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ANALYSIS: Is Antitrust Litigation at a Crossroads in 2021?

Nov. 16, 2020, 9:20 AM

Antitrust litigation, in the form of both public and private enforcement, looks to be entering a period of serious upheaval.

Both the U.S. and the European Union have begun a fundamental policy debate about the purpose of their antitrust laws, their appropriate scope, and who should be allowed to enforce them. As this debate simmers among U.S. antitrust stakeholders, for the first time since the 1970s, the practice may be in for a tectonic shift.

The four developments with the most potential to impact antitrust and trade litigation in 2021 are:

  1. the introduction of possible new tools for enforcers,
  2. the pending Supreme Court cases that could kick the FTC out of the consumer redress business,
  3. the court battle over further narrowing the right to bring class actions, and
  4. the rise of more enforcers worldwide.

New Enforcement Tools?

The U.S. and EU have separately proposed to give enforcers new tools to attack anticompetitive conduct. Both attempt to address how digital markets differ from traditional markets, and what many perceive as overweening power for a few digital platforms. The reforms could spell a reset of digital markets, and of antitrust law more broadly, in 2021 and beyond.

A much-awaited report from the U.S. House of Representatives proposes sweeping legal changes to private and public antitrust enforcement to “recalibrate” U.S. antitrust law. It also puts a bullseye on the back of the tech giants.

Among other recommendations, the House report advocates moving the U.S. toward an “abuse of dominance” standard like the EU’s. It also supports legislatively erasing court precedents that have critically narrowed the path to winning lawsuits filed under Sherman Act § 2.

Given that the last major change to U.S. antitrust statutes was in 1976, if enacted, the proposed changes likely would begin at least a decade of new lawsuits reckoning with concentrated markets. Meanwhile, the DOJ has challenged Google Inc.‘s online empire under the existing law, a rare public enforcement case alleging monopoly.

The report’s recommendations are controversial, and the outcome of the U.S. Senate elections likely will dictate whether legislative change materializes. David Cicilline (D-RI), the chair of the House Judiciary Committee’s Antitrust Subcommittee, has pledged to propose legislation based on the report as soon as possible.

In the EU, the Competition Commission has proposed a “new competition tool” that would permit the commission to intervene in tipping markets even before a player becomes dominant. The proposed new tool will be part of a Digital Markets Act for use in those markets, where the “winner take all” effect makes early action crucial to preserving competition. It could still be used outside of digital markets, because the tool isn’t yet a reality. But even in limited use, the proposed tool represents a radical change for EU enforcers: an experiment in stopping potential problems to competition before they mature into legal violations.

Threats to the FTC’s Role

2021 could see a radical shift in the role of the U.S. Federal Trade Commission in antitrust and consumer protection enforcement. During the 2020–2021 term, the Supreme Court will hear two cases (consolidated) addressing the power of the FTC to seek injunctive relief in federal court.

If the FTC loses its powers to seek disgorgement and to address past wrongs through an injunction, it will be forced to rely more on its administrative process to bring claims. While that gives the Commission more of a direct say in how the law progresses, it could end the FTC’s ability to seek redress for defrauded consumers, depriving the agency of a hammer in forcing companies to clean up their act.

On the other hand, Commissioner Rohit Chopra encourages the agency to return to using its penalty power under 15 USC § 45(m), which explicitly allows the FTC to seek penalties in court against unfair conduct that violates a standing cease-and-desist order. Those penalties are limited to $10,000 per violation, however, and therefore aren’t related to losses consumers have suffered.

While the agency has options, new methods would lead to a sharp turn from its long-standing practices.

A Harder Path for Class Actions

Changes in class action law could also upend antitrust (and consumer protection) litigation, given the prominent role of big consumer and direct purchaser class actions in the field. Relying on two Supreme Court cases from the 1800s, the U.S. Court of Appeals for the Eleventh Circuit recently held that any incentive award for named plaintiffs who participate in a lawsuit on behalf of the class is illegal.

A complete ban on plaintiff incentive awards, if it stands, would make it more difficult to recruit plaintiffs to represent large classes, like those that bring antitrust consumer actions. Defendants are sure to appeal, and other cases will test these waters.

The right to bring class actions is narrower each year. Next to criminal charges, big treble-damages civil actions are what keep U.S. antitrust defendants awake at night. If that threat is neutralized, private antitrust enforcement becomes an entirely different field.

Flexing Enforcers, Growing Voices

The growing role of newer enforcers outside of the U.S. continues to be an important trend to watch. The German Bundeskartellamt, armed with a new competition statute, continues to grow in international stature as a leading enforcer.

The Australian Competition and Consumer Commission is likewise testing its strength against tech and telecom players and, according to Chair Rod Sims, needs an unfair trade practices law and additional powers to regulate market power in infrastructure.

China is also flexing the muscles of its State Administration for Market Regulation, including potential changes to its antimonopoly law that target tech companies and new merger control rules.

Increasingly, global companies face global antitrust enforcement. In 2021, expect to see more from the 132 countries in the international competition network.

Access additional analyses from our Bloomberg Law 2021 series here, including pieces covering trends in Litigation, Transactions & Markets, the Future of the Legal Industry, and ESG.

Bloomberg Law subscribers can find related content on our Antitrust Practice Center resource.

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