (EC) issued a competition policy brief on non-price competition in EU merger control, noting that it is increasingly evaluating non-price competition parameters alongside traditional price effects for its merger reviews.
  • The EC suspects Kingspan to have intentionally, or negligently, provided incorrect, incomplete and misleading information while it investigated the company’s planned acquisition of Trimo in 2021.

UNITED KINGDOM

  • The Digital Markets, Competition and Consumers Act will grant the Competition & Markets Authority with powers to enforce the new digital markets competition regime and will apply to firms that are designated as having strategic market status.

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New DOJ Task Force to Target ‘Multisided Giants’ in Healthcare

by , , and | May 10, 2024 | , , , ,

The US Department of Justice’s (DOJ) announcement of the formation of a new healthcare task force signals an even stronger emphasis on addressing competition issues in the healthcare industry. Large, multisided platforms involved in multiple sectors (e.g., insurance companies acquiring physician practices and/or essential healthcare IT and data services) are a key target for enforcement.

WHAT HAPPENED:

  • On May 9, 2024, the DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). The HCMC will be tasked with guiding and developing policy advocacy and conducting investigations – and ultimately civil and criminal enforcement actions –in healthcare markets.
  • US Assistant Attorney General Jonathan Kanter stated that the HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.” The press release specifically identified the following non-exhaustive set of issues that will be priority areas for the HCMC: payer-provider consolidation, serial acquisitions, labor, quality of care, medical billing, healthcare IT services, and the access to and misuse of healthcare data.
  • In announcing the formation of the task force at a Washington Post Live event, Kanter highlighted the changing nature of the healthcare marketplace. In what he coined the “platformization of healthcare,” patients and consumers now interact with “multisided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks” which have become the “gatekeepers of our healthcare system.” According to Kanter, it is crucial that the Antitrust Division adapt its enforcement policies and strategies in healthcare to reflect these new market realities.
  • The HCMC will be led by Katrina Rouse, an antitrust prosecutor at the DOJ since 2011 who previously served as chief of the Defense, Industrials, and Aerospace Section and a trial attorney in the Healthcare and Consumer Products Section. Rouse will oversee a team of civil and criminal prosecutors, economists, experts in healthcare and technology, data scientists, investigators and policy advisors.

WHAT THIS MEANS:

  • The antitrust enforcement agencies have used similar task forces in the past to focus resources and accumulate subject matter expertise. For example, the DOJ’s Procurement Collusion Strike Force has been successful at investigating and pursuing government contracting cases.
  • The launch of the HCMC reflects the antitrust enforcement agencies’ increasing efforts to respond to changing dynamics in the healthcare space and address the potential harmful results of these changes on patients, healthcare workers and communities. In March 2024, the DOJ, Federal Trade Commission (FTC) and US Department of Health and Human Services (HHS) jointly launched a cross-government inquiry into the increasing role of private equity firms in healthcare transactions and whether such firms prioritize maximizing profits at the expense of healthcare quality and affordability.
  • Of note, the DOJ, rather than the FTC, typically investigates mergers involving health plans and contracting issues among health plans and providers. Therefore, healthcare industry participants, [...]

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Antitrust M&A Snapshot | Q1 2024

by , , , , , and | May 2, 2024 | , , , , , ,

Topics covered in this edition:

  • The Federal Trade Commission (FTC) and US Department of Justice have begun implementing the 2023 Merger Guidelines in their enforcement actions
  • During a virtual workshop, the FTC highlighted its focus on private equity (PE) acquisitions of healthcare service providers and expressed concerns about PE in healthcare
  • Artificial intelligence’s antitrust implications continue to draw FTC scrutiny
  • The European Commission (EC) used its super-simplified procedure in about one-third of all merger decisions in Q1 2024
  • EC regulators are taking an increasingly vigilant approach to merger control review to ensure market dynamics remain pro-competitive and pro-consumer

Access the full issue.



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Blocked JetBlue-Spirit Deal Illustrates New Antitrust Approach

by and | Apr 15, 2024 | , ,

As reflected in the December 2023 merger guidelines, the Federal Trade Commission and the US Department of Justice have changed the way they think about out-of-market effects, i.e., competitive effects that arise outside the relevant market.

In this Law360 article, Lisa Rumin and Anthony Ferrara unpack this new approach, which was prominently demonstrated during the JetBlue Airways-Spirit Airlines merger, and provide practical considerations on the implications for firms contemplating mergers and acquisitions.

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Heard at the 2024 Antitrust Law Section Spring Meeting: Part II

by , , , , , , , , , and | Apr 12, 2024 | , , , , ,

The American Bar Association Antitrust Law Section’s annual Spring Meeting concluded on April 12. The annual Spring Meeting featured updates from federal, state and international antitrust enforcers and extensive discussion on priority antitrust issues affecting various industries. In this article, we highlight takeaways from the final two days of the Spring Meeting.

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Heard at the 2024 Antitrust Law Section Spring Meeting: Part I

by , , , , , , , and | Apr 11, 2024 | , , , ,

The American Bar Association Antitrust Law Section’s annual Spring Meeting is underway in Washington, DC. The annual Spring Meeting features updates from federal, state and international antitrust enforcers and extensive discussion on priority antitrust issues affecting various industries. In this article, we highlight the key takeaways from the first portion of the Spring Meeting.

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Google Moves to Dismiss Third Complaint Alleging Tying of Google Maps API Services

by , and | Feb 28, 2024 | , ,

BACKGROUND Google LLC and Alphabet Inc. (Google) moved to dismiss a third successive complaint that alleged it tied the sales of Maps, Routes and Places application programming interface (API) services to one another. A basic tying claim involves a seller leveraging its market power in one product (the “tying” product) to force sales and gain market share over a different product (the “tied” product). Following the dismissal of an initial complaint filed in 2022, the plaintiffs filed an amended complaint alleging Google created a “three-way” tying arrangement by conditioning the sale of one API service (e.g., Maps) on the required purchase of the two other services (e.g., Routes and Places) through its contractual terms of service. The plaintiffs alleged that the tying product could be any of the three APIs and that Google had market power in all three. Whichever plaintiffs bought first was the tying product, and the other two were tied products – allegedly locked in by forced sale or prohibition on use of competitor APIs as a condition of the first sale. The court granted Google’s motion to dismiss because the plaintiffs did not explain how a product could be both a tying product (requiring market power) and the tied product (lacking market power) depending simply on the order of the sales. In their second amended complaint, the plaintiffs abandoned the three-way tying claim, instead bringing a basic tying claim with Maps as the tying product and Routes and Places as the tied products. Google has again moved to dismiss the complaint. THE DETAILS

  • Maps, Routes and Places APIs are interrelated but separately licensed services that appear alongside each other in mapping applications like Google Maps.
  • In response to the first amended complaint, Google argued that the plaintiffs did not explain how a product could be both a tying and a tied product depending on the order of sale, given the inherent conflicts in market power required of each.
  • Google also argued that it had broad rights to dictate the terms of use and display of its mapping services, including a right to protect and control user experience through restricting use of its mapping API services in conjunction with or in proximity to non-Google mapping API services, relying in part on a case called Sambreel. 906 F. Supp. 2d at 1073 (S.D. Cal. 2012).
  • The US Department of Justice Antitrust Division (DOJ) intervened, filing a Statement of Interest urging the court to reject Google’s interpretation of Sambreel as establishing an “unqualified right” over the use and display of its services. The DOJ did not take a position on whether the claim should survive otherwise.
  • The court agreed with the DOJ, holding that Google’s interpretation of “control” is too broad and could justify any tying arrangement as an exercise of a supplier’s right to determine or dictate the terms on which its product or service was used.
  • The court also found that the plaintiffs failed to explain how a product could be either a tying [...]

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Year in Review: Criminal Enforcement by the DOJ Antitrust Division in 2023

by , , and | Feb 8, 2024 | , ,

When it comes to antitrust criminal enforcement, 2023 will be remembered as the year when the US Department of Justice’s (DOJ) Antitrust Division redefined and tested the outer boundaries of its authority. This report looks back at the key events from the DOJ’s year in criminal antitrust enforcement.

Here’s a glimpse of what’s inside:

  • Despite four straight losses and a voluntary dismissal in labor market cases, the DOJ remains undeterred in bringing additional criminal wage-fixing and no-poach suits.
  • DOJ’s Procurement Collusion Strike Force secured several guilty pleas and stiff penalties in 2023 and will most likely continue pursuing aggressive investigative and litigation strategies moving forward.
  • The nearly decade-long investigation of the generic drug industry appears to be ending after the DOJ recently resolved and dismissed the remaining cases.
  • Deputy Attorney General Lisa Monaco highlighted cybersecurity, tech and national security as areas of heightened risk and thus heightened scrutiny, so corporations in these markets should take heed of the DOJ’s emphasis on corporate compliance in 2024.

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FTC and DOJ: Preserve Your Chats!

by , and | Feb 1, 2024 | ,

  • The Federal Trade Commission (FTC) and the US Department of Justice (DOJ) are updating their standard preservation notices and instructions for responding to all manner of discovery (e.g., second requests, voluntary access letters, compulsory process, etc.). The update will alert parties to the steps that must be taken to preserve communication from popular business collaboration tools and “ephemeral messaging platforms” like Slack, Microsoft Teams and Signal.
  • These platforms are typically set to delete communication data automatically and may lack appropriate capabilities for preserving and extracting data even when a preservation notice is issued. While these tools have become central features in the modern business landscape, the Agencies’ announcement is designed to clearly set out the expectation that companies and individuals will adhere to preservation requirements. Parties could be subject to criminal obstruction of justice charges if they fail to comply.
  • Highlighting the very serious concern these tools raise in the DOJ’s view, Manish Kumar, Deputy Assistant Attorney General for the DOJ’s Antitrust Division, asserted that ephemeral messaging platforms are “designed to hide evidence.”

WHAT HAPPENED

  • On January 26, 2024, the DOJ and FTC (the Agencies) announced an update to their preservation notices and instructions for responding to all manner of discovery to “address the increased use of collaboration tools and ephemeral messaging platforms in the modern workplace” and “reinforce longstanding obligations requiring companies to preserve materials during the pendency of government investigations and litigation.”
  • The Agencies recognize that ephemeral chat messaging is becoming an increasingly important feature of the modern business landscape, and they have sought to collect ephemeral messaging data in the past. However, because these platforms are typically set to delete messages automatically and may lack clear solutions for preserving data, the Agencies have run into dead ends trying to collect such data in prior cases. Indeed, Manish Kumar, Deputy Assistant Attorney General for the DOJ’s Antitrust Division stated that “these updates to our legal process will ensure that neither opposing counsel nor their clients can feign ignorance when their clients or companies choose to conduct business through ephemeral messages.”
  • This new preservation language will be included in all DOJ and FTC preservation letters, second request specifications, voluntary access letters, compulsory legal process and grand jury subpoenas going forward.
  • While the new language changes are a continuation of the Agencies’ existing preservation policies, they will highlight parties’ obligations with respect to ephemeral messaging data specifically, potentially making it easier for the Agencies to seek sanctions and other recourse against companies who fail to preserve such data.
  • Indeed, the Agencies’ announcement cites a prior case where civil spoliation sanctions resulted from a target’s failure to properly preserve ephemeral messaging data. Likewise, the FTC has also signaled its willingness to refer cases to the DOJ Antitrust Division’s Criminal Liaison Unit for criminal obstruction charges in certain cases.

WHAT THIS MEANS

  • The Agencies have recognized in recent cases that relevant business communications that used to happen over email are [...]

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