Antitrust

The Federal Trade Commission (“FTC”) has announced revised thresholds for determining whether transactions need to be filed under the Hart-Scott-Rodino (“HSR”) Act, along with an updated HSR filing fee schedule. The new minimum “size of transaction” notification threshold for acquisitions of voting securities, assets, or controlling interests in non-corporate entities will be $126.4 million, an increase from the prior threshold of $119.5 million. The new thresholds and fee schedule will be effective February 21, 2025, 30 days after their publication in the Federal Register.

The FTC also announced an increase in the maximum daily civil penalty amount for HSR violations from $51,744 to $53,088 for each day of the violation. The new maximum applies to civil penalties assessed on or after January 17, 2025.

Finally, the FTC also announced slightly higher caps for the de minimis exceptions of Section 8 of the Clayton Act, which prohibits certain interlocking directorates between competing corporations. The new Section 8 exception levels became effective on January 22, 2025, when they were published in the Federal Register.

HSR Act Thresholds and Filing Fees

The HSR Act requires parties to certain mergers and acquisitions to notify the FTC and Antitrust Division of the U.S. Department of Justice (“DOJ”) and observe a waiting period (usually 30 days) prior to consummating a reportable transaction. The notification thresholds are adjusted annually based on changes in the gross national product, with the new, revised thresholds as follows:Continue Reading FTC Increases HSR Filing Thresholds and Fees, Penalties, and Thresholds Applicable to Board “Interlocks” for 2025

On December 12, 2024, the U.S. Federal Trade Commission (FTC) authorized its staff to file a complaint against alcohol distributor Southern Glazer’s Wine and Spirits, LLC (“Southern Glazer’s”). The complaint alleges that the company engaged in price discrimination—charging higher prices to independent businesses and lower prices to large national and regional chains—in violation of Section 2(a) of the Robinson-Patman Act (“RPA”). The Commission voted 3-2 along party lines to file the lawsuit in federal district court, with the two Republican-appointed Commissioners—Commissioners Melissa Holyoak and Andrew Ferguson—issuing strongly worded dissenting statements (see here and here, respectively). Prior to this case, the federal antitrust agencies—the FTC and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”)—had not brought an enforcement action under the RPA in more than two decades.

The Robinson-Patman Act:

According to the Supreme Court in Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc.,546 U.S. 164, 175 (2006), Congress enactedthe RPA in 1936 to “target the perceived harm to competition occasioned by powerful buyers” in response to the advent of large chain stores. At the time, Congress was worried that large firms could extract lower prices from manufacturers or suppliers than smaller businesses. Id.

The RPA covers several categories of conduct. Most relevant here, Section 2(a) makes it unlawful for any person “engaged in commerce” to “discriminate in price between purchasers of commodities of like grade and quality” where the effect of such discrimination may be to lessen competition, tend to create a monopoly, or injure competition with any person who receives the benefit of such discrimination or their customers. There are several potential legal defenses to this provision, including that the price difference was justified by costs incurred by the seller, that the lower price was available to all customers, that the price differential did not cause the customer that paid a higher price to lose sales, and that the price difference was the result of meeting a competitor’s price.Continue Reading FTC Brings First Robinson-Patman Act Case in More Than Two Decades

On October 10, 2024, the federal antitrust agencies finalized the most significant changes to the U.S. merger notification regime since the enactment of the Hart-Scott-Rodino (“HSR”) Act in 1976. The Final Rule—which was issued by the U.S. Federal Trade Commission (“FTC”) with the concurrence of the Antitrust Division of the Department of Justice (“DOJ”) (together, “the Agencies”)—will significantly increase the burden on companies whose transactions must be notified to the Agencies pursuant to the HSR Act.

The Final Rule will become effective 90 days after publication in the Federal Register, meaning that the expanded filing requirements will take effect no earlier than mid-January 2025.

Although the Agencies significantly scaled back the changes they originally proposed in June 2023, the Final Rule will still fundamentally reshape the HSR process. According to the Agencies themselves, filings in most cases will take additional time to prepare and become much more expensive, which could extend deal timelines.

Notable new requirements include:

  • adding a “supervisory deal team lead” to the individuals from whom transaction-specific documents must be collected;
  • requiring production of certain non-transaction specific documents that analyze competitive overlaps relevant to the Transaction that were provided to the CEO (or CEOs of subsidiaries involved in the transaction) or members of the board;
  • submission of narrative descriptions of each strategic rationale for the transaction and of any horizontal overlaps or vertical relationships between the parties; and
  • providing the most recent year’s sales data for each overlapping product or service between the parties.

The FTC vote to issue the Final Rule was unanimous. The FTC and DOJ each issued press releases to accompany the issuance of the Final Rule, FTC Chair Lina M. Khan issued a statement (joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya), and Commissioners Andrew N. Ferguson (here) and Melissa Holyoak (here) each issued a statement as well. Commissioner Holyoak’s statement identifies many of the key differences between the Final Rule and the proposed rule.Continue Reading FTC and DOJ Announce Final Rule Reshaping HSR Filing Requirements

In the past several months, two state courts in the District of Columbia and California decided motions to dismiss in cases alleging that the use of certain revenue management software violated state antitrust laws in the residential property rental management and health insurance industries.  In both industries, parallel class actions…

Continue Reading State Courts Dismiss Claims Involving the Use of Revenue Management Software in Residential Rental and Health Insurance Industries

The European Court of Justice released its long-awaited judgment1 in the Google Shopping saga last week, finally putting to bed close to fifteen years’ of scrutiny into Google’s practices of favouring its own comparison shopping service (Google Shopping) over rival shopping services.

In its ruling, the ECJ upheld the General Court’s earlier judgment2 which had rejected Google’s appeal over the European Commission’s decision3 to fine it €2.42 billion for abusing its market dominance as a search engine by systematically favouring Google Shopping in its general search results.

The overall outcome of the ECJ’s reasoning in Google Shopping is perhaps unsurprising to competition law practitioners – given the unwavering direction of travel of the case. The ECJ judgment nevertheless raises a number of interesting points and leaves a number of questions unanswered.

Key takeaways

  • Refusal to supply. The judgment confirmed that not every issue of access necessarily requires the application of the Bronner test of refusal to supply. The ECJ found the Bronner doctrine applies in circumstances where a dominant firm refuses to grant a competitor access to infrastructure which it has developed for its own business needs. However, the ECJ ruled that the Bronner test is not applicable in cases where there is no outright refusal of access to infrastructure – but rather access granted on discriminatory terms (such discrimination being assessed under separate forms of potential abuse).
  • Competition not on the merits. The ECJ accepted Google’s arguments that, to establish an abuse of dominance under Article 102, a two-pronged test applies: (i) that actual or potential anticompetitive effects arise from the abusive conduct; and (ii) that the conduct falls outside of “competition on the merits”. However, in assessing the latter requirement, the ECJ rejected Google’s arguments that only circumstances relating specifically to Google’s conduct are relevant to the assessment. Instead, the ECJ held that, in assessing “competition on the merits”, relevant circumstances regarding the characteristics of the market or the nature of competition are capable of characterising the conduct as falling outside of the scope of competition on the merits.
  • Causality and counterfactual. The ECJ maintained that the causal link is one of the essential elements of a competition law infringement and that, as a result, the burden of proof for such causal link (and hence the counterfactual analysis) lies with the Commission. However, the ECJ found that the counterfactual analysis is just one way to establish causality. Where establishing a credible counterfactual may be “arbitrary or even impossible” (para 231), the Commission cannot be required to systematically establish a counterfactual and can rely on other evidence to establish causality.
  • “As-efficient competitors”. The ECJ reiterated earlier case law that it is not the objective of Article 102 to ensure that less efficient competitors remain on the market but also remarked that this statement did not imply that an abuse of dominance finding does not always require a showing that the conduct was capable of excluding an as-efficient competitor. With respect to the AEC test, the Court held that this is just one way to establish an abuse of dominance.

Continue Reading ECJ’s Google Shopping Judgment: The End of a Long Saga

The European Commission’s draft guidelines on exclusionary abusive conduct by dominant firms under Article 102 TFEU (the “Draft Guidelines”) were published on 1 August 2024. They show a marked change from the 2009 Article 82 [now Article 102] Enforcement Priorities Guidance (the “Priorities Guidance”): economic concept has largely been replaced with the Commission’s interpretation of the European Courts’ caselaw.

The consultation on the Draft Guidelines is open until 31 October 2024. Practical suggestions rooted in and developing the caselaw appear more likely to influence the Commission’s final version of the Draft Guidelines than statements of economics.

Like the Priorities Guidance before it, the Draft Guidelines cover exclusionary conduct that the Commission views as concerning – conduct that benefits the dominant firm by excluding competitors from the market – and not exploitative conduct which benefits the dominant firm by exploiting its market power such as excessive pricing or the use of unfair trading conditions. Though in a departure from the Priorities Guidance, the Draft Guidelines do note overlaps between exclusionary and exploitative analysis: “the principles relevant to the assessment of dominance (section 2) and the justifications based on objective necessity and efficiencies (section 5) are also relevant for the assessment of other forms of abusive conduct, such as exploitative abuses” (paragraph 11 of the Draft Guidelines) and “the same conduct by a dominant undertaking may have both exclusionary and exploitative effects” (footnote 17 of the Draft Guidelines).

The Draft Guidelines also now cover collective dominance and not only single dominance, of which more below.

The Draft Guidelines are important because they signal not only how the Commission intends to apply Article 102 to dominant companies – arguably it is already doing so – but also how the Commission interprets the European Courts’ caselaw since the Priorities Guidance was adopted, and how the Commission wishes to influence the development of the caselaw in the future. In the period since the publication of the Priorities Guidance in 2009, the concepts set out in the Priorities Guidance have had mixed success in front of the European Courts. Some examples:

  • The Court of Justice in the Telia Sonera preliminary ruling said that there can be a margin squeeze even absent an obligation to deal (paragraph. 59), in implicit contradiction of the Priorities Guidance;
  • The General Court in Qualcomm, overturning the Commission’s decision, seemingly extends the relevance of the as efficient competitor test beyond the area of pricing abuses in the Priorities Guidance to exclusivity arrangements;
  • The Court of Justice in the Unilever Italia preliminary ruling and the Intel appeal affirming the use of the as efficient competitor test; and
  • The Court of Justice in the Post Danmark II preliminary ruling noting that less efficient competitors can sometimes constrain dominant companies (paragraph. 60).

Continue Reading From Concept to Precedent: The 2024 Draft Guidelines on Article 102

On August 5, 2024, Judge Amit Mehta of the U.S. District Court for the District of Columbia concluded that Google has monopolized markets for online searches and search text advertising and unlawfully engaged in exclusionary conduct in those markets. Specifically, the court found that Google used revenue sharing agreements with…

Continue Reading D.C. District Court Finds Google Monopolized Online Search Text Ads Markets

On 18 July 2024, the current President of the European Commission (“Commission”), Ursula von der Leyen, was reconfirmed by the European Parliament for a second 5-year term. As part of her reconfirmation, President von der Leyen delivered a speech before the European Parliament, complemented by a 30-page program, which lays down the Commission’s political program for the next five years.

A key pillar of the program – “A new plan for Europe’s sustainable prosperity and competitiveness” – has the objective of combining competitiveness and prosperity with the achievement of the European Green Deal goals.

Specifically on competition policy, according to President von der Leyen, a new approach is needed to achieve this objective. This blog post projects where competition policy is likely headed in the 2024-2029 period by commenting on the most relevant paragraphs of the program.

Von der Leyen: “I believe we need a new approach to competition policy, better geared to our common goals and more supportive of companies scaling up in global markets – while always ensuring a level playing field. This should be reflected in the way we assess mergers so that innovation and resilience are fully taken into account. We will ensure competition policy keeps pace with evolving global markets and prevents market concentration from raising prices or lowering the quality of goods or services for consumers. We will look at all of our policies through a security lens.”

  • This statement reaffirms the classic principles underlying competition law, i.e., the focus on ensuring a level playing field, preventing market concentration, and ultimately avoiding a negative impact on prices/quality of goods or services.
  • However, the President’s comments recognize the impact of global dynamics and the need for EU companies to be able to respond to global pressures. In the context of Siemens/Alstom and Lufthansa/ITA, there is growing pressure from EU Member States to allow European champions and this program could signal an openness to that effect.
  • The President also calls for an increased focus on innovation and resilience in the substantive assessment of mergers. This could mean (i) that the Commission will expand its assessment of the impact of ESG (Environmental, Social, and Governance) standards and security, (ii) that the Commission would be open to a greater role of wider efficiency justifications/public interest considerations in merger control and competition law assessments, and/or (iii) that the impact on the overall economic competitiveness of the EU, and the aim of geopolitical de-risking for critical supply chains and technologies, may play an increasingly important role in the assessment of mergers.

Continue Reading The 2024-2029 Commission Political Guidelines: Where Is Competition Policy Likely Headed?

On July 9, 2024, the Federal Trade Commission (“FTC”) voted 4-1 (with Commissioner Melissa Holyoak dissenting) to release an Interim Staff Report (the “Interim Report”) entitled: Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. The Interim Report describes what FTC staff has uncovered…

Continue Reading Federal Trade Commission asserts significant anticompetitive harms in Interim Staff Report on the pharmacy benefit manager industry

In line with its previous decision-making practice (see our previous sustainability blog posts here and here), on 8 May 2024, the German Federal Cartel Office (“FCO”) declared the implementation of a new European industry standard for reusable pot plant trays compatible with competition law.

Since 2021, companies and associations…

Continue Reading FCO gives green light for ‘greener’ plant trays