Author: Sean P. McConnell

It is extremely rare to see the Federal Trade Commission (“FTC”) pursue an enforcement action under the Hart-Scott-Rodino Act (“HSR Act”) for illegal pre-merger coordination, better known as “gun jumping.” Nonetheless, the FTC recently announced that certain crude oil producers will pay a record $5.6 million civil fine to settle allegations that they engaged in impermissible pre-merger conduct in violation of the HSR Act.

Earlier today, the FTC published its final rule changing the premerger notification requirements under the Hart-Scott-Rodino Act (HSR Act), making the effective date for using the new HSR Form February 10, 2025. The publication comes roughly a month after the FTC voted unanimously to issue a final rule making significant changes to the premerger notification process. Parties to certain mergers and acquisitions that are required to submit premerger notification forms may use the current HSR Form until February 10, 2025.

According to today’s press release, the premerger notification office (PNO) will publish a detailed overview of the HSR Form changes and will invite practitioners to submit questions of broad applicability and PNO staff will post answer to the website. As we previewed in our alert, front-loading the preparation of premerger notification materials will be critical to ensuring timely submission of the required materials under the new rule.

On May 23, 2024, the Department of Justice Antitrust Division (DOJ) and Attorneys General from 29 states and the District of Columbia sued Live Nation and its wholly owned subsidiary, Ticketmaster, for violations of federal antitrust law in the U.S. District Court for the Southern District of New York. United States of America, et al., v. Live Nation Entertainment, Inc., et al., No. 1:24-cv-03973 (S.D.N.Y. May 23, 2024).  Among other relief, the government is seeking to require the divestiture of Ticketmaster, a little over a dozen years after DOJ allowed Live Nation to acquire Ticketmaster.

The Complaint alleges that Live Nation “serves as the gatekeeper for the delivery of nearly all live music in America today.” DOJ and the Attorneys General allege that Live Nation controls “around 60% of concert promotions at major concert venues” and that Ticketmaster “controls roughly 80% or more of major concert venues’ primary ticketing for concerts and a growing share of ticket resales in the secondary market.” With that control as leverage, the Complaint alleges that Live Nation and Ticketmaster have violated Sherman Act Sections 1 and 2 and various state competition laws.

On March 23, 2024, the Justice Department Antitrust Division (DOJ) and Federal Trade Commission (FTC) jointly issued a Request for Information (RFI) on serial acquisitions and roll-up strategies, a consolidation strategy often used by private equity firms. The RFI seeks information from “any sector or industry in the U.S. economy, including, but not limited to, housing, agriculture, defense, cybersecurity, distribution, construction, aftermarket/repair, and professional services markets.  The RFI is intended to complement the federal government’s investigation into healthcare competition.

The public has 60 days to submit comments to the RFI, meaning until July 22, 2024. According to the RFI, public comments will inform FTC and DOJ enforcement priorities and future actions.

The Department of Justice (DOJ) Antitrust Division’s newly formed Task Force on Health Care Monopolies and Collusion (HCMC) “will guide the division’s enforcement strategy and policy approach in health care, including by facilitating policy advocacy, investigations, and where warranted, civil and criminal enforcement in health care markets,” according to its May 9, 2024 announcement.

The HCMC announcement came on the same day that Assistant Attorney General Jonathan Kanter discussed DOJ’s antitrust enforcement efforts with the Washington Post. In that interview, AAG Kanter stated that “[t]he platformization of health care has resulted in multi-sided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks.” The HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry,” according to DOJ’s press release. Katrina Rouse will lead the HCMC.

The HCMC is yet another effort in the so-called “whole-of-government” approach articulated by the Biden Administration to enforce the antitrust laws, in particular with respect to the health care industry. In March, DOJ, with the Federal Trade Commission and U.S. Department of Health and Human Services, jointly issued a Request for Information requesting public comment on transactions in the health care space. Earlier this month, the agencies extended the comment period by 30 days with the new deadline being June 5, 2024.

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.

A proposed class of McDonald’s employees will proceed with their case alleging that franchise agreements used by McDonald’s contained provisions that violated federal antitrust law after the Supreme Court declined McDonald’s petition to review a decision by the Seventh Circuit in Deslandes v. McDonald’s USA, LLC.  The circuit court held that plaintiffs sufficiently alleged that a no-hire provision in McDonald’s franchise agreements was presumptively illegal under federal antitrust law without consideration of the provision’s procompetitive impact on other markets, including the sale of McDonald’s food and beverages.

Whether certain employment restraints, such as no-poach and no-hire provisions, violate the federal antitrust laws has been an issue of much debate over the last several years. DOJ dropped its last criminal no-poach case in November of last year after several high-profile failures to convince judges and juries to treat such provisions as per se violations of the Sherman Act. Deslandes v. McDonald’s is required reading for any corporate counsel handing antirust class action litigation involving no-poach or non-solicitation issues.

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.