A Deeper Dive: A Look at Possible Antitrust Policy in the Biden Administration

This note outlines some trends in antitrust enforcement that will continue and may accelerate under the Biden administration. Also included is a roster of federal, state, and local antitrust/consumer protection agencies that may be useful if you have issues in those areas.

A. Some Thoughts on Antitrust Enforcement Under the Biden Administration

The Biden Administration has been slow to appoint top people to lead the administration’s antitrust policy, but all indications are to expect more aggressive and well-funded competition agencies. Rebecca Kelly Slaughter is still the Acting Chairwoman of the Federal Trade Commission, though she is in contention to be nominated to take the position. Ms. Slaughter will pursue an aggressive path. She dissented from the Vertical Merger Guidelines adopted by the previous administration (here) and in testimony before the House antitrust subcommittee she pledged “to strongly enforce existing antitrust law to protect Americans from rising monopoly power and anticompetitive mergers.” (here). President Biden is already filling key positions in the White House (Timothy Wu, National Economic Council) and at the FTC (Lina Khan, nominee for commissioner) with lawyers who have advocated for increased antitrust enforcement, especially against “big tech.”

There has not been a nomination to lead the Antitrust Division. The selection process has been difficult as progressives push back against potential candidates who have represented Google, Facebook, Amazon and other high profile, high-tech companies. On the other hand, ethics questions arise with anyone who has aggressively attacked Google, Facebook, Amazon, etc. Whomever is selected, he/she may well be recused from the high-profile Google case or other future high-tech actions the Antitrust Division may bring. It is hard to find a qualified leader who has not been either involved in litigation or outspoken about concentration issues in high-tech. Congress, especially the House, is expected to push for more aggressive antitrust enforcement--backed by increased funding. The House and Senate antitrust subcommittees have held four hearings since February 25, 2021. Even without leadership set in place, there are some predictions that can be made with a fair degree of confidence about antitrust enforcement going forward.

Criminal Enforcement

Criminal antitrust enforcement is handled exclusively by the DOJ’s Antitrust Division. The prosecution of price fixing and bid rigging cartels enjoys bi-partisan support and there is generally a continuity in the criminal enforcement program between administrations. The criminal enforcement case filings/fines were significantly down during the Trump Administration but there are a number of factors that contribute to that--including the pipeline left by the previous administration. The Antitrust Division has recently stated that in the last year they have opened the most grand juries than they have in almost 20 years. The Antitrust Division received a 10% budget increase last year, and current proposals in Congress would further increase the budget in a major way. The FTC is also likely to receive a major increase in funding. Two trends started under the last administration will continue. Healthcare is a primary focus of the Antitrust Division, particularly violations in health care labor markets including prosecution of wage fixing and no-poach agreements not to hire employees from a competitor company. The Antitrust Division has recently filed several criminal antitrust wage fixing and no-poach cases. The Division has indicated there are many more active grand juries on these topics. The last administration established the Procurement Collusion Strike Force to concentrate on bid rigging involving government contracts for construction, supplies and other goods. This will likely continue and, with increased budgets, enforcement in this area may pick up.

Merger Enforcement

Merger enforcement is handled by both the FTC and Antitrust Division. Which agency reviews a particular matter is decided by a tug of war more formally known as the “clearance process.” It is likely that mergers will receive greater scrutiny in a Democratic administration. The shift is usually not dramatic, but Democrats are more willing to use government intervention in the market to correct perceived problems. One area of merger enforcement that has already increased under the prior administration is to challenge “nascent” mergers. On January 12, 2021 Visa Inc. and Plaid Inc. abandoned their planned $5.3 billion merger after the DOJ filed a civil antitrust lawsuit on Nov. 5, 2020, to stop the merger. The challenge was based on the allegation that Plaid was an innovative and nascent competitor that would have been eliminated before it had a chance to succeed. See the DOJ press release here. On January 5, 2021, the FTC announced that the Procter & Gamble Company abandoned its proposed acquisition of Billie, Inc. On December 8, 2020, the Commission had voted to file a complaint against the proposed merger. The FTC charged that the acquisition would allow Procter & Gamble, the market-leading supplier of both women’s and men’s wet shave razors, to eliminate growing competition from Billie. See the FTC press release here.

Further, we may see increased enforcement of vertical mergers – mergers between companies at different distribution levels in the market. The FTC recently filed a complaint to block the merger of Illumina Inc., a DNA sequencing company, and GRAIL, Inc., a developer of an innovative cancer test that uses Illumina’s technology. The FTC asserts the merger would incentivize Illumina to cut off potential GRAIL competitors from sequencing technology necessary to develop competitive cancer tests. The FTC press release can be found here.

As mentioned above, the FTC and DOJ updated the Vertical Merger Guidelines in 2020 (here) after having not touched them since 1984. Already there are calls to update them again to support more aggressive enforcement of vertical mergers like that of Illumina and GRAIL.

Monopolization

It is clear that there is an appetite in the FTC and DOJ for alleging monopolization, particularly in the high-tech markets. These monopoly cases were filed in the previous administration and will be litigated throughout the Biden administration: FTC v. Facebook, Inc. (FTC press release here) and US v. Google LLC, (DOJ Press release here). Many states, including California, have joined these suits.

Compliance

The increased budgets for antitrust enforcement should be met by companies by an increase in their antitrust compliance programs. In 2019 the Antitrust Division announced a new policy to incentivize corporate compliance which included a change in policy to recognize that a robust compliance program may merit consideration in charging and/or sentencing decisions (here). The criminal cases in the wage-fixing/no-poach area show that many senior executives and human resources departments may not be aware of the illegality of certain conduct. The FTC and Antitrust Division issued a joint statement, Antitrust Guidance for Human Resources Professional (here).

Antitrust compliance training can be crucial even outside the area of collusive agreements between competitors that may warrant criminal prosecution. Mergers often come under intense scrutiny or are even challenged because an overzealous proponent of the merger writes an email something like “After we buy X corporation, we will dominate the market and can raise prices.” Such emails are actually written and find their way into both government and private antitrust actions. Executives should be taught to memorialize the procompetitive benefits from their actions.

B. Federal, State and Local Resources for Antitrust/Consumer Protection Issues

In California we are fortunate to have regional offices of the DOJ’s Antitrust Division and the FTC in state. While many matters/investigations will be handled by attorneys in Washington, D.C., questions/complaints about competitive issues can be initially brought to these regional offices. The government will not get involved in private disputes, but if conduct has broad affect in a market, it may be something the government will look into. • Antitrust Division, United States Department of Justice

The Antitrust Division’s regional field office in San Francisco has a long history of successful antitrust enforcement in both criminal and civil matters. The Antitrust Division’s web page is here. Contact information for the San Francisco office is:

San Francisco Office Manish Kumar, Chief 415-934-5300 Jacklin Lem, Assistant Chief 415-934-5300 Leslie Wulff, Assistant Chief 415-934-5300 Phillip Burton Federal Building and U.S. Courthouse 450 Golden Gate Avenue Room 10-0101 Box 36046 San Francisco, CA 94102-3478 Office Phone: 415-934-5300 Fax: 415-934-5399 E-Mail: SanFran.ATR@usdoj.gov

• Federal Trade Commission

The Federal Trade Commission has two regional offices in California. The Western Region San Francisco serves the residents of Northern California, Northern Nevada, Utah, and Colorado. Thomas Dahdouh, Director Kerry O’Brien, Assistant Director The Western Region San Francisco handles both antitrust and consumer protection matters. The office works to enforce the federal antitrust laws through merger and anticompetitive conduct investigations and litigation across an array of industries. Western Region San Francisco also stops unfair, deceptive, and fraudulent business practices by conducting investigations, bringing law enforcement actions, building state and local partnerships, and educating consumers and businesses about their rights and responsibilities.

The Western Region Los Angeles serves the residents of Southern California, Southern Nevada, Arizona, Hawaii, Guam, American Samoa, and Northern Mariana Islands. Maricela Segura, Director Faye Chen Barnouw, Assistant Director The Western Region Los Angeles stops unfair, deceptive, and fraudulent business practices by conducting investigations, bringing law enforcement actions, building state and local partnerships, and educating consumers and businesses about their rights and responsibilities. • State of California, Office of the Attorney General, Antitrust and Business Competition The Attorney General’s Antitrust Law Section enforces California’s antitrust laws both civilly and criminally, and federal antitrust laws civilly, through business merger/acquisition reviews, investigations of potential violations of the law, and, where necessary, litigation. • District Attorneys’ Offices Some of the larger cities, San Diego, Los Angeles and San Francisco, among others, also have active Consumer Protection Divisions which may be a good resource for consumer/business complaints.

C. Wrap Up

This promises to be a very active time for antitrust enforcement, both at the government and private level. The Antitrust and Unfair Competition Section of the California Lawyers Association will have full coverage through various programs, and the Section's publications: California Antitrust and Unfair Competition Law Treatise; Competition Journal and the monthly E-briefs, News and Notes. Stay tuned.