The 67th Annual American Bar Association Spring Antitrust Meeting was held in Washington, D.C. from March 26-29, 2019. Over 3,300 competition and consumer protection professionals from more than 68 jurisdictions attended the Spring Meeting, including lawyers, economists, enforcers, academics and members of the judiciary. Seven members of Fasken’s Antitrust/Competition & Marketing Group represented the firm at the Spring Meeting.
The Spring Meeting is an excellent opportunity for competition professionals from various jurisdictions to meet and share knowledge about competition and consumer protection law. For Canadian lawyers, it is especially important to remain current on developments in the U.S. antitrust space. When it comes to civil enforcement in the U.S., the following trends were discussed at the Fundamentals –Antitrust session of the Spring Meeting:
- Focus on pharma: There have been several case law developments in the U.S. in the area of pharmaceutical antitrust. For example, in 2018, the FTC ordered the largest online retailer of contact lenses in the U.S., to stop enforcing provisions of certain settlement agreements with rival online contact lens competitors. The purpose of the settlement agreements was to avoid litigation after the online retailer complained that its competitors purchased search terms that gave them advertising space whenever a potential customer searched it by name. The important takeaway is that pharmaceutical companies should expect competition enforcers to keep a close eye on settlement agreements for potential antitrust violations.
- Uncertainty surrounding remedies for vertical mergers: A horizontal merger is one between firms that could compete with one another whereas a vertical merger is one in which a company on one level of the supply chain buys a company on another level of the supply chain. In the U.S., there has been some uncertainty surrounding the type of remedies – structural (such as divestitures) vs. behavioural – that will be accepted by U.S. antitrust authorities to address vertical merger concerns. Historically, the FTC and the DOJ Antitrust division have preferred structural remedies to resolve competition concerns; however, in 2018, the FTC accepted behavioural remedies to address concerns stemming from the Northrop Grumman-Orbital ATK merger. Whether behavioural remedies will be accepted in the future remains to be seen.
- Enforcement of failures to file: Under the Hart-Scott-Rodino Antitrust Improvements Act, companies and individuals must notify the FTC of acquisitions that cause the value of their voting securities in a company to increase above certain dollar thresholds. Further, once a notification has been submitted, a waiting period must be observed prior to closing. Over the past two years, there are at least three examples of U.S. antitrust regulators pursuing individuals who failed to file and observe the requisite waiting period prior to closing the acquisition of shares. For more information, see the FTC’s press release here.
- Information exchanges may be subject to civil liability: Agreements among competitors to share information are not per se illegal in the U.S.; however, they may be subject to civil antitrust liability when they have, or are likely to have, an anti-competitive effect. In November 2018, the DOJ reached a settlement with six broadcast television companies to resolve a lawsuit alleging that the companies engaged in unlawful agreements to share non-public competitively-sensitive information with their broadcast television competitors. According to the DOJ, by “exchanging pacing information, the broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform the stations’ own pricing strategies and negotiations with advertisers. As a result, the information exchanges harmed the competitive price–setting process.” What is of significance is that the DOJ’s review of the information exchanges arose from information produced in an unrelated review of a proposed merger between two of the six broadcast television companies. This case demonstrates how merger reviews can lead to other investigations with significant consequences.
- “No poach” agreements: Under U.S. antitrust laws, the same rules apply to employers competing for talent in labour markets as when they compete to sells goods and services. The DOJ has been active in investigating and challenging no-poach and wage-fixing agreements. For example, with respect to an alleged agreement between Duke University and the University of North Carolina not to poach each other’s medical school faculty, the DOJ filed a statement in February 2019, urging the court to apply the per se rule if it finds the parties entered into a no-poach agreement. For further information about this case, see the Statement of Interest. For best practices for human resources professionals to ensure compliance with U.S. antitrust laws, see the joint Guidance on behalf of the DOJ and FTC.