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Sponsored briefing: The new antitrust

Eugene Sokoloff discusses what the Biden Administration’s antitrust overhaul means for litigation and enforcement

The confirmation last October of Jonathan Kanter as head of the influential antitrust division at the US Department of Justice completed an overhaul that could portend a progressive revolution in American competition law. Kanter is the last in a trio of key picks by President Joseph R. Biden’s Administration, following the appointment in March of Tim Wu to a seat on the National Economic Council, which advises the President on economic policy, and the confirmation in June of Lina Khan as chair of the Federal Trade Commission, which polices business practices.

All three made names for themselves as critics of Big Tech – Khan and Wu as law professors, Kanter as an attorney for some of the world’s leading tech companies. But their ascendance represents far more than a change in policy toward Silicon Valley. They are the leading edge of a new generation of antitrust thought leaders.

Since the early 1980s, successive Republican and Democratic administrations have largely shared an approach to competition law that focused on keeping output high and prices low. For progressives like Wu, Khan, and Kanter, this overriding focus on market outcomes at the expense of market structure fails to take account of competition policy’s impact on workers, innovators, and independent entrepreneurs. That fundamentally different perspective portends much more than the shift in enforcement emphasis typically associated with a change in presidential administration.

A ‘whole-of-government’ approach

The Biden Administration’s embrace of this new vanguard – sometimes called the New Brandeisians, after the great US Supreme Court Justice Louis Brandeis – is not just about personnel. In July 2021, President Biden issued a 72-point executive order setting out his administration’s approach to competition policy. The order directed executive branch agencies to focus on anticompetitive practices in labour markets, as well as increased concentration in agricultural markets, healthcare markets, and the tech sector.

The July 2021 order also heralded a broader evolution in how the government implements competition policy. Antitrust enforcement has traditionally been the purview of the FTC and Department of Justice. But the order announced a new ‘whole-of-government’ approach that calls on more than a dozen federal agencies, from the Federal Communications Commission and the Commerce Department, to the Department of Health and Human Services and the Consumer Financial Protection Bureau, to take an active role in shaping the markets in the industries they regulate.

The new rules of the road

The Administration’s immediate priorities include a shakeup in the enforcement guidance relied upon by industry participants and courts alike as definitive statements of federal antitrust policy. One of Ms Khan’s first acts as FTC chair was to rescind a 2015 policy document that constrained the agency’s use of its authority to police ‘unfair methods of competition.’ The Commission later withdrew from the guidelines for vertical mergers it issued jointly with the Department of Justice in 2020, ultimately prompting the agencies to announce in January that they would overhaul all guidance for vertical and horizontal mergers. And the department has begun the process of replacing its policy on the licensing of standard-essential patents – critical to everything from automobiles to mobile phones and computers.

The Administration’s immediate priorities include a shakeup in the enforcement guidance relied upon by industry participants and courts alike as definitive statements of federal antitrust policy.

The Administration is also signaling a more muscular response to perceived violations of the antitrust laws. Mr Kanter’s antitrust division has brought on seasoned prosecutors from DOJ’s criminal division. In a January 2022 speech, Kanter announced that the Department would emphasise litigation over settlements. It has filed criminal charges in several cases involving so-called ‘no-poach’ agreements that limit labour mobility. And just last month, another DOJ official said that the department would consider criminally prosecuting monopolists – something that has not happened in more than 40 years. While the FTC has no criminal enforcement authority, it has ramped up administrative and civil enforcement actions.

Setting the tone, and lending a hand, in private litigation

The Biden Administration’s antitrust overhaul is most likely to affect industry through merger clearance and enforcement actions. But it will also impact private litigation. US antitrust law gives private plaintiffs the right to bring claims for damages and injunctive relief under the antitrust laws. When that litigation touches on key policy priorities, the government will sometimes intervene to offer its views.

The Department of Justice has filed briefs in civil suits challenging no-poach and non-compete agreements, articulating the department’s view that such agreements should sometimes be treated as presumptively illegal. The shift in policy has also led the government to sit out cases in which the previous administration filed briefs advancing policies that are now under review. Even where the government does not intervene, courts often look to the merger guidelines and other policy documents to aid in the analysis of complex antitrust questions. Any revision to those guidelines is therefore likely to help set the tone for private civil enforcement, as well.

What comes next?

The question now is whether the new antitrust is here to stay. Without legislation, Mr Biden’s policy changes may not survive his administration. There is bipartisan support for reining in Big Tech. Several Republican Senators recently joined Democrats in advancing a bill that would clamp down on acquisitions by tech platforms of potential competitors. But that bipartisanship has been missing elsewhere. Some Republicans have expressed skepticism about a sweeping proposal to overhaul the antitrust laws that would, among other things, make it easier to block mergers. And the FTC has split on party lines over many of Ms Khan’s initiatives. If Republicans regain control over the House or Senate in the 2022 midterm elections, Mr Biden will need their support to advance his agenda.

The new antitrust also faces an uncertain future in court. An overly aggressive approach to enforcement could trigger judicial backlash, particularly from courts that have grown accustomed to analysing competition questions through the long-dominant lens of consumer welfare. At the same time, concerns over the concentration of market power, particularly in Big Tech, may mean that a progressive approach to competition law has found its moment.

Eugene Sokoloff
MoloLamken LLP

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