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Written by Theodore L. Banks
We usually expect shifts in enforcement priorities when a new political party comes into the White House. But rather than a slight shift left or right, as has happened in the past, there may be a dramatic change in many areas of enforcement, as reflected by the appointments in every federal agency as well as to the cabinet. One area where the changes may be significant would be antitrust enforcement, which is shared between Department of Justice and Federal Trade Commission.
Over the past few years, most public antitrust enforcement has been confined to attacking price-fixing cartels and mergers that were deemed anticompetitive. Conduct-related cases for things like tying, exclusive dealing, and price discrimination were rare. There are indications that this approach to antitrust enforcement might be changing.
On March 22, President Biden nominated Columbia law professor Lina Khan to the Federal Trade Commission. Khan published a widely cited law review article critical of Amazon, and she helped draft a report by the House antitrust subcommittee that was critical of lax enforcement by federal antitrust agencies. President Biden selected Tim Wu, author of “The Curse of Bigness,” to be the competition adviser on the National Economic Council. Wu has been a critic of lax enforcement and the anticompetitive conduct of the technology companies.
The federal enforcement agencies and courts have been very much influenced by the “Chicago School” of economics for the last 40 years or so, which advocated a very conservative approach to antitrust, giving great deference to markets as opposed to regulation. There is some evidence that a more interventionist antitrust theory is gaining favor, sometimes referred to as “Hipster antitrust,” at least partially reflecting the younger ages of the academics following this approach. While the appointments of President Biden are from this more aggressive enforcement school, and while they could bring more enforcement actions, they will need to operate within the confines of the current case law which may constrain, to a certain extent, dramatic changes in the outcomes of antitrust cases.
The President has not yet nominated someone to be the head of the Antitrust Division at the Department of Justice, which is responsible for criminal antitrust enforcement. Although the DOJ has gone after other conduct in the past, for the last 40 years or so it has primarily focused its enforcement attention on price fixing and some mergers. Vanita Gupta has been nominated to be Associate Attorney General, the number three position in the Justice Department. At her confirmation hearing she said, “If I am confirmed as associate attorney general, I will bring the full force of our country’s antitrust laws to bear to protect competition which is so core to our economy and to protecting consumers.” The delay in appointing someone to fill the antitrust role has been due to the Administration’s concern over ethics problems that might arise if it appointed someone who represented a company (such as Google) that is already a target of DOJ enforcement or likely to become a target, or someone who was active in representing groups that were calling for enforcement against tech companies. Appointments by the Trump administration showed less concern for this issue. Back in January, it was reported that Merrick Garland wanted Susan Davies, who had worked for him in the Clinton administration, was out of consideration since she had represented Facebook in the past. So, the Biden administration is working to find a candidate that will satisfy progressive forces within the Democratic party without any entanglements from prior representations.
Meanwhile, various interest groups are mounting public relations efforts to get the administration to commence antitrust enforcement. For example, the National Grocers Association (NGA) released a study that supports its call for more enforcement against large grocery chains and online sellers who have (illegally) extracted more favorable terms than those available to the NGA members. Groups such as the NGA are calling for more enforcement of the Robinson-Patman Act, passed in 1936 to make price discrimination illegal. The recession brought about by COVID19 and the disruption caused by the growth of online businesses have some similarities to the business failures in the 1930s that occurred while chain stores were growing and displacing the “mom and pop” grocery store. Although there is controversy about whether Robinson-Patman enforcement can actually help small businesses, this kind of enforcement is very politically attractive. Some groups are alleging that the presence of “food deserts” in many minority communities are a product of rampant price discrimination.
At this juncture, it is appropriate for companies to review their antitrust compliance programs to make sure that they are not engaging in any practices that might attract the attention of a government enforcer or a private plaintiff (supplier, customer, or competitor) who feels it has been injured by anticompetitive conduct. Scharf Banks Marmor is happy to provide a complimentary consultation to discuss your antitrust risks.
*Partner, Scharf Banks Marmor LLC