The Federal Trade Commission (FTC) and US Department of Justice have begun implementing the 2023 Merger Guidelines in their enforcement actions
During a virtual workshop, the FTC highlighted its focus on private equity (PE) acquisitions of healthcare service providers and expressed concerns about PE in healthcare
Artificial intelligence’s antitrust implications continue to draw FTC scrutiny
The European Commission (EC) used its super-simplified procedure in about one-third of all merger decisions in Q1 2024
EC regulators are taking an increasingly vigilant approach to merger control review to ensure market dynamics remain pro-competitive and pro-consumer
In the first half of 2023, antitrust enforcers remained remarkably busy both in the United States (US) and across the European Union (EU). The US Department of Justice’s (DOJ’s) Antitrust Division (Division) and the Federal Trade Commission (FTC) have continued their aggressive and novel effort to drag antitrust enforcement into the labor markets. The DOJ Procurement Collusion Strike Force (PCSF) has pursued its crackdown on antitrust and fraud involving government procurement with a number of recent cases. And DOJ has pushed the boundaries under Section 2 of the Sherman Act—both by revitalizing the criminal provisions of the law and by pursuing “attempts” to monopolize criminally. The European Union has also kept the pressure on those doing business overseas, imposing significant fines in recent matters and upgrading its online leniency program to make it easier for companies to report wrongdoing.
In this installment of Cartel Corner, we examine this continued aggressiveness toward antitrust enforcement. While these government enforcement efforts have not always been successful, they have nonetheless reframed the landscape for many companies and individuals. What was once thought of as a civil antitrust violation at worst—or no violation at all—is now often pursued criminally. And antitrust enforcers are speaking in more strident tones as they attempt to remake, in certain ways, the way companies do business in the United States and abroad.
Whether antitrust enforcers are ultimately successful remains to be seen. Nonetheless, the trend is real, and it is one that all companies should be prepared to address in the weeks and months to come.
The European Commission recently adopted and published the revised Research and Development Block Exemption Regulation and Specialisation Block Exemption Regulation, together referred to as the Horizontal Block Exemption Regulations (HBERs), accompanied by the revised Horizontal Guidelines (HGLs). The adoption of the new HBERs and HGLs comes after the conduct of a similar review process and the adoption of the Vertical Block Exemption Regulation and Vertical Guidelines in May 2022. This revised horizontal package seeks to provide businesses with up-to-date guidance to help them self-assess the compatibility of their horizontal cooperation agreements with EU competition law.
The Competition and Markets Authority (CMA) blocked what would have been the largest deal in the gaming industry to date on April 26, 2023. This decision brings attention to various significant trends, including:
In dynamic markets, regulators are focusing in on whether a deal harms or could harm future competition (i.e., innovation based on predications raising significant uncertainties). The CMA speculated that the deal would “alter the future of the fast-growing cloud gaming market” and preferred to maintain the status quo with the block.
Regulators are focusing more and more on non-horizontal relationships and supply chain issues, particularly if one party is vertically integrated. Whereas in the past, concerns could often be remedied via behavioral commitments, more and more deals with a vertical component are now being outright prohibited.
While the industry expects the European Commission (Commission) to accept the behavioral remedy (license package) offered by Microsoft, this case shows once again that the CMA and the Commission can reach different conclusions when reviewing the same transaction.
This Review provides legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy. Topics covered include:
• DOJ Sees First Merger Win After String of Losses • FTC Brings Suit Against Microsoft/Activision • Updated Merger Guidelines Expected Soon • Merger Fees Changing • The EC Launches a Consultation on Its Draft Revised Market Definition Notice • UK Orders a Chinese Firm to Divest Its 83% Controlling Stake in a Welsh Semiconductor Wafer Factory Based on National Security Concerns
In the United States, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) lost four merger challenges (Illumina/GRAIL, UnitedHealth/Change Healthcare, U.S. Sugar/Imperial Sugar and Booz Allen/EverWatch) in September. The losses demonstrate that parties willing to litigate can have success in court. The absence of “smoking gun” documents and lack of a presumption of anticompetitive effects (based on market shares and concentration) made these cases very difficult for the government. The judges in these cases tended to credit structural and behavioral remedies that the government felt were insufficient and were persuaded by real-world testimony from executives and third parties contradicting the government’s theories of changed economic incentives from the transactions.
In July 2022, the European Parliament published the final text of the European Union’s upcoming instrument to address distortive foreign subsidies, following a provisional political agreement reached between the EU lawmakers in June (Foreign Subsidies Regulation). The Foreign Subsidies Regulation introduces a new mandatory screening mechanism including notification obligations and the European Commission’s right of ex officio investigations, which will have a considerable impact on M&A transactions and procurement procedures.
The Foreign Subsidies Regulation will enter into force once it is formally adopted by EU lawmakers and published in the Official Journal. It will become directly applicable across the European Union six months after entry into force. The notification obligations will start to apply nine months after entry into force. The Commission also is currently drafting procedural rules on how to notify transactions, how to calculate time limits, and the process for preliminary reviews and in-depth probes when there is a suspicion of distortive foreign subsidies.