Federal Trade Commission’s Historic Attempt to Drive a Mack Truck Through the Sherman Act

Key Takeaways
  • The Federal Trade Commission (FTC) issued a historic statement, setting out a new framework for assessing “standalone” claims of “unfair methods of competition” that can be brought by the FTC alone under Section 5 of the FTC Act and that do not independently violate the Sherman, Clayton or Robinson-Patman acts.
  • Although the FTC’s new interpretation of Section 5 is far broader and more aggressive than it has been in the past, it is unclear what conduct the FTC will deem “unfair” going forward and what criteria it will use to make that determination.
  • One commissioner dissented from the FTC’s statement, fearing that its unclear framework will create uncertainty for businesses, undermine consumer welfare and competition, and delegitimize the FTC’s enforcement efforts.
Introduction

Following its repudiation of its prior enforcement regime in July 2021, the FTC on Nov. 10 issued a Statement Regarding the Scope of “Unfair Methods of Competition” Under Section 5 of the Federal Trade Commission Act (Statement). The Statement, however, creates significant uncertainty for businesses seeking to predict (1) what conduct will be deemed by the FTC to run afoul of Section 5 and (2) what analytical structure the FTC will use to make that determination. We have considerable experience analyzing and successfully litigating the FTC’s authority under Section 5. We will continue to monitor this significant development as it unfolds and provide additional client alerts along with our analysis.

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Yer Out (For Now): MLB Dismissed from Antitrust Lawsuit Because of Historic Antitrust Exemption

In a decision that stunned no one (yet will garner plenty of headlines), a federal district court granted a motion to dismiss filed by Major League Baseball (MLB) on the basis of its storied antitrust immunity. Coming almost on the eve of the World Series, this decision (now under appeal) will surely keep the MLB’s antitrust exemption, unique for a sports league, front and center as Congress investigates its effects and considers legislation to eliminate it.

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DOJ Antitrust Brings First Criminal Monopolization Case in More Than 40 Years

Key Takeaways
  • U.S. v. Nathan Nephi Zito is the first criminal monopolization case in more than 40 years, reversing the Antitrust Division’s practice of pursuing monopolization cases only civilly.
  • The elements enumerated in the Zito plea agreement are the same elements required in a civil case, but prosecutors may encounter obstacles trying to prove these elements beyond a reasonable doubt to a lay jury in future criminal monopolization cases.
  • It remains to be seen if Antitrust Division prosecutors will seek jail time for Zito and how the court would calculate an appropriate sentence, as the sentencing guidelines contemplate conspiratorial conduct among horizontal competitors.

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Hospital Mergers: The Future of COPA Immunity

Open Plan Medical Hospital Ward with 4 beds ready for patients.  Specially prepared for a pandemic.

In October 2022, the Federal Trade Commission issued a Public Comment opposing a Certificate of Public Advantage (COPA) for the merger of State University of New York Upstate Medical University (SUNY Upstate) and Crouse Health System, Inc. The FTC’s Public Comment advises the New York State Department of Health that the merger would harm competition, and more generally reflects the Commission’s continued hostility to COPAs. So what are COPAs, and why is the FTC so critical of them?

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DOJ Antitrust Division Not Backing Down on Labor

Despite back-to-back losses in the Department of Justice’s (DOJ) first-ever criminal no-poach and wage-fixing cases, the Antitrust Division (the Division) is not backing down from its enforcement focus on labor. In fact, the Division and Assistant Attorney General Jonathan Kanter continue to proudly tout their continued aggressive stance, with Kanter recently stating that the Division is going to “continue to bring cases” and “will not back down.” 

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DOJ’s Kanter: New Merger Guidelines to Address Enforcement’s ‘Disconnect’ with Court Precedent and Market Realities

On Sept. 13, Assistant Attorney General Jonathan Kanter delivered remarks[1] at the Georgetown Antitrust Law Symposium, largely focusing on merger control enforcement at the Department of Justice (DOJ) under his leadership. After touting the Antitrust Division’s increased appetite for merger control litigation in the 10 months since his appointment, delivering on a promise that negotiated divestitures should be “the exception, not the rule,”[2] Kanter offered a preview of DOJ’s thoughts as it collaborates with the Federal Trade Commission (FTC) on updating their joint Horizontal Merger Guidelines and Vertical Merger Guidelines. President Biden instructed the agencies to review the merger guidelines in his 2021 Executive Order on Promoting Competition in the American Economy.[3]

Two themes emerged from Kanter’s remarks, which indicate likely objectives for the new merger guidelines: that speculative theories of harm are sufficient to block a deal under the Clayton Act and that, at times, direct evidence of competition dynamics can supplant a structural analysis of concentration in a fastidiously defined market.

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Federal Court Allows Price-Fixing Class Action to Proceed Against Universities

Price-Fixing Class Action University college campus

Seventeen of U.S. News & World Report’s top 25 universities in the nation recently lost their bid to dismiss allegations of an antitrust conspiracy to suppress student financial aid awards. The ruling by the U.S. District Court for the Northern District of Illinois is notable because it held that the “568 Exemption,” on which many universities’ financial aid systems are based, does not provide antitrust immunity unless all participating universities admit their students on a need-blind basis. It also highlights the risk in relying on narrow exemptions to the antitrust laws in reaching horizontal agreements with competitors.

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PGA Tour Wins First Round in Antitrust Legal Fight with Players

Empty golf cart on field. Golf bags on grass. Sports equipment on green landscape. PGA antitrust

On August 9, 2022, a federal judge hearing the antitrust lawsuit filed by 11 professional golf players against the PGA Tour ruled against three of the players who had sought a temporary restraining order. The order, if granted, would have allowed those three players who had qualified for the PGA Tour’s playoffs to play in this weekend’s FedEx Cup. Judge Beth Labson Freeman determined that the players knew the potential consequences of joining the rival LIV Golf circuit and thus emergency injunctive relief was not warranted. Further, because the players had already been compensated by LIV Golf, the Court found that they had failed to establish irreparable harm in being unable to play in the PGA Tour’s post-season.

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Is Antitrust Liability in the Future for the PGA Tour, and Beyond?

A pair of golfers bravely play on through a torrential rain shower

On August 3, 2022, 11 professional golfers, led by Phil Mickelson, filed an antitrust complaint in the Northern District of California against the PGA Tour for the actions it took against the golfers – including suspension from PGA Tour events – for their participation in events for the new Saudi-backed LIV Golf Invitational Series (LIV Golf). It is no secret that the new LIV Golf league seeks to compete with the PGA Tour, having publicly offered nine-figure payments to players joining its tournaments.

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Baseball’s Antitrust Exemption Marks Its 100th Anniversary with a New Challenge

Baseball blurred over stadium backdrop

For more than a century, minor league baseball and Major League Baseball (MLB) have thrived in a symbiotic relationship. Minor league teams affiliate with major league teams for financial support and access to major league staff. In exchange, major league teams receive a share of minor league revenue and access to budding talent. The year 2020 marked the expiration of an agreement governing these affairs. According to a case filed in the Southern District of New York, Nostalgic Partners v. Office of the Commissioner of Baseball, a new agreement capping the number of minor league affiliates at 120 is alleged to constitute a group boycott in violation of the Sherman Act § 1. 

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