Recent headlines blare warnings that antitrust authorities are targeting tech companies. Indeed, the siege on Big Tech runs the gamut from multi-state enforcement actions, to federal investigations, to congressional inquiries and threatened legislative action.
The Big Tech frenzy, albeit real, gives the digital economy an outsized feel. Although the focus has been on the digital economy, it accounts for only 10% of U.S. GDP. So what antitrust enforcement should the rest of the economy expect?
Antitrust enforcement is poised to rebound under the Biden administration, further bolstered by reported plans for a new White House “antitrust czar” and antitrust budget increases for both the DOJ and the Federal Trade Commission. In addition to Big Tech, several industries already are in the cross-hairs, including health care, defense and public procurement, pharmaceuticals, labor, and energy.
The Department of Justice’s antitrust enforcement fell dramatically during the Trump administration, averaging 22 criminal cases each year—approximately one-third of the Obama average. Criminal antitrust fines dipped from over $1 billion each year in 2012-2014 , to a low $67 million in 2017.
Defense and Public Procurement
More than one-third of the DOJ’s Antitrust Division’s open investigations relate to bid-rigging in public procurement. That trend is poised to continue.
The DOJ’s Procurement Collusion Strike Force (PCSF), launched in November 2019, is gaining momentum in its second year. With a permanent director recently appointed, the strike force now boasts nearly 500 individuals focused on ferreting out anti-competitive conduct in procurements at the federal, state, and local levels.
The PCSF already has trained close to 10,000 procurement officials, agents, investigators, auditors, and data scientists on the heightened risks of collusion. Companies doing business with the U.S. government in foreign countries is a big focus, such as the five companies in South Korea that pleaded guilty in 2018 and 2019 for rigging bids to supply fuel to the U.S. military.
Health Care and Pharmaceuticals
The Biden administration will advance the existing campaign against pricing schemes and market concentration. President Biden’s platform commitment to “stand up to abuse of power by prescription drug corporations,” and “tackle market concentration across [the] healthcare system,” suggests antitrust enforcement in these areas will intensify.
Indeed, investigations started under the previous administration evidence bipartisan support for continuing enforcement in health care. In 2020, Florida Cancer Specialists & Research Institute LLC was charged in connection with an ongoing oncology industry market allocation investigation that so far has netted penalties exceeding $100 million. The DOJ also continued to charge generic drug makers, such as Glenmark Pharmaceuticals Inc. USA, for price-fixing and bid-rigging.
The FTC approved a merger involving Pfizer Inc.’s Upjohn Inc. and Mylan N.V., as well as AbbVie Inc.’s acquisition of Allergan Plc, but both deals were conditional and lacked the support of more than one FTC commissioner. And reaching beyond statutory thresholds under Hart-Scott-Rodino (HSR), Commissioner Rohit Chopra joined a 2020 statement that “encourage[d] the Commission to analyze sub-HSR deals in [the healthcare industry].”
Depending on the composition of the FTC going forward, similar mergers and acquisitions may not obtain approval at all.
Wage-Fixing in Labor Markets
In 2016, the DOJ and FTC jointly announced that agreements between companies to set wages—or not to poach one another’s employees—would face criminal prosecution. The DOJ followed through on its promise with back-to-back charges in two separate investigations.
First, the DOJ announced wage-fixing charges against the owner of a health-care staffing company that allegedly agreed with competitors on wages to be paid to physical therapists in Texas. And in January 2021, the DOJ charged Surgical Care Affiliates Inc. for allegedly agreeing not to hire senior-level employees away from competitor employers.
These initiatives appear to enjoy support at the highest levels. “It’s simple,” President Biden tweeted, “companies should have to compete for workers just like they compete for customers.”
The Texas power grid’s recent failure highlights the national conversation about the new administration’s race to clean energy, and antitrust enforcement in the transition away from carbon-based fuels will be something to watch.
In the Trump administration, antitrust enforcement in energy was not a priority. The investigation of four automakers in 2019 for agreeing to meet California emissions standards—which exceeded the federal requirements—was the most prominent; the reportedly “legally-dubious” investigation closed in February 2020 amid criticism, including DOJ whistleblower testimony. Under the new administration, these automakers are more likely to be applauded than subpoenaed.
Biden’s Jan. 27 executive order on climate change “put[s] the climate crisis at the center of United States foreign policy and national security.” Biden’s pledges to eliminate electricity-sector carbon emissions by 2035 and achieve a carbon-free U.S. economy by 2050 will require major disruptions in the status quo.
The executive order halts oil and gas leases on public lands and offshore waters, directs the OMB to eliminate all fossil fuel subsidies going forward, and orders agencies to prioritize spending on clean energy and infrastructure.
The DOJ and FTC actions are likely to be consistent with the administration’s goals to ensure full and free competition among clean energy technologies. Traditional energy companies should expect vigilant opposition to any efforts to thwart competition from, or otherwise inhibit growth in, clean energy production.
Increased antitrust enforcement is a Biden administration priority, and, despite recent headlines, Big Tech is not alone under the microscope.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Craig Seebald is a partner in the Antitrust Group of Vinson & Elkins LLP and over a 30-year career has defended numerous companies in antitrust investigations. He is the managing partner of the firm’s Washington, D.C., office, and co-head of the firm’s Complex Commercial Litigation practice.
Lindsey Vaala is a counsel at Vinson & Elkins LLP. She represents companies and individuals in a variety of investigations, litigation, and counseling matters in the U.S. and abroad, with an emphasis on antitrust-related issues. She currently co-chairs the ABA Antitrust Section’s Cartel & Criminal Practice Committee.
Molly McDonald is an associate at Vinson & Elkins LLP where her principal area of practice is complex commercial litigation, with a focus on antitrust matters.