The Biden administration's recent high-profile announcements of two new antitrust-related "forces" are the latest in its ongoing efforts to aggressively enforce the antitrust laws. These forces come on the heels of renewed enforcement of existing statutes that had largely fallen out of use by previous administrations and exploration of new and broader theories of harm.
The Biden administration's expansive view of antitrust and its use of tools such as task/strike forces is likely to result in even more investigations as well as potential litigation over business practices. A snapshot of the Biden Administration's recent actions is below.
Forces for Enforcement
Following on the existing Procurement Collusion Strike Force, the Biden administration in the last two months has announced the creation of two new efforts to investigate competition concerns.
Strike Force on Unfair & Illegal Pricing
On March 5, 2024, the Biden Administration announced the creation of an inter-agency "Strike Force on Unfair and Illegal Pricing" led by the Department of Justice (DOJ) and Federal Trade Commission (FTC) to "root out and end illegal corporate behavior that raises prices for Americans through anti-competitive, unfair, deceptive, or fraudulent business practices."The Strike Force will focus on "critical sectors" including housing, pharmaceuticals, health care, food and grocery, transportation, and financial services.
Task Force on Health Care Monopolies & Collusion
On May 9, 2024, the DOJ Antitrust Division announced the formation of a Task Force on Health Care Monopolies and Collusion which "bring together civil and criminal prosecutors, economists, health care industry experts," and others from across DOJ to look at a variety of competition concerns in health care including "payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, health care IT services, access to and misuse of healthcare data and more." The task force is meant to "guide the division's enforcement strategy and policy approach in health care[.]"
Old, But Not Forgotten
The DOJ and FTC have shown a particular focus on investigations and enforcement actions under a variety of federal statutes that had previously fallen into disuse.
FTC Act Section 5
Section 5 prohibits "unfair or deceptive acts or practices in or affecting commerce[.]"15 U.S.C. § 45. Historically, the law was used to reach "incipient violations" and conduct that violates the "spirit," if not the letter, of the antitrust laws. In a November 2022 Policy Statement, the FTC set-forth its interpretation that Section 5 prohibits a broader set of conduct than the traditional antitrust laws (the Sherman and Clayton Acts), and expressed the intention to begin enforcement activities under that statute going forward against conduct that the agency deems coercive, exploitative, or collusive.
Since then, the FTC has targeted various non-compete agreements and information exchanges under Section 5, entering into several consent decrees prohibiting specific conduct alleged to be "unfair or deceptive." See In re Anchor Glass Container Corporation and In re QEP Partners, L.P. Most recently, on April 23, 2024, the FTC cited Section 5 as authority for approving a near total and national ban on employer-employee non-compete agreements.
1936 Robinson-Patman Act
The Robinson-Patman Act prohibits price discrimination—charging different buyers different prices for the same commodity—and other related conduct. 15 U.S.C. §§ 13-13c, 21a. While private actions under the Robinson-Patman Act have been consistent, the federal government has not brought a case under the Robinson-Patman Act for over 20 years. This could be changing, within the past year, the FTC has initiated investigations into the soft drink and wine & spirits industries for potential price discrimination violations.
Chair Khan recently said reviving the Robinson-Patman Act is "[a] big focus" of hers. And in 2022, Commissioner Alvaro Bedoya also touted the Robinson-Patman Act's lesser-known prohibition on commercial bribery as a way to combat high drug prices in connection with the FTC's 6(b) study of the pharmacy benefit managers industry. Despite these renewed efforts to investigate potential Robinson-Patman violations, no public enforcement actions have been taken to date. Legislators have also shown renewed interest in the Robinson-Patman Act. Senator Warren along with other Senators and Members of Congress recently wrote a letter to the FTC, focusing on the food industry and urging the FTC to "investigate potential RPA violations and, when merited, bring lawsuits under the RPA to protect small businesses, farmers, workers, and consumers"
Broadening Interpretations
In addition to revitalizing old laws, the DOJ and FTC have sought to broaden the interpretation of numerous existing laws to expand the scope of their enforcement toolkit.
FTC Act Section 6(b)
The FTC's specific investigative and rulemaking powers are codified in Sections 6, as well as Sections 9 and 20 of the FTC Act, 15 U.S.C. § 46, 49, and 57b-1. Section 6(b) allows the FTC to investigate business conduct by conducting studies of industries and markets based on public interest concerns. In the past few years, the FTC has utilized this power to institute several far-reaching investigations of industries and business practices including small business credit reporting, grocery stores and supply chain disruptions during the COVID-19 pandemic, the car rental industry, misleading or fraudulent advertising, Pharmacy Benefit Managers, and generative AI, among others. No public enforcement actions have risen out of these investigations to date.
FTC Act Section 6(g) & Non-Compete Ban
Section 6(g) states "[f]rom time to time [the FTC may] ... make rules and regulations for the purpose of carrying out the provisions of this subchapter." The FTC cites Section 6(g) as authority for its recent and highly controversial ban on employer-employee non-compete agreements. The FTC's position is that Section 6(g) read together with Section 5, allows the agency to promulgate the Non-Compete Rule, presuming that non-competes are virtually always "unfair or deceptive acts or practices." This already is being litigated vigorously as an unprecedented overreach of FTC authority.
Criminal Prosecutions
The past few years have seen a renewed interest in antitrust criminal prosecutions. In addition to an increase in the number of criminal cases brought, DOJ has used its criminal authority to prosecute a wider variety of conduct including no-poach agreements. These recent cases have had mixed results.
Merger Guidelines
In late 2023, the FTC and DOJ released their revisions to the Horizontal Merger Guidelines that, among other things,lower the threshold for a "presumption" that a merger is illegal under the antitrust laws, increase emphasis on vertical mergers, labor markets, and serial acquisitions, and further decrease the weight to be afforded to the merging parties' arguments on the merger's potential efficiencies The FTC relied on these new guidelines in bringing its challenge to the Kroger/Albertsons merger which included the allegation that the deal would harm competition in the FTC's proposed market for "union grocery labor", an untested legal theory.
Key Takeaways
The DOJ and FTC's expansion of enforcement efforts to broader theories of harm and to revive seldom used laws—and the legal challenges to their authority to do so—are slowly working their way through the courts. Companies accused of violating the law under these expanded theories of harm are fiercely fighting the accusations and many are bringing pre-emptive challenges to new rules and regulations. The result is an unsure legal landscape.
The current election cycle also contributes additional uncertainty here. While the agencies' aggressive enforcement efforts may be unwound if Republicans win the White House in November, if President Biden secures reelection, the agencies are likely to continue to follow through on their new and expansive efforts to address anticompetitive or unfair conduct in the business community.
Because of the broad range of business practices that are potentially implicated by these new initiatives and expanded interpretations, it is important for businesses to remain aware of the agencies' new and renewed enforcement mechanisms in order to properly mitigate the risks of potential investigation or enforcement action these aggressive enforcement priorities may carry. This is especially true in "critical sectors" like healthcare, financial services, and other sectors with high consumer visibility. Even if scrutiny by the antitrust enforcers does not culminate in any enforcement action being taken, responding to a federal investigation into a company's business practices can be time-consuming, disruptive, and costly.
Originally published by Bloomberg Law, May 2024.
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