Federal Enforcers Sketch Outlines of New Era in Anti-Competition

Top federal agency leaders previewed plans for broader antitrust enforcement at the 2023 ABA Antitrust Spring Meeting. The expansive view of the government’s role in preserving competition will involve more actions and more agencies, and reviving dormant enforcement tools and strategies.

No-Poach, No-Hire, and Wage-Fixing Agreements

The Department of Justice’s Antitrust Division has been busy investigating and litigating cases that affect workers. Deputy Assistant Attorney General Manish Kumar stated that these cases “are about protecting the economic freedom of individuals to sell their labor into a competitive market and therefore earn a livelihood.”

Given the DOJ’s appetite for bringing labor market cases, an antitrust compliance program tailored to human resources professionals is now crucial.

Criminalization of Monopolization

Enforcers sent a clear signal that they will bring more criminal cases alleging monopolization under Section 2 of the Sherman Act. Last year, the DOJ brought its first such case in decades when it charged a defendant with attempted monopolization of the market for highway crack-sealing projects that prevent water, sand, and dirt from damaging road surfaces.

This is an important reminder that even a mere invitation to collude can be prosecuted criminally. Those who think their company is too tiny or too niche to worry about complying with antitrust laws should think again. As recent prosecutions demonstrate, even small and specialized firms face antitrust risk and criminal exposure.

More Aggressive Merger Enforcement Strategy

Leadership at both the DOJ and Federal Trade Commission expressed concern that fear of overenforcement has led to underenforcement of antitrust laws, especially regarding mergers and acquisitions. They contend that too often divestiture and other remedies have proven insufficient to preserve competition.

Increased Interest in Vertical Deals

Both agencies are increasingly focused on mergers that involve vertical relationships and adjacent markets, particularly in technology and digital industries. While the agencies have not had much success blocking vertical deals, we expect them to challenge more acquisitions.

Concern Over Industry Rollups

The agencies are paying close attention to roll-up strategies where private equity firms or strategic buyers engage in a series of acquisitions. The DOJ and FTC are exploring ways to better monitor and enforce potentially anticompetitive rollups, such as requiring prior notice and approval requirements of future transactions in consent orders.

Systematic Enforcement of Interlocking Directorates

Assistant Attorney General Jonathan Kanter emphasized the DOJ’s efforts to identify and prevent interlocking directorates under Section 8 of the Clayton Act. More than 15 directors have already stepped down from boards of competing companies as a result of DOJ inquiries, and around 20 more investigations are underway.

Notably, several of these interlocks involved representatives from private equity companies. The DOJ has adopted the “deputization theory,” which finds an unlawful interlock where an entity—such as a private equity firm—has appointed agents or representatives to the board of competing companies. This is the case regardless of whether the same individual serves on both boards.

Price Discrimination Is Being Heavily Scrutinized

The FTC is keen to pursue price discrimination cases under the Robinson-Patman Act, which has seldom been used since the 1980s. RPA prohibits charging different prices or offering different promotional allowances to competing retailers of commodities.

Antitrust concerns arise when some resellers are given an edge in the market that has nothing to do with their superior efficiency or service. Discrimination in promotional allowances (such as marketing support) may also be a violation.

Importantly, the buyer can be liable along with the seller if the buyer knowingly induces and receives discriminatory pricing or promotional allowances. Commissioner Alvaro Bedoya said that the FTC is strongly considering buyer liability in RPA cases.

Bedoya said that the RPA “is a democratically enacted law, it remains a good law ... If you think the law shouldn’t be enforced, the burden is on you to prove why.” Chair Lina Khan also suggested that RPA cases are coming.

Information Sharing Safeguards No Longer Apply

The DOJ indicated that prior guidance on information sharing no longer “makes sense” in a world where it is easy to leverage big data and machine learning. Because aggregated data can be disaggregated, aggregation isn’t necessarily a safeguard against anticompetitive conduct.

The same is true of sharing information through third parties. Companies should consider these three key questions: what information is being shared, how is it being used, and what is the impact on output, price, and competition?

Unfair Competition Cases Are Coming

The FTC is poised to bring cases under Section 5 of the FTC Act. It has taken the position that Section 5 could reach conduct that falls short of a Sherman Act violation where it is coercive, exploitative, collusive, abusive, deceptive, predatory, or involves the use of economic power of a similar nature. Whether these efforts will be successful remains to be seen, but this is clearly a high priority for the agency.

Whole Government Approach

Channeling President Joe Biden’s call for a whole-of-government approach in his executive order Promoting Competition in the American Economy, enforcers from the DOJ and FTC touted increased coordination on competition issues with other agencies, including the Federal Communications Commission, Department of Defense, and Federal Aviation Administration.

This is an important reminder that the DOJ and FTC are not the only governmental entities with competition mandates. Antitrust enforcers predicted that we will see more action on competition issues from a broader set of federal agencies in the years ahead.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Shylah Alfonso is firmwide chair of Perkins Coie’s antitrust and unfair competition litigation practice.

Chris Williams is a partner in Perkins Coie’s antitrust and unfair competition litigation practice.

Henry Hauser is counsel in Perkins Coie’s antitrust and unfair competition litigation practice, and previously served as a general attorney for the Federal Trade Commission’s Technology Enforcement Division and as a trial attorney for the Department of Justice’s Antitrust Division.

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