Matthew D. Purcell

Published January 2022

Everything is bigger in America and, it appears, its companies are no different. Following an unprecedented reduction in federal antitrust charges against corporations and individuals during the Trump Administration, the Biden Administration is ready to increase enforcement of federal antitrust laws against large corporations and individuals it views as engaging in anticompetitive practices in the marketplace.¹  This article will give a brief history of antitrust laws and the current statutory landscape. The article will then focus on the enforcement issues that plague this area of law and what this author believes we can expect from the Biden Administration.

Historical and current statutory landscape

Antitrust laws were initially enacted in the United States at a federal and state level in the late 1800’s and early 1900’s to counteract what many believed to be unfair business practices by large corporate monopolies and trusts. Since the initial introduction of antitrust legislation, federal and state antitrust laws have expanded to prohibit businesses from engaging in a wide range of anticompetitive activities, including (1) price-fixing schemes, (2) anticompetitive mergers, acquisitions, and joint ventures, (3) unfair and anticompetitive distribution models, and (4) other activities and transactions intended to achieve a monopoly. In summary, antitrust laws are intended to encourage competition in the marketplace and to discourage anticompetitive behaviors.

Principally, the federal antitrust laws in effect today are (1) the Sherman Act, including Section 1 which prohibits agreements that unreasonably restrain trade and Section 2 which prohibits monopolization, attempts to monopolize or conspiracies to monopolize ² (2) the Clayton Act, which, among other things, prohibits price discrimination, exclusive dealing or tying arrangements, and mergers and acquisitions that may substantially lessen competition,³ and (3) the FTC Act, which, in an attempt to bolster the Sherman Act, prohibits unfair methods of competition or deceptive acts or practices.⁴ In addition to the foregoing federal antitrust laws, there are state antitrust laws similar in scope to the federal laws, but they are not always identical, including those related to the enforcement of non-competition agreements between employers and employees.⁵

Enforcement issues

Enforcement of federal antitrust laws is largely the responsibility of the Antitrust Division of the Department of Justice and the Federal Trade Commission. However, just as federal antitrust laws are a patchwork of legislation, so is the enforcement. For example, a violation of Section 1 of the Sherman Act is subject to civil enforcement by the Department of Justice and the Federal Trade Commission.⁶ The DOJ may also bring criminal charges for Section 1 violations. In addition to the federal agency enforcement, violations of Section 1 can give rise to court actions for damages brought by private plaintiffs and state attorneys general on behalf of their residents.⁷

Federal enforcement of Section 2 of the Sherman Act is the same, except the DOJ does not generally prosecute violations of Section 2 criminally.⁸ Meanwhile, violations of the Clayton Act do not carry any criminal liability but do provide for civil penalties and may be enforced by private parties, the DOJ and the FTC.⁹ Predictably, the FTC Act is enforceable by the FTC, but it is not enforceable by private parties.¹⁰

Such a hodgepodge of federal antitrust laws—to say nothing of state antitrust laws—and the various means of enforcing those laws, results in a difficult and complex legal landscape of differing interpretations, policies, enforcement, and defenses. As one might imagine, due to this complexity and lack of uniformity, enforcement of antitrust laws lacks consistency and is prone to political pressures, societal and community viewpoints, and contemporary economic considerations.

One area of particular enforcement concern is with regards to Hart-Scott-Rodino (HSR) filings.¹¹ The HSR Act (which amends the Clayton Act) established a federal premerger notification program which requires parties to report large mergers and acquisitions to the FTC and DOJ prior to closing the transaction.¹² Following the pre-closing filing, the parties to the transaction must wait for a specified period (typically, 30 days for the initial waiting period) which allows the agencies to review the proposed transaction to determine if the proposed transaction is likely to substantially harm competition.¹³ Following the waiting period, and assuming that the FTC and DOJ have not taken further action, the parties may close the transaction—albeit with the caveat that the agencies may always take a retroactive look back if necessary.¹⁴

In the event that the FTC and DOJ need more time to evaluate the proposed transaction, they can make a second request—thereby extending the waiting period and launching a more in-depth investigation.¹⁵ Regardless of whether the parties are subject only to the initial waiting period or whether they are subject to the second request, once that waiting period expires and the agencies have taken no action, it is largely accepted that the parties may consummate the transaction with very little risk that the FTC and DOJ will come back to further scrutinize, or perhaps even un-wind, the transaction.¹⁶

On August 3, 2021, the FTC announced that due to “a tidal wave of merger filings that is straining the agency’s capacity to rigorously investigate deals ahead of the statutory deadlines”, it is unlikely that the FTC will be able to fully investigate deals within the standard 30 day waiting period.¹⁷ As such, investigations that are not completed in the 30 day waiting period “remain open and ongoing” and parties that choose to proceed with closing transactions that have not been fully investigated do so at their own risk.¹⁸

In one sense, there is nothing new in this announcement as the FTC has always retained the right to determine if a merger is unlawful even after a pre-merger review has been completed. However, the proactive announcement combined with President Biden’s recent Executive Order on Promoting Competition in the American Economy (which expressly states that it is the Biden Administration’s policy to provide greater scrutiny of mergers and acquisitions even after the transactions have closed), should give parties to large transactions pause, particularly in the industries identified in the Executive Order as the focus of the administration’s antitrust enforcement efforts.¹⁹ Parties to large transactions should allocate risk in their transaction documents regarding HSR filings and the possibility of pre-closing or post-closing enforcement actions by the FTC.

The FTC and DOJ may seek to further amend their current HSR guidelines. The FTC and DOJ recently announced that “current guidelines deserve a hard look to determine whether they are overly permissive” and that the antitrust enforcers planned “to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous approach consistent with applicable law.”²⁰ We should expect further changes soon.

Executive Order on Promoting Competition in the American Economy

On July 9, 2021, President Biden signed an Executive Order on Promoting Competition in the American Economy.²¹ The primary focus of the Executive Order is to encourage and empower federal agencies to scrutinize large corporations across multiple sectors of the U.S. economy to curb anticompetitive activities. It adopts a “whole of government competition policy” to what has historically been a fragmented patchwork of laws, agency oversight, and enforcement^.22 In short, the Biden Administration wants to change the way the federal government approaches competition issues.²³

The rationale from the Biden Administration in issuing the Executive Order is the belief that (1) too few companies control too much of their respective markets, i.e., “Big is Bad,” (2) prices have increased too much, too fast, (3) barriers to competition are driving down wages for workers, and (4) innovation is stagnating. ²⁴ Certainly, arguments can be made that other factors besides the lack of enforcement of federal antitrust laws have contributed to these results. However, it is well-known that many industries have seen rapid consolidation of competition in recent years.

We need to look no further than the technology sector which has drastically consolidated since the beginning of the 21^st century. But it is not just the technology sector that has seen massive consolidation. For example, in the agricultural seed market, just four companies: (i) Bayer (which acquired Monsanto in 2018), (ii) Corteva (created through the merger of Dow and DuPont in 2017), (iii) Chem China (which acquired Syngenta in 2017), and (iv) BASF, control more than 60% of global proprietary seed sales—a fact which the accompanying Fact Sheet to the Executive Order highlights.²⁵

While hyper partisanship is en vogue in the United States, the Executive Order and enhanced antitrust enforcement is a rarity in that it largely enjoys bipartisan support, ²⁶ particularly when it comes to the colloquial terms of “Big Tech” (Facebook, Apple, Google, Microsoft, and Amazon) and “Big Ag.” Republicans often view the former, Big Tech, as having a unique ability to censor freedom of speech rights while viewing the latter, Big Ag, as having a detrimental effect on family-run farms, a sanctum sanctorum for conservatives and liberals alike.

The bipartisan support for further antitrust legislation and increased enforcement from both Democratic and Republican politicians is even enjoyed by many members of the judiciary and federal agencies. Current U.S. Attorney General, Merrick Garland, recently stated: “The Supreme Court has repeatedly referred to the antitrust laws as the charter of American economic liberty, and I deeply believe that.”²⁷ The position that a competitive marketplace is critical to our form of government is echoed in the opening lines of the Executive Order: “A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers.”²⁸

The Executive Order creates 72 initiatives to address economic competition problems and specifically calls out—it appears in terms of priority—the following industries as the focus of the administration’s antitrust enforcement efforts: (1) technology, (2) agriculture, (3) healthcare, (4) banking and financial institutions, and (5) transportation.²⁹

Next steps for the Biden Administration

Based on the content of the Executive Order and the early actions of the Biden Administration, we should expect to see the following five developments over the next several years.

First, there will be an increase of antitrust enforcement charges filed by the FTC and DOJ against corporations and individuals during the Biden Administration. These charges are likely to be widespread across industries and federal and state antitrust laws, but should be particularly expected in the technology, agriculture, healthcare, banking and financial institutions, and transportation industries.

Second, in addition to enforcement actions by the FTC and DOJ, there will be an increase of federal and state investigations into the practices of large corporations, particularly in the Big Tech and Big Ag industries, which will likely result in increased class action litigation.

Third, there will be continued political pressure from both the left and the right on the Big Tech and Big Ag industries to stop further consolidation, and perhaps, to break-up the limited market participants. We have already seen the pressure increasing with a steady scrutiny from federal and state agencies, legislators, academics, trade organizations, interest groups, and grass roots organizations. This pressure even comes from unlikely sources, such as Yale Law School sponsoring a “Big Ag and Antitrust” conference in 2020.³⁰ Its purpose and underlying position are succinctly stated in the opening sentence of the conference guide: “Since the mid-20^th century, a handful of corporations have grown to dominate America’s farm and food sectors” and the conference aims “to explore the role of antitrust and competition policy in creating America’s food system and its potential for improving it.”³¹ Anticompetitive behaviors in Big Tech and Big Ag are in the crosshairs. Market participants have been warned.

Fourth, there will be increased scrutiny of previously completed, or soon-to-be-completed, mergers and acquisitions and a potential unwinding of large transactions that have anticompetitive results. In July 2021, the $30 billion merger of insurance brokers Aon Plc and Willis Towers Watson Plc was terminated following the DOJ’s lawsuit seeking to block the merger.³² This was the first major victory—and a very aggressive step—of the Biden Administration’s new antitrust enforcement policy. The action and end result, with Aon paying Willis a $1 billion break-up fee, was surprising considering that European regulators had recently approved the proposed merger (with qualifications)—and European regulators have typically taken a more stringent approach to antitrust enforcement^.33 The position of the Biden Administration on the Aon-Willis proposed merger should not be viewed as an isolated event. We should expect the Biden Administration to continue with its aggressive enforcement of antitrust laws to restructure the economy.³⁴

Fifth, the Executive Order took direct aim at employer non-competition agreements and burdensome occupational licensing requirements intended to restrict competition.³⁵ We should expect to see state legislatures (and court systems) further evaluate current laws and turn towards viewing overly restrictive non-competition agreements and occupational licensing requirements as inhibiting competition and restricting mobility in the labor markets. Unfettered employer-driven labor barriers or profession-driven occupational barriers are no longer du jour.

Conclusion

Our clients depend on us to identify legal issues and risks and to advise them accordingly. Both in-house and outside counsel should expend the time and resources necessary to educate their clients on antitrust risks and how to avoid anticompetitive behaviors and actions. These training opportunities should be a deep dive into what business activities may give rise to potential antitrust investigations and enforcement, such as relevant market share, supply and distribution agreements, strategic relationships and collaborations, and non-competition or exclusionary agreements.

Matt Purcell is Senior Counsel at J.R Simplot Company, a privately-owned international food and agriculture company with more than 13,000 employees. In his current role, Matt manages a team of in-house attorneys and paralegals responsible for all transactional legal matters at Simplot and its global subsidiaries.

Endnotes

1. There were 274 charges filed against corporations and individuals in the last four years of the Obama Administration (2013-2016). There were less than half of that number (129) of charges filed against corporations and individuals in the four years of the Trump Administration (2017-2020). See “Antitrust Division Workload Statistics FY 2010-2019” available at https://www.https://www.justice.gov/atr/file/788426/download.

2. Sherman Antitrust Act of 1890, 15 U.S.C. §§1-7.

3. Clayton Antitrust Act of 1914, 15 U.S.C. §§12-27.

4. Federal Trade Commission Act of 1914, 15 U.S.C. §§41-58.

5. Exec. Order No. 14,036.

6. Sherman Act 15 U.S.C. §§1-7

7. Id.

8. Id.

9. Clayton Act 15 U.S.C. §§12-27

10. Federal Trade Commission Act of 1914, 15 U.S.C. §§41-58

11. Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. §§18a.

12. https://www.ftc.gov/enforcement/premerger-notification-program

13. Id.

14. Id.

15. Id.

16. Id.

17. Vedova, Holly, “Adjusting Merger Review To Deal With The Surge In Merger Filings,” Aug. 3, 2021, available at https://www.ftc.gov/news-events/blogs/competition-matters/2021/08/adjusting-merger-review-deal-surge-merger-filings

18. Id.

19. Exec. Order No. 14,036 86 FR 36987, available at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/

20. Statement of FTC Chair Lina Khan and Antitrust Division Acting Assistant Attorney General Richard A. Powers on Competition Executive Order’s Call to Consider Revisions to Merger Guidelines (July 9, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/statement-ftc-chair-lina-khan-antitrust-division-acting-assistant.

21. Exec. Order No. 14,036.

22. Id. at Section 2.

23. Id. at Section 4. The Executive Order establishes a White House Competition Council within the Executive Office of the President. The Council will be led by the Assistant to the President for Economic Policy and Director of the National Economic Council consist of many cabinet-level members. The Council is responsible, among other things, for coordinating, promoting, and advancing federal government efforts to enforce antitrust laws.

24. Fact Sheet: Executive Order on Promoting Competition in the American Economy dated July 9, 2021 available at https://www.https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.

25. “The Sobering Details Behind the Latest Seed Monopoly Chart” by Kristina Kiki Hubbard dated January 11, 2019 available at https://civileats.com/2019/01/11/the-sobering-details-behind-the-latest-seed-monopoly-chart/

26. “Lawmakers unveil major bipartisan antitrust reforms that could reshape Amazon, Apple, Facebook and Google” dated June 11, 2021 by Lauren Feiner at CNBC available at: https://www.cnbc.com/2021/06/11/amazon-apple-facebook-and-google-targeted-in-bipartisan-antitrust-reform-bills.html

27. “Under Garland, DOJ Takes Harder Line on Antitrust” by John D. McKinnon and Aruna Viswanatha, Wall Street Journal, Tuesday, July 27, 2021 on page A6.

28. Exec. Order No. 14,036, Section 1.

29. Fact Sheet: Executive Order on Promoting Competition in the American Economy dated July 9, 2021 available at https://www.https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.

30. Big Ag & Antitrust: Competition Policy for a Sustainable and Humane Food System, dated January 16, 2021 available at https://law.yale.edu/animals/events/big-ag-antitrust-conference

31. Id.

32. “Aon, Willis halt $30 billion merger over monopoly concerns, delay” by Alwyn Scott and Sohini Podder, Reuters, July 26, 2021, available at https://www.reuters.com/business/finance/aon-willis-towers-watson-call-off-30-bln-merger-2021-07-26/

33. Id.

34. “Under Garland, DOJ Takes Harder Line on Antitrust” by John D. McKinnon and Aruna Viswanatha, Wall Street Journal, Tuesday, July 27, 2021 on page A6.

35. Exec. Order No. 14,036.