Antitrust

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 Northern District of Illinois recently denied certification to several proposed classes of purchasers of a seizure drug called Acthar in City of Rockford v. Mallinckrodt ARD, Inc., No. 3:17-cv-50107, 2024 WL 1363544 (Mar. 29, 2024).  Class plaintiffs had alleged that defendant Express Scripts, a drug distributor, conspired with…

Continue Reading Court Denies Class Certification in Antitrust Case Based on Expert’s Reliance on Unsupported Assumptions in Damages Model

On January 5, 2023, the Federal Trade Commission (“FTC”) issued a groundbreaking proposed rule that would, if finalized:

  • prohibit most employers from entering into non-compete clauses with workers, including employees and individual independent contractors;
  • prohibit such employers from maintaining non-compete clauses with workers or representing to a worker that the worker is subject to a non-compete clause; and
  • require employers to rescind any existing non-compete clause with workers by the compliance date of the rule and notify the affected workers that their non-compete clause is no longer in effect.

The FTC’s notice of proposed rulemaking explains that the FTC considered possible limitations on the rule—such as excluding senior executives or highly paid employees from the ban—but it ultimately proposed a categorical ban on non-competes.  The only exception is for non-competes related to the sale of a business.  However, even this exception is unusually narrow: it would only apply to selling business owners who own at least 25% percent of the business being sold.  (The proposal also would not apply to most non-profits, certain financial institutions, common carriers, and others who are also outside the scope of FTC regulation.)

As discussed in Covington’s January 5 client alert, the FTC explained that it issued the proposed rule due to its belief that non-competes reduce wages, stifle innovation and business, and are exploitative and unnecessary. Continue Reading FTC Proposes Rule to Ban Most Non-Competes

On 22 March 2022, the European Court of Justice (“ECJ”) issued two separate preliminary rulings – Bpost and Nordzucker – which clarify how the protection against double jeopardy (“non bis in idem principle”) should be applied in instances where an identical competition law infringement is sanctioned in parallel investigations, either by different regulatory authorities of the same EU Member State or by multiple national competition authorities (“NCAs”) from different EU Member States.

The key takeaways from the two judgments are as follows:

  • the non bis in idem principle applies to competition law due to the criminal aspect embedded in the relevant administrative penalties;
  • the non bis in idem principle only applies if the facts are identical – a mere reference to a fact in a decision is not sufficient to demonstrate that an authority has ruled on that element;
  • different national authorities can impose fines for an identical infringement if the legislation on which they rely pursues complementary objectives;
  • the non bis in idem principle also applies to situations where an NCA has granted leniency to a company such that only a declaratory finding infringement (without fine) can be made.

Background

In Bpost, the ECJ  examined whether the Belgian NCA could impose a fine on Bpost for an abuse of a dominant position (through the application of a rebate system) even though Bpost had already been fined for the same rebate system by the Belgian postal regulator.Continue Reading European Court of Justice clarifies scope of protection against double jeopardy in successive antitrust investigations

In Enel, a judgment of 12 May 2022 (C-377/20), the Court of Justice of the European Union (“CJEU”) complemented the framework for analysing exclusionary abuses developed in earlier case-law, notably where it applies to a context of market liberalisation:

  • Abuse: The concept of “abuse” relates to conduct that departs from “competition on the merits”. Conduct that an equally efficient competitor can replicate is generally not abusive (“equally efficient competitor test”).
  • Anti-competitive effects: While it is not necessary to demonstrate actual anti-competitive effects or the company’s intention to carry out an exclusionary strategy, such factors are relevant in assessing whether the conduct is abusive or not.
  • Harm: Conduct that harms consumers indirectly as a result of its effect on the structure of the market is per se abusive; it is not required to demonstrate an actual or potential direct harm to consumers.
  • Objective justification: The prohibition set out in Article 102 TFEU does not prohibit   conduct that is objectively justified and proportionate, or where the behaviour is counterbalanced or outweighed by pro-consumer efficiency-benefits.

The judgment largely endorses the opinion of Advocate General Rantos (see our blog post), but adds some important nuance.Continue Reading The CJEU sets out an analytic framework on exclusionary abuses in the context of market liberalisation