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January 11, 2024

Antitrust Agency Insights: Developments at the U.S. Antitrust Enforcement Agencies — Fourth Quarter 2023

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Letter From the Editors 

The Biden administration’s U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC or Commission) leadership have been clear about their goal to reshape antitrust enforcement in the United States. These efforts have taken a number of different forms over the last three years, including aggressive enforcement actions, new expansive policy statements (and withdrawal of prior policy statements), and revised merger guidelines. While 2024 will bring election-year uncertainty and, with it, the potential for change in the leadership at both agencies, current DOJ and FTC leadership are likely to continue to explore ways to instill lasting change in how the federal government and courts approach antitrust enforcement. Over the last three years, the antitrust agencies have been exceptionally active — but it appears, based on public statements and prior actions, they still have a lot on their “to do” list. Therefore, rather than look back at developments over the last quarter, your Editors are breaking out their crystal ball and predicting the top 10 potential developments to watch out for in 2024 as DOJ and FTC leaders attempt to cement their legacies.

  1. Pricing Algorithm Enforcement Action: As discussed in our Second Quarter 2022 Antitrust Agency Insights newsletter, the antitrust agencies have expressed concerns about the potential misuse of pricing algorithms, which allow companies to price dynamically in near-real-time in response to competitor price movements, customer demands, and other market conditions. While the private bar and state enforcers have pursued litigation accusing companies of using technology solutions to fix prices, the federal antitrust enforcers have yet to bring a case. It bears watching whether the DOJ or FTC announce an enforcement action focusing on firms allegedly coordinating with one another through the use of algorithmic pricing.
  2. Section 5 Enforcement at the FTC: FTC leadership has been vocal about their desire to use all of the Commission’s available tools to challenge allegedly anticompetitive activity. While the FTC made waves in 2022 with a far-reaching policy statement addressing unfair methods of competition under Section 5 of the FTC Act, its enforcement activities in this area have been far more limited. The few cases since then with standalone Section 5 claims largely covered categories of conduct commonly understood to raise potential concerns under the Sherman and Clayton Acts. 2024 could bring a high-profile standalone Section 5 action from the FTC’s Anticompetitive Practices Division (which has largely been quiet in 2023) to put some teeth around its policy statement.
  3. Implementation of the Revised Merger Guidelines: On December 18, 2023, the DOJ and FTC released their final revised Merger Guidelines. The Merger Guidelines largely mirror the draft version published for public comment in July 2023, with some modest changes to address concerns about the draft’s presumption of harm in certain vertical transactions and to streamline the discussion of other principles. While the Merger Guidelines are intended to reflect how the DOJ and FTC approach merger analysis in the ordinary course, it remains to be seen how willing courts will be to credit them in litigation challenges given courts’ disagreements with a number of recent DOJ and FTC merger challenges.
  4. Robinson-Patman Enforcement Action: As discussed in our Second Quarter 2023 Antitrust Agency Insights newsletter, FTC leadership, especially Commissioner Alvaro Bedoya, has advocated for a renewed focus on Robinson-Patman Act enforcement. The agency’s ongoing efforts to investigate alleged violations of the Robinson-Patman Act by Southern Glazer’s Wine and Spirits was brought into the spotlight by a high-profile subpoena enforcement action against Total Wine & More. Dusting off the Robinson-Patman Act would fit squarely within current FTC leadership’s populist rhetoric and rejection of a consumer welfare lens for enforcement decisions.
  5. PBM Study Report and Enforcement Action: In June 2022, the FTC launched a study of pharmacy benefit managers (PBMs) under Section 6(b) of the FTC Act to assess the “impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs.” Since the initial announcement, the FTC has issued requests for information from group purchasing organizations and PBM affiliates. Despite a request from Congress that the FTC complete its study within a year, the FTC has not published its final report or taken any enforcement actions against PBMs. Given the Biden administration’s focus on lowering health care and pharmaceutical costs, a report is likely to issue at some point in 2024. It remains to be seen whether an enforcement action against one or more PBMs will follow soon thereafter.
  6. FTC Policy Statement on Artificial Intelligence: Regulation of artificial intelligence (AI) is without a doubt a hot topic across all aspects of the economy. On October 30, 2023, the Biden administration issued an Executive Order (EO) addressing a range of issues related to AI, including a call on agencies to promote competition in AI. The EO specifically called on the FTC to enact AI rulemaking, but as an interim step, the FTC may issue a policy statement on AI outlining its potential concerns with the use of AI, including the ways in which AI could be used to violate the antitrust laws. The FTC already has launched consumer protection investigations into the use of AI programs.
  7. Bank Merger Guidelines: In June 2023, Assistant Attorney General (AAG) Jonathan Kanter discussed DOJ efforts to revise the agency’s Bank Merger Guidelines and the DOJ’s current views regarding the DOJ’s role in bank merger enforcement. Last updated in 1995, the Bank Merger Guidelines outline the DOJ’s stated approach to investigating bank mergers and describe how it advises the federal banking agencies on the competitive effects of proposed bank mergers. The agencies have clearly been focused on revising their general Merger Guidelines in the intervening six months, but it seems likely they will turn their attention to revising the Bank Merger Guidelines in 2024.
  8. DOJ’s Criminal Enforcement Efforts in Light of U.S. v. Brewbaker: On December 1, 2023, the U.S. Court of Appeals for the Fourth Circuit reversed a Sherman Act, Section 1 criminal conviction for bid rigging, holding that the indictment failed to state a per se antitrust offense because the two companies were a manufacturer and distributor (and thus in a vertical relationship), despite submitting bids for the same contracts. The DOJ has until mid-January to decide whether to seek en banc review of the decision. If the decision stands, it could have a significant impact on DOJ’s criminal enforcement agenda in the context of companies in dual distribution arrangements.
  9. Hart-Scott-Rodino Act (HSR) Rule Changes: In June 2023, the DOJ and FTC announced their intent to make significant changes to the HSR notification form and associated rules that would require parties to reportable transactions to provide substantial additional information and documents, increasing the burden associated with HSR filings. While the agencies have been processing public comments received in connection with the proposed changes, final rule changes are expected in 2024 to ensure their implementation during the current administration.
  10. Non-Compete Rule Implementation: One year ago, in January 2023, the FTC proposed a rule that would ban certain non-compete agreements between employers and their workers as unfair methods of competition in violation of Section 5 of the FTC Act. The announcement attracted a lot of attention with over 20,000 public comments submitted. As the FTC reviews those comments, companies that rely on non-compete agreements have been left in limbo. The FTC is likely to announce a final rule in the coming months, though we would expect immediate court challenges to both the FTC's rulemaking authority and the specifics of the rule.

Additional Agency Updates

FTC Staffing Updates

  • Senate Holds Hearing on FTC Nominees. On October 18, 2023, the U.S. Senate Committee on Commerce, Science, and Transportation held a confirmation hearing for FTC nominees Melissa Holyoak and Andrew Ferguson and Commissioner Rebecca Kelly Slaughter.
  • New Deputy Assistant Directors in FTC’s Merger Divisions. In November 2023, the FTC promoted Karen Hunt to serve as deputy assistant director of the Mergers IV Division, as well as Abby Dennis and Michael Lovinger as deputy assistant directors in the Mergers II Division.
  • FTC Names New Director of Policy Planning and Chief of Staff. After the departure of Elizabeth Wilkins in late November, Chair Lina Khan named Hannah Garden-Monheit as the director of policy planning at the FTC. Prior to joining the FTC, Garden-Monheit worked on the National Economic Council with a focus on competition policy. In addition, Sarah Miller took over Wilkins’ role as chief of staff to Chair Khan. Miller is a former official with the U.S. Department of Treasury who also founded the American Economic Liberties Project.

DOJ Staffing Updates

  • DOJ Names New Deputy Director of PCSF. In October, Sandra Talbot was recently selected to become the new deputy director of the Procurement Collusion Strike Force (PCSF). Talbot was recently the assistant director of the strike force and led its data analysis initiative.

FTC Cases and Proceedings

  • FTC Abandons Axon Merger Challenge. On October 6, 2023, the FTC dropped its in-house challenge to Axon Enterprise Inc.’s acquisition of VieVu. In response, Axon abandoned its lawsuit challenging the constitutionality of the FTC’s adjudication process because the case was moot.
  • FTC Approves Final Order to Prevent Interlocking Directorate in EQT/Quantum Energy Deal. On October 10, 2023, the FTC announced that it resolved its first case in 40 years enforcing Section 8 of the Clayton Act, which prohibits interlocking directorates. Earlier last year, EQT agreed to acquire certain assets in Appalachia from Quantum Energy for US$5.2 billion in cash and shares, and to appoint Quantum’s chief executive to EQT’s board of directors. The FTC alleged that the proposed acquisition would have made Quantum one of EQT’s largest shareholders and created an interlocking directorate. The finalized consent order prohibits Quantum from occupying an EQT board seat. The order also unwinds a separate joint venture for purchasing mineral rights, appoints a monitor to track compliance, and bars Quantum from acquiring additional EQT shares without the Commission’s approval for the next decade.
  • FTC Sues Amazon. On November 2, 2023, the FTC, along with 17 state attorneys general, filed a complaint in the U.S. District Court for the Western District of Washington against Amazon alleging that it engages in exclusionary conduct that prevents existing competitors from growing and new competitors from emerging. The FTC and states allege that Amazon punishes sellers for using Amazon’s competitors and requires sellers to use Amazon’s fulfillment service.
  • FTC Approves Final Order Resolving Antitrust Concerns Surrounding ICE/Black Knight Deal. On November 3, 2023, the FTC finalized a consent order relating to the acquisition of Black Knight Inc. by Intercontinental Exchange Inc. (ICE), two mortgage technology providers. Under the terms of the consent order first approved on August 31, Black Knight must divest two of its businesses, Optimal Blue and Empower, to third party Constellation Web Solutions Inc. (Constellation), another provider of mortgage-related tools and software. Black Knight and ICE must also offer transition assistance to enable Constellation to operate the businesses in a similar manner. Further, for the next 10 years, ICE and Black Knight must seek FTC approval before reacquiring any divested assets and give notice when acquiring an interest in other similar businesses.
  • FTC Sues 7-Eleven, Alleging Violation of 2018 Consent Order. On December 4, 2023, the FTC sued 7-Eleven for alleged violations of a 2018 consent order. In response, 7-Eleven noted that it self-reported the error to the FTC and is working in good faith with the Commission.
  • FTC Settles Dispute With Total Wine Over Civil Investigative Demand Compliance. On December 9, 2023, the FTC and Total Wine & More (Total Wine) filed a notice of settlement to end the agency’s enforcement action against the company. The FTC had filed a petition in federal district court seeking to force Total Wine to comply with a civil investigation demand. The FTC asserted that Total Wine had failed to comply with the FTC’s demand, while Total Wine argued that the agency demanded documents that went beyond its investigation into distributor Southern Glazer’s Wine & Spirits LLC.
  • FTC Challenges Sanofi’s Exclusive License From Maze. On December 11, 2023, the FTC challenged an exclusive license from Maze Therapeutic Inc. to Sanofi for an investigational treatment of Pompe disease that completed phase 1. Following the challenge, Sanofi agreed to terminate its proposed acquisition. In response, Sanofi noted that it disagreed with the action by the FTC, which would delay potential advancements that could benefit patients, and that it would not be in the best interest of patients to continue the litigation.
  • FTC Approves Final Order Settling Amgen-Horizon Challenge. On December 14, 2023, the FTC finalized a consent order in its challenge to Amgen’s acquisition of Horizon Therapeutics plc. Under the consent order, Amgen agreed to refrain from bundling its products with either of Horizon’s medications used to treat certain diseases and from conditioning product rebates for Amgen products on the sale of either of these drugs.
  • FTC Blocks John Muir Health’s Takeover of San Ramon Regional Medical Center. On December 15, 2023, John Muir Health announced that it would terminate its proposed acquisition of San Ramon Regional Medical Center LLC from its current majority owner Tenet Healthcare Corporation after the FTC sued to block the US$142.5 million deal. The Commission alleged that the proposed acquisition would eliminate head-to-head competition between John Muir Health and nearby San Ramon Regional Medical Center.
  • Fifth Circuit Remands FTC’s Challenge of Illumina/Grail Merger. On December 15, 2023, the U.S. Court of Appeals for the Fifth Circuit vacated the FTC’s order to unwind Illumina’s acquisition of Grail and remanded the action for further proceedings. After the Commission found that the transaction would violate Section 7 of the Clayton Act, the Fifth Circuit vacated that decision, holding that the FTC applied an incorrect legal standard when considering Illumina’s offer to mitigate competitive concerns from the transaction by offering to enter into contracts to make Illumina’s products available to anyone who wanted them. While the Fifth Circuit agreed with the FTC that complaint counsel had satisfied its burden to put forth a prima facie case that the transaction would substantially lessen competition, the court held that the FTC should have considered whether the parties’ offer would mitigate the transaction’s effect such that it was no longer likely to substantially lessen competition rather than eliminate any anticompetitive effects in their entirety. Following this decision, Illumina announced that it would divest Grail.
  • IQVIA/Propel Media Deal Enjoined. On December 29, 2023, the U.S. District Court for the Southern District of New York granted the FTC’s motion for a preliminary injunction enjoining IQVIA’s proposed acquisition of DeepIntent from Propel Media. The judge found that the agency showed a reasonable probability that the proposed acquisition will substantially impair competition.

DOJ Cases and Proceedings

  • DOJ Argued That District Court Incorrectly Required Intent in Civil Section 1 Case. On October 19, 2023, in an amicus brief filed in the U.S. Court of Appeals for the Fifth Circuit, the DOJ argued that a Louisiana federal district court applied a standard higher than that for criminal liability when it dismissed Section 1 claims brought by Tesla challenging an alleged conspiracy involving the state’s auto regulator to exclude Tesla from the market. The DOJ argued that the lower court’s order incorrectly held that Tesla needed to establish anticompetitive intent to violate Section 1 of the Sherman Act, which is an element of a criminal Section 1 violation, whereas for civil violations a plaintiff only needs to prove the agreement was knowingly entered into and designed to harm competition.
  • Former President of Asphalt Paving Company Pleads Guilty To Bid Rigging. On October 30, 2023, the former president of an asphalt paving company in Michigan pleaded guilty in connection with a conspiracy to rig bids.
  • Justice Department Files Lawsuit and Proposed Consent Decree To Prohibit Koch Foods From Imposing Unfair and Anticompetitive Termination Penalties in Contracts With Chicken Growers. On November 9, 2023, the DOJ announced that Koch Foods Inc. agreed to a consent decree to resolve allegations that it required chicken farmers to pay Koch a termination penalty to switch from working for Koch to a competitor. The DOJ argued that the penalty constituted a de facto noncompete clause and an unfair and deceptive act in violation of the Packers and Stockyards Act, as well as an unreasonable restraint of trade under Section 1. As part of the consent decree, Koch is required to reimburse farmers for all termination fee payments and other out-of-pocket legal expenses, as well as refrain from retaliating against growers. The consent decree would also prohibit Koch from including any termination penalty obligation in future contracts or collecting payments for the next seven years.
  • DOJ Seeks Dismissal of No-Poach Case Against Surgical Care Affiliates. On November 13, 2023, the DOJ filed a motion to dismiss its pending criminal no-poach case, which was filed against UnitedHealth subsidiary Surgical Care Affiliates in January 2021.
  • DOJ Backs Tenants in Case Alleging Price-Fixing. On November 15, 2023, the DOJ filed a statement of interest in support of plaintiffs in opposition to a motion to dismiss claims against RealPage and apartment owners that used RealPage software when setting rental rates. The DOJ argues that the plaintiffs’ complaints plausibly allege that defendants are using new technology and complex algorithms to engage in anticompetitive activity in violation of Section 1 of the Sherman Act.
  • Fourth Circuit Reverses Criminal Conviction in Bid-Rigging Conspiracy. On December 1, 2023, after a former executive of Contech Engineered Solutions LLC was sentenced to 18 months in prison for his participation in bid-rigging and fraud schemes, the U.S. Court of Appeals for the Fourth Circuit reversed the Sherman Act conviction on the basis that the agreement did not constitute a per se antitrust violation.
  • Executives Charged With Bid Rigging, Territorial Allocation, and Defrauding the U.S. Forest Service After a Wiretap Investigation. On December 15, 2023, the DOJ announced that two Idaho executives were indicted for conspiring to rig bids and allocate territories in connection with the U.S. Forest Service contracts. The indictment alleges that from February 2014 to March 2023, the defendants coordinated their bids to harm competitors and accepted payment for fuel trucks at noncompetitive daily rates. The grand jury indictments are a result of an investigation conducted by the PCSF.

Joint FTC and DOJ Policy

  • FTC and DOJ Issue Fiscal Year 2022 Hart-Scott-Rodino Notification Report. On December 21, 2023, the FTC and DOJ released their annual report detailing 2022 data on the HSR Premerger Notification Program. The report notes that in 2022, 3,152 transactions were reported under the HSR, the second highest number over the past 10 years. Of those, 47 were subject to a Second Request, which is in line with prior years. The agencies indicated they took 50 merger enforcement actions (including filed matters, settlements, abandonments, and restructuring that led to no action).

FTC Policy

  • FTC Challenges Orange Book Patents Listed With FDA. On November 7, 2023, the FTC sent notice letters to 10 pharmaceutical manufacturers warning that their allegedly improper listing of patents in the FDA’s Orange Book might constitute an unfair method of competition under Section 5 of the FTC Act. While reserving the right to take further action, the FTC informed the recipients that it was using the FDA’s administrative process to challenge Orange Book listings under 21 C.F.R. § 314.53(f)(1).

DOJ Policy

  • DOJ's Procurement Collusion Strike Force Holds Its First Summit To Discuss Strategies to Combat Emerging Threats. On November 16, 2023, the DOJ’s Antitrust Division and the PCSF hosted its first summit to convene its law enforcement partners from across the country to discuss emerging threats and strategies to confront them. Participants discussed the heightened areas of procurement collusion risk resulting from recent spending bills like the Infrastructure Investment and Jobs Act, the Inflation Reduction Act of 2022, the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022, and supplemental funding in response to the invasion of Ukraine.

Inter-Agency Initiatives

  • DOJ and the FTC Meet With G7 Enforcement Partners in Tokyo To Discuss the Challenges of Ensuring Competition in Digital Markets. On November 8, 2023, the FTC and DOJ Antitrust Division participated in the G7 Competition Authorities and Policymakers Summit. The nations discussed ways in which they can address competition issues in digital markets and better understand and anticipate the challenges to competition that AI brings.
  • White House Announces Joint Effort From DOJ, FTC, and Department of Health and Human Services (HHS). On December 7, 2023, the White House announced that the DOJ, FTC, and HHS will issue a joint request for information on how private equity and concentration in health care may affect patients. The agencies will use this information to identify areas for future regulation and enforcement prioritization. The agencies are also looking to better identify alleged “roll up” strategies where multiple small acquisitions can lead to large market consolidation.

FTC Speeches

  • FTC Hosted Virtual Roundtable To Discuss Artificial Intelligence. On October 4, 2023, FTC staff hosted a virtual roundtable in which Commissioner Rebecca Kelly Slaughter and Chair Lina Khan spoke on artificial intelligence in creative industries. Opening the event, the two FTC members discussed the potential dangers of generative AI to creators and artists, as well as antitrust enforcers’ role in protecting them.
  • Chair Khan Delivers Remarks at the International Competition Network Conference in Barcelona, Spain. On October 18, 2023, Chair Lina Khan delivered a speech at the International Competition Network Conference addressing the FTC’s approach to the revised Merger Guidelines. She outlined the agency’s goals and principles, including to update the Merger Guidelines to reflect current market realities, encompass the full scope of congressional intent and legal precedent, and provide a clear and administrable framework for courts and market participants.
  • Chair Khan Speaks at Stanford Institute for Economic Policy Research. On November 2, 2023, Chair Khan delivered remarks at the Standard Institute for Economic Policy Research describing her belief that government action has been crucial to protect free and fair competition in the technology industry. She expressed concerns about the dangers of large firms capturing innovative capacity through the hoarding of talent or acquisition of firms, and outlined the ways the FTC sought to protect fair competition in Silicon Valley.
  • Commissioner Bedoya Speaks at Artificial Intelligence Event. On November 16, 2023, the Open Markets Institute hosted an event on the contemporary artificial intelligence landscape. Among the speakers were FTC Commissioner Alvaro Bedoya, who spoke about his concerns with the increasing use of AI, such as potential bias, harmful use in hiring practices, and the use of AI systems to make health care decisions.

DOJ Speeches

  • Criminal Enforcement Section Director Emma Burnham Delivers Remarks to the New York State Bar Association. On October 18, 2023, DOJ’s Criminal Enforcement Section Director Emma Burnham spoke to the New York Bar Association explaining how the DOJ’s Antitrust Division has worked with other offices and agencies, as well as international partners, in joint initiatives to investigate and prosecute antitrust crimes. Director Burnham spoke about the agency’s emphasis on corporate enforcement and the importance of remediation and strategic divestments.
  • Deputy Assistant Attorney General Andrew J. Forman Speaks at the Capitol Forum’s Health Care Competition Conference. On October 26, 2023, Deputy Assistant Attorney General Andrew J. Forman delivered a speech on competition in the health care industry. He described the importance of the health care industry to the U.S. economy, and how the DOJ is focused both on non-merger and conduct-related transactions in the health care space.
  • PCSF Director Daniel Glad Speaks at the National Association of State Procurement Officials’ 10th Annual Law Institute. On November 9, 2023, Director Daniel Glad delivered remarks to the National Association of State Procurement Officials’ Law Institute in which he outlined the importance of procurement experts, particularly at a time of increased infrastructure spending. He also described the work of the PCSF and its recent accomplishments. After stressing the significant loss local governments can experience from bid rigging, price fixing, and other collusive schemes, he asked for assistance from other procurement experts and their teams in reporting and investigating potential crimes.
  • AAG Kanter Testifies Before House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust. On November 14, 2023, AAG Jonathan Kanter testified before the regulatory reform and antitrust subcommittee in November. AAG Kanter defended his agency’s actions and praised its recent accomplishments.
  • PDAAG Mekki Speaks at Artificial Intelligence Event. Principal Deputy Assistant Attorney General (PDAAG) Doha Mekki, spoke on the contemporary artificial intelligence landscape on November 16, 2023. PDAAG Mekki covered the DOJ’s merger guidelines, the purported danger of AI finding new and efficient ways to collude, and her view of tech companies’ increased aversion to antitrust regulation.
  • Deputy Assistant Attorney General Michael Kades Speaks at Annual CRA Brussels Conference 2023. On December 7, 2023, Deputy Assistant Attorney General Michael Kades discussed recent evolutions in antitrust ideology. He described many economic assumptions that have changed over time, including views on cartels and labor.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Newsletter 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.

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