By Jeffrey May, J.D.
The 66th annual American Bar Association Section of Antitrust Law Spring Meeting wrapped up today with its enforcers roundtable, offering insights on recent developments and future trends from the heads of the world’s leading antitrust authorities. Spring Meeting attendees heard from FTC Acting Chairman Maureen K. Ohlhausen; Makan Delrahim, Assistant Attorney General in charge of the U.S. Department of Justice Antitrust Division; European Commission Competition Commissioner Margrethe Vestager; Andrea Coscelli, Chief Executive of the United Kingdom Competition & Markets Authority; and Victor J. Domen, Chair of the National Association of Attorneys General (NAAG) Multistate Antitrust Task Force.
FTC enforcement. Ohlhausen kicked off the discussion, defending her agency’s record over the last year. Ohlhausen wanted to dissuade attendees of the notion that the agency wasn’t actively enforcing the antitrust and consumer protection laws. She said that the agency has been a notable example of bipartisanship. Since the inauguration of President Trump, there have been well over 500 unanimous votes at the Commission, she noted.
According to Ohlhausen, there have been 12 merger challenges so far in Fiscal Year 2018. In her opening remarks, she pointed to two particular mergers that were abandoned in the face of FTC challenges. First, the proposed acquisition of Conagra’s Wesson brand by J.M. Smucker Co., owner of the Crisco brand, was dropped last month after the FTC announced that it issued an administrative complaint, challenging the combination. Ohlausen also pointed to the abandoned combination of auto software vendors CDK Global, Inc. and Auto/Mate, Inc. in light of an FTC challenge to the transaction.
Outside the merger area, Ohlhausen highlighted the FTC’s action challenging the adoption and enforcement by the Louisiana Real Estate Appraisers Board of a regulation that set fees for appraisal services provided to appraisal management companies. Ohlhausen noted that the case was the Commission’s first administrative complaint against a state board since the U.S. Supreme Court issued its 2015 decision in N.C. State Bd. of Examiners v. FTC. She pointed to a very recent Commission decision on requirements for active supervision under the state action doctrine in the matter.
On the consumer protection front, Ohlhausen said that the FTC has continued to prioritize privacy and data security issues. She noted the agency’s nonpublic investigations into Equifax and Facebook. She also mentioned the very recent revised settlement with Uber. Just yesterday, the FTC announced that Uber agreed to expand a proposed settlement it reached with the FTC in August 2017 in relation to charges that it deceived consumers about its privacy and data security practices based on the failure to disclose an additional breach in 2016.
The high level activity at the FTC’s competition and consumer protection bureaus also was identified at an earlier agency update with the FTC Bureau Directors. In that session, Acting Bureau of Competition Director Bruce Hoffman said that the Bureau has 12 cases in active litigation. In addition, against a backdrop of increased merger activity, there have been 16 merger consents. Tom Pahl, acting director of the Bureau of Consumer Protection, said that, in the 14 months that he has been at the helm of the BCP, the Bureau has brought or settled approximately 125 cases. While the focus has been on fraud prevention, the Bureau is active in non-fraud areas, such as health claims, influencers, native advertising, privacy, and data protection, he noted. Pahl is leaving the FTC, and there is speculation that he may be returning to the Consumer Financial Protection Bureau.
Ohlhausen delivered her remarks with the knowledge that new commissioners were awaiting Senate confirmation to replace her and the only other current five commissioner—Terrell McSweeny—at the Commission. President Trump has nominated Ohlhausen to serve as a judge on the U.S. Court of Federal Claims.
Antitrust Division highlights. This was the first Spring Meeting enforcers roundtable for AAG Delrahim. Delrahim took the opportunity to highlight three central priorities for the Antitrust Division to protect consumers and competition. These priorities were highlighted in the Antitrust Division’s Spring 2018 Update, released earlier this week.
First, Delrahim said that he wants to return the Antitrust Division to a law enforcement agency. Delrahim said that he cringes when he hears the agency described as a regulator. The effort to restore the role of the Antitrust Division as an enforcement agency has informed the antitrust chief’s views on remedies. He reiterated his view that the best remedies are structural remedies. "Let the market decide," said Delrahim. The agency should not be guessing what the market should do.
Second, the antitrust chief said that he is focused on the intersection of antitrust and intellectual property. It is not that there is no role for antitrust. Delrahim has ushered in a policy shift on IP antitrust at the Antitrust Division. Delrahim has taken the position that antitrust has a limited role in IP disputes that have a contractual remedy. In recent speeches, Delrahim has explained that there needs to be a balance between IP holders and implementers. We continue to study this. "We don’t have all of the answers," Delrahim noted.
Lastly, the Antitrust Division recognizes the importance of international engagement. The agency is looking for convergence of procedures at a minimum. It also is striving for convergence on substantive norms, according to Delrahim.
On the merger enforcement front, Delrahim avoided talking about the ongoing trial over AT&T, Inc.’s proposed acquisition of Time Warner, Inc. However, he did generally take issue with the notion that competition concerns with vertical mergers are almost always resolved with behavioral remedies. He suggested that the types of remedies in vertical merger cases have been misrepresented in the press. The Antitrust Division filed its complaint to block the AT&T/Time Warner deal last November. The trial is currently going on in the federal district court in Washington, D.C.
Delrahim was asked to explain the downturn in criminal cartel filings. While criminal case filings are down, Delrahim said that a better indicator of activity was leniency applications. According to Delrahim, the number of leniency applications is the same as historical averages. Delrahim also mentioned efforts to obtain relief on behalf of taxpayers from cartelists using the Antitrust Division’s Clayton Act, 4(a) authority.
European Commission developments. Vestager expressed concern about a balance in the digital world. A lot of energy being put into making digital markets work, she noted. Vestager said that the EC is continuing to keep a close watch on Google, particularly whether it is competing on a level playing field in the comparison shopping services area so as not to block innovation.
Innovation is not limited to the tech sector, Vestager noted. The EC competition commissioner said that the EC’s reviews of the agrochemical mergers of Dow/DuPont and Bayer/Monsanto were intended to make sure that innovation will continue in these sectors. In March 2017, the EC approved under the EU Merger Regulation the proposed merger between U.S.-based chemical companies Dow Chemical and DuPont. Bayer’s proposed acquisition of Monsanto received conditional approval from the EC last month. The Antitrust Division continues to conduct its own review of that deal in the United States.
United Kingdom transition. Coscelli discussed how the U.K. Competition & Markets Authority will be moving from an agency focused on national cases to international cases. Currently the EC takes the lead on large mergers. He foresees cooperation with other agencies on major transactions as Britain continues to move towards exiting the European Union. Coscelli noted that the agency was in a transition in light of Brexit. He foresees significant cooperation with foreign counterparts the international cases that will come to the agency.
State perspective. "Don’t forget the states," Domen reminded attendees. The NAAG antitrust multistate task force chair provided a state enforcer's perspective. Among the top state enforcement highlights discussed was the multi-state action against American Express over its so-called "anti-steering" rules imposed on merchants. The case is currently before the U.S. Supreme Court, as the Justices review a Second Circuit decision that held that the U.S. Department of Justice and complaining states failed to prove that the anti-steering rules that prohibited merchants who accepted American Express cards from directing customers to alternative credit card brands violated Section 1 of the Sherman Act.
A day earlier at a briefing with state enforcers session, Matthew W. Sawchak, Solicitor General in the North Carolina Attorney General’s Office, provided a detailed history of the twisting path that the case took to the U.S. Supreme Court. After the loss on appeal, the U.S. Department of Justice decided not to seek High Court review and opposed the states’ petition for certiorari. After the Court granted certiorari, the Justice Department rejoined the case and participated in argument in February. Both Domen and Delrahim said they were looking forward to the guidance that the Supreme Court’s decision will provide.
Domen also noted that the states are particularly active in the health care area. One of the suits noted was an action brought by 49 states, with Connecticut taking the lead, alleging overarching conspiracy among generic drug companies to fix prices for generic medications. He also pointed to efforts by individual states, particularly California and New York, to pursue antitrust actions.
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