FTC Bureau of Competition Director Says Companies Should Assume Agency Looking at Potential Section 5 Cases

Speaking at the American Bar Association Antitrust Section’s annual Spring Meeting on Friday, April 12, Henry Liu, Director of the Bureau of Competition at the Federal Trade Commission, said that parties that are under an antitrust investigation by the FTC should assume that the agency is looking not only at whether the conduct being investigated violates the Sherman Act, but also whether the conduct may fall into a “gray zone” and thus be subject to the FTC’s authority to police “unfair methods of competition” under Section 5 of the FTC Act.

Liu described this “gray zone” as encompassing conduct where, for technical reasons, the existing case law shows that the Sherman Act is a less attractive theory for the agency.  Nonetheless, if the FTC determines that the conduct “harms the competitive process” through nefarious means such as deception or coercive tactics, bringing a Section 5 claim is a viable option.  Enforcement of “gray zone” conduct under Section 5 is consistent with the FTC’s 2022 Policy Statement expanding the scope of what the FTC considers unfair methods of competition.

A potential example he cited is an invitation to collude, where there is not yet a reduction in competition.  For cases involving such conduct that is “adjacent” to violations of Sections 1 and 2 of the Sherman Act, Liu said that the FTC will not hesitate to bring “standalone” cases under Section 5; however, such standalone enforcement actions remain rare.

DOJ and 16 State Attorneys General Sue Apple for Monopolization

Continuing the government’s antitrust enforcement campaign against the tech industry, the DOJ Antitrust Division, along with 16 states, today sued Apple Inc., in federal court in New Jersey, making sweeping allegations of a widespread scheme to monopolize the market for smartphones in the United States. Specifically, the government plaintiffs allege that Apple violated Section 2 of the Sherman Act as well as Wisconsin and New Jersey state antitrust laws. With this lawsuit, the U.S. antitrust agencies now have pending monopolization actions against all four “big tech” companies: Apple, Google, Meta and Amazon.

The complaint alleges that Apple has a monopoly in two markets, the “smartphone” market and the narrower “performance smartphone” market, and that it has maintained its monopoly in both markets by anti-competitive restrictions on app developers and potential rivals. According to the complaint, these restrictions have allowed Apple to “extract higher fees, thwart innovation, offer a less secure or degraded user experience, and throttle competitive alternatives.”

Like the other government cases against the tech industry, this case promises to be a long drawn-out battle.

Is Increased Criminal Enforcement of State Antitrust Laws on the Horizon?

California Assistant Attorney General Paula Blizzard announced that California intends to start prosecuting criminal antitrust cases under the Cartwright Act, which makes it illegal to restrict commerce, prevent competition, or enter agreements to lessen competition. Speaking at the American Bar Association’s National Institute on White Collar Crime, California AAG Blizard noted that California has not brought a case in 25 years, but that the office intends to reinvigorate criminal antitrust prosecutions of its statute, which is more expansive than the federal Sherman Act. Individual violators of the Cartwright Act could face fines up to $250,000, or two times the loss from the anti-competitive conduct, and up to three years in county prison. Corporate violators could face a fine up to $1 million. In addition to familiarity with the federal antitrust laws, corporate counsel should be aware of applicable state antitrust statutes.

FTC, DOJ and HHS Launch Cross-Government Investigation Into Healthcare Competition

The Federal Trade Commission, Department of Justice’s Antitrust Division, and U.S. Department of Health and Human Services jointly issued a Request for Information requesting public comment on transactions in the healthcare space.  According to the agencies, there is increasing concern that private equity firms and other corporate owners are increasingly involved in healthcare transactions leading to greater consolidation, poorer quality of care, and less access to affordable healthcare. Continue reading “FTC, DOJ and HHS Launch Cross-Government Investigation Into Healthcare Competition”

Federal and State Antitrust Enforcers Reiterate Focus on Healthcare

Federal and state antitrust enforcers are keenly focused on potential anticompetitive conduct in the healthcare space.

Federal Trade Commission Chair Lina Kahn recently noted that “the FTC is squarely focused on tackling illegal business practices that deprive Americans of access to affordable and innovative healthcare” in a speech to the American Medical Association’s national advocacy conference.  According to Chair Kahn, medical professional consistently express frustration to the FTC “about how the business of healthcare today forces many [medical providers] to subordinate [their] own medical judgment to corporate decision-makers at the expense of patient health.” In response to those complaints, Chair Khan highlighted a few recent enforcement efforts, including scrutiny of group purchasing organizations, drug wholesalers, and pharmacy benefit managers; tackling unlawful consolidation in healthcare markets and roll-ups of healthcare providers. She also touted the FTC’s work protecting healthcare workers, tackling unlawful practices by pharmaceutical companies, including suits to block two major pharmaceutical mergers, and protecting patient privacy and data.

Continue reading “Federal and State Antitrust Enforcers Reiterate Focus on Healthcare”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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