February Antitrust Bulletin: Top-of-Mind Global Antitrust Issues

Our Take on Top-of-Mind Global Antitrust Issues

Commissioner Wilson to depart the FTC: On February 14, FTC Commissioner Christine Wilson announced her intent to resign from the FTC soon. After the departure of former Commissioner Noah Phillips in October, Commissioner Wilson has been the sole Republican commissioner at the FTC. She cited her frustration with FTC Chair Lina Khan’s “disregard for the rule of law and due process” as one of the driving reasons behind her departure.

Why it matters: Although the results coming out of the FTC may not change with Commissioner Wilson’s departure, as she was consistently in the minority, the FTC will not have an important dissenting voice at least until another Commissioner is appointed.

DOJ warned private equity firms about compliance with the Hart-Scott-Rodino Act: On February 2, Ryan Danks, Director of Civil Enforcement at the Antitrust Division, called private equity firms’ noncompliance with premerger notification requirements under the HSR Act an “existential threat” to the U.S. merger control process. He warned that the agencies will not tolerate any kind of noncompliance, and he highlighted the production of all documents responsive to Item 4(c)/4(d) on the HSR form as critical to the agencies’ full review. He noted that the DOJ is particularly focused on HSR compliance for private equity firms given the frequency with which they undertake reportable mergers and acquisitions as well as their strategic focus on serial acquisitions and rollups where such firms acquire a series of complementary companies, often without reporting certain acquisitions. Danks stated that the DOJ is keenly focused on considering both the horizontal and vertical dimensions of such strategies.

Why it matters: Danks’ comments about the DOJ’s focus on private equity firms are not novel; they are consistent with those made by both agencies including their leaders, Jonathan Kanter, Assistant Attorney General of DOJ’s Antitrust Division, and Kahn of the FTC. Danks’ specific referral to compliance with Item 4(c)/4(d) of the HSR Act, however, should serve as not only a reminder but also a warning to frequent HSR filers that every effort must be made to locate and produce responsive Item 4(c)/4(d) materials, even for transactions that do not raise competitive concerns.

DOJ announced the withdrawal of antitrust healthcare guidelines: On February 3, the DOJ Antitrust Division announced the withdrawal of three antitrust policy statements related to enforcement in healthcare markets, issued in 1993, 1996, and 2011. The Antitrust Division, which characterized the policy statements as “outdated” and “overly permissive,” explained that “the healthcare landscape has changed significantly” over the past three decades. Among other topics, the policy statements addressed the sharing of information, such as prices and costs, and established a “safety zone” for certain information sharing arrangements that applied when (1) the information collection was managed by a third party, (2) shared information was at least three months old, and (3) there were at least five participants reporting data, with no one participant accounting for more than 25% of the reported statistics.

Why it matters: DOJ’s decision to withdraw the guidance introduces uncertainty for business participants both inside and outside of the healthcare industry. Many nonhealthcare companies relied on the safety zone for guidance to develop information exchange practices, even though the safety zone never technically applied. The principles behind the safety zones, however, are consistent with case law, so policies that are fully compliant with the safety zones remain likely to be defensible under case law. The retraction signals that the DOJ may be seeking to bring an information exchange case. In response to potentially heightened antitrust scrutiny, trade associations and other business entities conducting surveys or managing information exchanges may want to ensure that their practices are fully compliant with the now-retracted safety zones and do not otherwise appear anticompetitive.

DOJ sues Google for alleged monopolization (again): On January 24, the DOJ filed a complaint alleging that Google illegally monopolized the advertising technology space through a series of acquisitions, including acquiring nascent competitors, and through other anticompetitive conduct, including exclusionary conduct that inhibited rivals’ ability to compete. As redress, the DOJ is seeking both equitable relief and — for the first time in nearly 50 years — treble damages for a civil antitrust violation on behalf of U.S. agencies that overpaid for web display advertising.

Why it matters: Antitrust enforcement agencies in the U.S. and abroad have been vocal and aggressive about pursuing actions against large tech companies. The DOJ’s complaint filed against Google for its digital advertising technology practices comes on the heels of the case the DOJ brought against Google in 2020 for monopolization of search and search advertising, which is set to go to trial in September 2023. The recent U.S. complaint also follows numerous other actions and investigations against tech firms in the U.S., the European Union (EU), the UK, and elsewhere.

It remains to be seen whether the DOJ’s aggressive request for relief will affect the approach taken by European regulators in their own ongoing investigations of Google’s ad tech practices. So far, the remedies hypothesized by the European Commission (EC) and the CMA have mainly focused on potential operational separation of Google’s buy-side and sell-side businesses, but the bold stance taken by the DOJ may inspire a more radical approach.

CJEU delivers important judgment on abuse of dominant position: On January 19, the CJEU delivered its ruling in the Unilever Italia case, which related to a fine imposed by the Italian Competition Authority (AGCM) on Unilever Italia for abusing its dominant position on the market for the sale of individually packaged ice creams. The case concerned exclusivity clauses that Unilever Italia’s independent distributors had imposed on vendors to prevent their selling ice cream from competing producers and whether Unilever Italia could be held responsible for those clauses. On the grounds that the mere use of such exclusivity clauses by a dominant entity was “sufficient to establish abusive use of that position,” the AGCM also declined to analyze Unilever Italia’s economic arguments and evidence that these practices did not have exclusionary effects on competition.

Why it matters: This judgment found that the behavior of independent distributors could be imputed to a dominant undertaking (in this case Unilever Italia) where the latter had unilaterally adopted an exclusionary policy implemented through its independent distributors. This outcome signals (once again) that — under EU competition law — liability can be shared between entities in ways that may seem surprising in other jurisdictions. The CJEU also confirmed that in cases of exclusivity clauses used by dominant undertakings, competition authorities should consider all relevant evidence to assess whether the exclusivity was capable of producing restricting effects on competition, instead of presuming such effects. The case returns to Italy for final judgment.

UK CMA consults on draft guidance on horizontal agreements: The UK CMA is consulting on draft guidance on the application of competition rules to horizontal agreements (i.e., agreements between competitors). Horizontal agreements are prohibited where they restrict competition in the UK unless they meet certain conditions for exemption. The consultation period will close on March 8, 2023.

Why it matters: The CMA’s guidance will replace existing guidance from the EC on horizontal agreements that had been retained in the UK following Brexit. It will be important to monitor any divergence between the approaches taken by the CMA and the EC. One area of divergence may be environmental sustainability: The CMA will soon consult on additional guidance that aims to “[spell] out where [the CMA] won’t take enforcement action against business collaboration to tackle climate change.”

Read more Antitrust Bulletins here.