The US Federal Trade Commission today announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act.

Notification Threshold Adjustments

The US Federal Trade Commission (FTC) announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) pre-merger notifications on January 28, 2020. These increased thresholds will become effective on February 27, 2020. These new thresholds apply to any transaction that closes on or after the effective date.

Continue Reading Notification Threshold Under the Hart-Scott-Rodino Act Increased to $94 Million

Two recent US antitrust class action settlements drew additional scrutiny from federal judges, showing that the allocation of settlement funds between a proposed class and their attorneys will be carefully reviewed for fairness to class members.


  • On January 17, 2020, Judge Janis L. Sammartino denied a motion for preliminary approval of a settlement between Chicken of the Sea and a proposed class of caterers, restaurants and commercial food preparers from 27 states and DC regarding allegations of price-fixing for canned tuna.
    • The proposal would allocate about 77% of the total settlement to attorney fees, costs and expenses, and leave the proposed class with $1.5 million or less of the total $6.5 million settlement amount.
    • The judge indicated concern that the agreement may not have been negotiated at arm’s length, that the filings lacked a claim administration plan and that “class members will collectively receive approximately 6.85% of the damages they attribute to [Defendants]. This seems a modest amount considering that in criminal antitrust proceedings [Defendants] admitted to price-fixing, thus essentially conceding liability in this action for civil damages. Nevertheless, [Plaintiff]s provide no discussion of the weaknesses of their claims, strengths of [Defendants]’s defenses, collection difficulties, or other relevant circumstances to justify the modest recovery.”
    • Though the settlement approval motion was denied, the judge allowed for re-filing to potentially remedy the deficiencies of the original proposal.
  • On January 21, 2020, Judge Joy Flowers Conti requested briefing to justify a proposed settlement between an 11,000-member class of small-group insurance customers and Highmark Inc. regarding allegations of collusion with the University of Pittsburgh Medical Center to block small insurance plans from the market.
    • The proposal would allocate about 79% of the total settlement to attorneys, leaving about $1.6 million of the $7.5 million settlement for the proposed class.
    • Plaintiff attorneys had not yet submitted their official request for costs and fees to the court, but a draft notice to potential class members attracted the judge’s attention and prompted the required briefing “to address the notice and [Plaintiff’s] reasons for the award of fees and costs as set forth on the record.”
    • Plaintiff attorneys sparred with the judge over the cause of the increased costs with Plaintiffs noting the court required a special master, additional discovery and expert reports from both parties and the judge responding that if issues had been properly raised initially, there would not have been a need for additional hearings and discovery.
    • The briefing regarding attorney fees is due February 4, 2020.


  • Companies who become defendants in antitrust class action litigation should be aware that courts may reject a proposed class settlement if attorney costs and fees represent too great a portion of the total settlement amount, despite the parties’ desire to resolve the case. If the parties are not able to successfully address concerns raised by judges regarding settlements, it may be back to the negotiation table to devise a new deal that could result in a higher settlement amount.
  • The fairness of class settlements is a central consideration for antitrust agencies and courts. Where the vast majority of a proposed settlement will never reach the allegedly injured class, a judge will consider the fairness of the proposed settlement and its distribution in approving a settlement. The FTC’s Class Action Fairness Project held a recent workshop relating to notice and has studied the impact of compensation amounts and consumer perceptions in trying to better understand the issues involved in class actions.

The US antitrust regulators continue to challenge consummated transactions. On January 3, 2020, the FTC filed an administrative complaint against Axon Enterprise, Inc., challenging its consummated acquisition of VieVu, a body-worn camera competitor, from Safariland. The FTC also challenged non-compete agreements that Axon and Safariland signed in connection with the acquisition. The complaint demonstrates the FTC’s continued focus on challenging consummated transactions, and on defining “price discrimination markets” around sets of customers with unique needs. The FTC’s challenge also shows that merging parties should avoid signing non-compete agreements that are not reasonably limited in scope and duration. If these agreements are not appropriately tailored to achieving a legitimate business interest, the FTC may challenge them as anticompetitive.

Continue Reading FTC Challenges Axon’s Consummated Acquisition of Body-Worn Camera Competitor

California Attorney General Xavier Becerra (AG Becerra) announced on Friday, December 20, 2019, the terms of a comprehensive settlement agreement reached with Sutter Health (Sutter), the largest hospital system in Northern California.

Continue Reading California Attorney General Announces Historic $575 Million Settlement of Antitrust Suit Against Sutter Health

For the first time since the Department of Justice Antitrust Division (DOJ) published non-horizontal merger guidelines in 1984, the DOJ and Federal Trade Commission (FTC) issued updated Vertical Merger Guidelines to explain how the antitrust agencies analyze vertical mergers. The guidelines were published in draft on January 10, 2020, and are now open for a 30-day public comment period.


The DOJ and FTC released draft guidelines outlining the principal analytical techniques, practices and enforcement policies the antitrust agencies will use to analyze vertical mergers and acquisitions. Vertical mergers combine firms or assets that operate at different stages of the same supply chain. For example, vertical mergers or acquisitions could combine companies such as:

  • a satellite maker and a payload provider;
  • an automaker and an aluminum supplier;
  • an automaker and an automotive retailer;
  • a filmmaker and a cable television company; or
  • a pharmaceutical company and a chemical company making active pharmaceutical ingredients.

The merging companies do not compete with each other, but rather work with each other through the supply of inputs, distribution or other business services. The draft guidelines are relatively limited in scope and do not significantly expand the theories and issues that US antitrust regulators have been applying to vertical mergers for several years. That said, having these theories on paper will provide helpful guideposts in assessing potential transactions. At the FTC, the two Democratic Commissioners abstained from voting to release the guidelines, issuing Dissenting Statements instead.

The draft guidelines rely on the well-established principles in the Horizontal Merger Guidelines on how to define product markets and measure concentration levels. The guidelines establish a safe harbor if the companies have a share of less than 20% in the relevant market(s), but set no presumption of anticompetitive harm if market shares are higher than that. The focus of these new draft vertical merger guidelines is on the competitive effects analysis and not on shares or any formulaic assessment. The basic concern is whether combining two companies at different levels in a supply chain will enable the combined company to lessen competition at one of the levels.

Unilateral Effects

First, the guidelines discuss potential unilateral anticompetitive effects from vertical mergers under two theories: (1) foreclosure/raising rivals’ costs and (2) access to competitively sensitive information.

  1. Raising rivals costs / foreclosure. The first theory suggests that “[a] vertical merger may diminish competition by allowing the merged firm to profitably weaken . . . one or more of its actual or potential rivals in the relevant market by changing the terms of those rivals’ access to one or more related products.” Alternatively, the merged firm could refuse to supply rivals altogether, foreclosing their access to a necessary product or service. The guidelines lay out the following key conditions for a foreclosure theory:
  • The foreclosure makes it more difficult for the company that is foreclosed to compete effectively.
  • The newly merged firm is likely to win more business if it denies or disadvantages the input to its rival.
  • The merger makes the foreclosure strategy profitable, when it would not have been premerger.
  • The impact is meaningful and not de minimis.
  1. Information sharing. The second theory suggests that in a “vertical merger, the combined firm may, through the acquisition, gain access to and control of sensitive business information about its upstream or downstream rivals that was unavailable to it before the merger.” The mere fact of information access is not sufficient to cause competitive concern, but where the exchange of information may lead a company to reduce R&D spending or take other actions that lessen competition, then the exchange can be viewed as having an anticompetitive effect. This is a common issue the regulators have historically resolved by imposing a consent decree requiring firewalls to prevent anticompetitive effects. The continued viability of these types of firewalls is in question because the DOJ has made it a firm policy to insist on structural remedies (i.e., divestitures) rather than conduct remedies such as firewalls.

Today, these are already the two primary theories that antitrust regulators analyze when determining if a vertical merger raises competitive issues. With respect to foreclosure and raising rivals’ costs, the guidelines note that that there are different models to measure competitive effects and that these effects do not depend on product market definition. This focus on competitive effects continues the theme from the horizontal merger guidelines of looking at outcomes to help define the product market.

Coordinated Effects

Second, the vertical merger guidelines discuss how vertical mergers may reduce competition through coordinated effects by, for example, enabling the sharing of confidential information. This could occur if a manufacturer of components (e.g., aluminum body sheet) and maker of final products (e.g., an automaker) merged and the component manufacturer supplies rival makers of final products. The merged entity would have access to information about its competitor’s output levels, costs of key inputs and perhaps other sensitive details. As a result, this confidential information could facilitate the forming of a tacit agreement between rivals and could make detecting any deviation from an agreement easier to detect. As with unilateral effects, the regulators often address this type of concern through a firewall remedy. As noted above, it is unclear, in light of the DOJ’s general opposition to behavioral remedies, whether firewalls remain a viable solution for vertical mergers with competitive concerns, especially at the DOJ.

The guidelines further discuss a coordinated effects theory that is relatively novel: how a transaction might “eliminate or hobble” a “maverick” firm that acts as a particularly disruptive influence that has an outsized role in ensuring a competitive market. Under this theory, if the merged entity now has control over a key input that a maverick competitor requires, the merged entity can use this power to raise prices to this maverick and lessen its ability to act as a disruptive force, thus leading to higher prices in the market in which the maverick competes.  Nevertheless, the guidelines also state that a vertical merger may make coordination less likely by increasing the merged entity’s incentive to “cheat on a tacit agreement.”


Finally, the guidelines emphasize that vertical mergers often create efficiencies and pro-competitive benefits because a vertical merger brings together assets at different levels in the supply chain. One specific example given in the guidelines is the elimination of double marginalization. Double marginalization occurs when different firms in the same industry, at different vertical levels in the supply chain, apply their own markups in prices. The draft guidelines recognize that one potential benefit of vertical integration is eliminating double marginalization which can provide more incentive or ability for the merged entity to reduce prices from premerger levels. The agencies will not challenge a merger if the net effect of eliminating double marginalization shows that the transaction is unlikely to be anticompetitive. The elimination of double marginalization, however, will only be recognized if cognizable and merger specific—the same requirements set forth in the horizontal merger guidelines and generally applicable to all claimed efficiencies.

Dissenting Statements

The two Democratic Commissioners at the FTC abstained from the vote releasing the new draft guidelines. They agreed with the need to update and replace the 1984 guidelines, and in their “dissenting statements” explained that these draft guidelines are too narrow and should go further. In their view, the guidelines should identify other potential anticompetitive theories of harm and should create a presumption that a vertical merger is anticompetitive if one of the parties is in an oligopoly.


At a high level, these guidelines embody principles the regulators have already been applying to vertical merger situations. The guidelines put these principles on paper, providing a useful reference point and transparency.

The two Democratic FTC Commissioners abstained from voting to release the new guidelines and issued statements criticizing the scope of the guidelines. This bears watching if there is a change in the administration this fall. Under a Democratic presidency, these new Vertical Merger Guidelines may shortly change given the views of the Democratic Commissioners and given comments of Democratic presidential candidates about general concerns of overly high market concentrations in many areas of the economy.

The draft guidelines are now open to public comment for 30 days, at which point the agencies will review the comments received prior to issuing final vertical merger guidelines.

Three recent antitrust merger reviews involving nascent competition demonstrate enforcers are paying close attention to acquisitions by industry leaders of emerging, but early-stage competitors. The US antitrust agencies have been criticized for allowing leading technology companies to extend their entrenched positions to multiple markets or technologies through acquisitions. We are now seeing regulators increasing their scrutiny of acquisitions of nascent competitors that were positioning themselves to challenge an entrenched, strong rival.

Continue Reading Recent Merger Reviews Demonstrate Increased FTC and DOJ Focus on Acquisitions of Nascent Competitors

There was significant antitrust activity in the third quarter of 2019. In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) continued an active docket challenging M&A transactions. DOJ is resolving antitrust reviews significantly faster than the FTC, following DOJ’s 2018 policy establishing a six-month target. The DOJ also made use, for the first time, of its authority to arbitrate a market definition dispute, potentially opening the door for a new tool the DOJ could employ to resolve challenges more rapidly.

In the European Union, the European Commission (EC) agreed to clear, subject to conditions, the acquisition of broadband and energy networks following lengthy Phase 2 investigations. Meanwhile, the national European regulators opened new in-depth investigations into commercial radio advertising, software as a service for airlines, autonomous sea surface vehicles and the promotion of live music events (all in the UK) and prohibited the merger of two recyclers (Germany).

Access the full issue.

The European Commission (EC) has found, on a prima facie basis, that Broadcom abused its dominant position. In order to avert the risk of serious and irreparable damage to competition, Broadcom has been ordered to cease its prima facie abusive conduct with almost immediate effect. This is the first time in 18 years that the EC has made use of such measure and could signal the re-awakening of a once-dormant tool.

Access the full article.

Government contractors should be aware that the Department of Justice (DOJ) is taking new steps to scrutinize public procurement. The DOJ Antitrust Division’s creation of the Procurement Collusion Strike Force (PCSF) means that government procurement enforcement will be a significant focus for the agency moving forward. Although the new strike force builds on past government-wide efforts to detect illegal conduct in public procurement, recent activity from the Antitrust Division has raised the stakes. In light of this, government contractors should broaden their compliance programs to include antitrust so they can avoid heightened monetary penalties and possible prison terms for implicated employees.

I. What Happened

The DOJ’s Antitrust Division took another step to increase its attention on government procurement by focusing resources on a new task force designed to detect anticompetitive behavior amongst government contractors. On October 24, 2019, the Antitrust Division posted a notice in the Federal Register inviting public comment on its implementation of a “Procurement Collusion Strike Force” complaint form. The complaint form will facilitate “reporting by the public of complaints, concerns, and tips regarding potential antitrust crimes affecting government procurement, grants, and program funding.” While the DOJ’s unveiling of the PCSF is significant in itself, the event is just one of several pieces of activity from the Antitrust Division indicating that government contractors must begin to consider antitrust risk much more seriously.

Continue Reading DOJ Set to Increase Scrutiny of Government Contractors with New Procurement Collusion Strike Force

Developments in antitrust class actions over the past year highlight the critical role that the certification decision plays. In the United States, the denial of class certification “may sound the ‘death knell’ of the litigation on the part of plaintiffs.”

To obtain class certification, plaintiffs must satisfy the four requirements in Rule 23(a) of the Federal Rules of Civil Procedure (numerosity, commonality, typicality and adequacy) and at least one of the requirements in Rule 23(b). McDermott’s Nicole L. Castle, David L. Hanselman, Jr. and Steven Vaughn authored the section “United States: Class Action Defense” of Global Competition Review’s America’s Antitrust Review 2020, in which they discuss the requirements of the Rules and offer insight for those seeking class certification.

Access the full article.

An extract from GCR’s America’s Antitrust Review 2020, first published in September 2019. The whole publication is available at