Key Antitrust Developments in 2024 and Prospects for the Coming Year

A 2024 Republican election victory marks the end of the four-year Neo-Brandeisian antitrust experiment at the Federal Trade Commission (FTC) and Department Of Justice (DOJ). Spearheaded by FTC chair Lina Khan and DOJ attorney general for antitrust Jonathan Kanter, their movement sought to upend antitrust’s longstanding bipartisan consumer welfare-focused consensus. Instead, they focused on punishing businesses for bigness; opposing mergers and other business practices based on speculative rather than probable theories that of competitive harm; and orienting antitrust toward policy considerations outside economic competition, such as income redistribution, labor, and environmentalism.

It would be a mistake to think that the incoming Trump administration’s antitrust leadership will completely depart from the work of their predecessors. The Biden-era DOJ and FTC inherited monopolization cases from the first Trump administration, including Google Search (DOJ) and Facebook (FTC) In a tweet nominating his former National Economic Council staff member Gail Slater as the DOJ assistant attorney general for antitrust, President-elect Trump also affirmed that her priorities will include punishing “big tech” firms for purported depredations against consumers and small business.

We will examine the key federal antitrust developments in 2024, including some ongoing cases that the new administration will inherit. The precise direction to be taken by the incoming Trump administration remains to be determined.

FTC Attacks on Alleged Intellectual Property Rights Abuses

The FTC issued an October 2023 FTC Policy Statement expressing concern about “improper” FDA Orange Book patent listings by branded drugmakers. The Commission subsequently issued letters to drugmakers challenging the validity of over 300 such listings in 2024. The FTC expressed hope that improper listings would be dropped, thereby easing generic entry into the market. Many companies decided, however, not to delist their patents. Relatedly, in March 2024 the FTC filed an amicus brief in Teva v. Amneal (D. N.J.) arguing that drug patents claiming devices or device components cannot be listed on the Orange Book.

In February 2024, the FTC submitted a comment to the National Institute of Standards and Technology (NIST), supporting the use of Bayh-Dole Act march-in rights as a check on “inflated” pharmaceutical prices. In the comment, the FTC endorsed an expansive and flexible approach to march-in rights, including providing that agencies can march in on the basis of high prices. Despite the FTC’s comment, NIST has backed away from an unprecedented assertion of march-in this instance, given strong opposition from the IP community.

In short, the FTC’s patent-related initiatives in 2024 manifest a disdain for IP rights. The FTC’s Orange Book initiatives would, if successful, substantially weaken incentives to invest in patentable pharmaceuticals, slowing health care innovation. The FTC’s Bayh-Dole commentary in effect says that overly “high” patent licensing rates may justify price controls, a position at odds with reliance on markets and the understanding that a patent is a property right.

It is unclear to what extent a new Republican FTC majority would adopt a more IP-friendly policy stance. It is certainly possible that new leadership would reject the FTC’s recent anti-IP initiatives as regulatory overreach that went beyond the FTC’s core statutory authority.

Artificial Intelligence

In July 2024, the FTC issued a joint statement with the UK Competition and Markets Authority (CMA) and European Commission (EC) regarding the agencies’ competitive concerns on artificial intelligence (AI). These concerns included the potential for larger firms to structure partnerships and investments with smaller ones and startups in ways that reduce competition or avoid antitrust scrutiny or liability.

This followed an FTC Act Section 6(b) investigation into AI-related partnerships and investments between large firms and startups, such as those between Microsoft and OpenAI, and Amazon and Anthropic. An FTC probe has since been launched into whether Microsoft and Inflection structured their partnership to deliberately avoid reportability rules under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), which don’t apply to minority stakes in non-corporate entities, acquisition of staff, or non-exclusive licenses to another firm’s technology. In light of these investigations, Microsoft and Apple have reportedly withdrawn plans to seek non-voting seats on OpenAI’s board.

Additionally, the FTC recently launched an investigation into whether Microsoft has violated antitrust laws through practices concerning its AI and cybersecurity interests, including license agreements that restrict customers from transferring data from its Azure cloud computing service to other companies’ platforms. These and similar investigations and potential prosecutions of big tech firms over theoretical future harms arising from their leverage in rapidly-evolving markets are likely to continue under the Trump administration.

New HSR Act rule

The FTC’s final rule change to the pre-merger notification rule required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is due to take effect in February 2025. It will significantly expand the scope of disclosure to the FTC And the DOJ for mergers that meet the disclosure threshold. It will thereby impose significantly greater costs and delays on merging parties than under the existing framework. It would thus deter a greater range of potentially pro-competitive mergers, while placing strain on limited agency resources in the document review area that may be better allocated elsewhere.

The incoming Trump administration could elect to freeze this and other federal rules that have not yet taken effect for up to 60 days. Nevertheless, the HSR rule is unlikely to be rescinded in the near-term, as it was unanimously passed by a 5-0 vote of FTC commissioners on October 10, 2024.

It is possible, however, that Congress might vote to rescind the rule under the Congressional Review Act (CRA). The CRA requires agencies to report the issuance of “rules” to Congress and provides Congress limited time to enact a joint resolution of disapproval of the rule. If the President signs the joint resolution, neither the rule, nor any “substantially similar” future rule, becomes effective.

Merger Enforcement

The agencies brought relatively few new merger enforcement actions this year, including no new challenges to tech deals (down from two in 2023). This was in line with a record of historically low merger enforcement activity under the Biden Administration during 2023.

Rather than demonstrating a permissive attitude toward mergers, however, this record reflects a drop in merger proposals driven by private sector fear of the agencies’ anti-merger rhetoric since 2021.

This merger-skeptic philosophy was embodied and sharpened by the agencies’ release of new merger guidelines in December 2023. The new guidelines placed a greater emphasis on the merging firms’ share of the market as key to an enforcement decision, and a lesser emphasis on detailed case-specific economic analysis. They also eliminated language from previous guidelines, stressing a government “hands off” approach to mergers not posing a competitive threat.

FTC and DOJ leadership have touted the chilling effect on dealmaking that their 2023 merger guidelines have had by raising costs and uncertainty for prospective merging parties as evidence of success. The guidelines, however, have been criticized as suffering from a lack of clarity, speculative theories of harm, under-acknowledgment of the potential for mergers to be pro-competitive, and disregard for the latest legal precedents. President-elect Trump has indicated that his DOJ will promulgate “clear rules” that unlock “the ingenuity of our greatest companies.” This could perhaps flag a withdrawal or revision of the guidelines.

Brief Summary of 2024 Agency Enforcement Actions

In January 2024, the Southern District of New York granted the FTC a preliminary injunction against IQVIA’s acquisition of Propel Media, with the parties subsequently abandoning the deal. The court sided with the FTC in endorsing the Philadelphia National Bank rebuttable presumption of anticompetitive harm in mergers between direct competitors, solely upon showing that the merger would corner 30%+ of the relevant market. This presumption, which eases the agency’s burden in obtaining a preliminary injunction, remains good law, although it has been criticized by scholars on economic and legal policy  grounds.

The FTC secured a preliminary injunction against fashion company Tapestry’s $8.5 billion acquisition of Capri from the Southern District of New York after arguing the deal would reduce competition in the affordable luxury handbag market. The parties subsequently abandoned the deal.

The FTC also successfully contested Novant Health, Inc.’s $320 million purchase of two North Carolina hospitals from Community Health Systems, Inc. Hospital mergers have traditionally been a source of victories for the agency even under prior administrations, with the current FTC drawing criticism for failing to adequately police likely anti-competitive hospital mergers due to expending its limited resources on more high-profile cases based on spurious harm theories.

A running theme in various Biden-era agencies’ merger cases has been unrealistically narrow market definitions. The DC District Court criticized the FTC’s market definition in their case for unwinding Meta’s acquisitions of Whatsapp and Instagram as it excluded competition from other apps like Linkedin, X and Tiktok, thus  “strain[ing] this country’s creaking antitrust precedents to their limits.”

Similarly, the market definition of supermarkets in the Kroger/Albertsons merger complaint disregards superstores like Walmart and “specialty stores” like Whole Foods and Trader Joe’s, even though many consumers use them interchangeably. Narrower market definitions often make cases easier to win, but only if courts accept them. It’s unclear whether the new administration will abandon this practice.

Finally, there is an ongoing FTC administrative complaint and federal lawsuit against the $4 billion vertical merger of mattress manufacturing giant Tempur Sealy and retailer Mattress Firm. Citing company documents, the FTC alleges that the merged entity will harm consumers and competition by restricting rival mattress manufacturers’ access to retail markets.

UMC Rulemaking: Non-Competes

This year, the FTC adopted a rule banning noncompete clauses nationwide except for existing agreements with senior executives. It was meant to take effect in September, but was blocked by a nationwide injunction after a Texas federal court found the agency lacked statutory authority to issue such substantive competition rules under Sections 5 and 6(g) of the FTC Act. The FTC has appealed that ruling in the 5^th circuit, with another ruling against the ban pending appeal in the 11^th circuit. A Pennsylvania federal judge previously ruled in the government’s favor.

The ban on noncompetes is unlikely to survive final judicial scrutiny. FTC Act’s structure and text indicate that Section 6(g) doesn’t give the agency power to make competition rules with the force of law.

Other Major Cases

Ticketmaster/Live Nation

On the Department of Justice (DOJ) front, antitrust enforcers joined 29 states and the District of Columbia in suing Ticketmaster and its subsidiary Live Nation, seeking to break up the company. They accuse the live events giant of monopolizing that industry through practices like signing venues to exclusivity contracts.

This lawsuit is problematic. Ticketmaster’s agreements may deliver countervailing benefits to consumers, which would make business sense for reasons other than creating or maintaining a monopoly. Much of the anticompetitive conduct alleged contravenes existing prohibitions under the consent decree that Ticketmaster and Live Nation signed with the agency when they merged in 2009, which was extended in 2019. This suggests a failure to monitor and enforce available penalties, rather than the need for new remedies or structural relief. Unwinding their merger could destroy efficiencies created by vertical integration, including bundling of services like artist management, ticketing, venue ownership, and concert promotion.

DOJ v. Apple

The DOJ joined 15 states and the District of Columbia in suing Apple for monopolizing the smartphone market, alleging that the tech giant’s “contractual restrictions against app creation, distribution, and access to APIs [have] impeded apps and technologies including, but not limited to, super apps, cloud streaming, messaging, wearables, and digital wallets.” Apple cites countervailing benefits to consumers from these restrictions, including a curated ecosystem and enhanced security features that differentiate their product from competitors. The District Court of New Jersey is expected to rule in January on whether the DOJ’s allegations that Apple has monopoly power and has harmed competition and consumers are plausible enough for the suit to proceed to trial.

Google Search

The District of Columbia District Court held that Google violated Section 2 of the Sherman Act by illegally maintaining its monopoly in the general search services and general text advertising through “exclusive distribution agreements” to become the default search engine in mobile and computer web browsers. The trial on proposed remedies will begin in April 2025, with remedies likely to be stayed pending Google’s appeal of the verdict.

The Biden administration DOJ has proposed structural relief, including the divestiture of Google Chrome and the Android operating system. However, president-elect Trump has expressed skepticism about breaking up Google..

Google’s Ad Stack

Closing arguments at the U.S. District Court for the Eastern District of Virginia recently wrapped up in the DOJ and 17 states’ 2023 lawsuit against Google for allegedly monopolizing three levels of the digital advertising product chain. The chain comprises the ad server that publishers use to sell ads on their websites, the ad network tool used by advertisers to purchase inventory from publishers, and the ad exchange that operates auctions matching sellers and buyers of online advertising. The DOJ alleges that Google uses this leverage to force its ad publishing customers to use and pay excessive prices for its full stack of digital advertising tools without viable alternatives. Google argues that its stack of ad services yields efficiencies and is competitive as a superior bundled product. It also asserts that the market share alleged by the DOJ is unduly narrow, as it ignores competition that Google faces from advertising on mobile phones, social media and e-commerce platforms.

DOJ v. Visa

In September 2024, the DOJ sued Visa in the District Court for the Southern District of New York for anticompetitive exclusionary conduct. The DOJ alleges that the debit/credit card giant and payment processing network provider illegally used a “web of contracts” with merchants and banks to penalize merchants for using other payment networks. It claims that this results in higher fees for merchants and consumers, and excludes other debit card payment processors, including fintech companies like Square’s CashApp, from competition.

Visa’s behavior, however, may be explained by non-anticompetitive factors, such as Visa’s rational response to federal regulation and its efforts to benefit customers.

DOJ v. RealPage

In August 2024, the DOJ and eight states sued real estate and rental price recommendation software provider RealPage for an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.” It’s alleged that competing landlords share nonpublic pricing information about lease terms and rental rates with RealPage. The company then allegedly uses this competitively sensitive information to train its price recommendation algorithm to output supra-competitive prices that deter landlords from competing independently to draw customers through offering discounts and other concessions. RealPage also allegedly uses this price-fixing scheme and its substantial data trove to maintain a monopoly in the commercial revenue management software market.

Supreme Court precedent holds that a price-fixing conspiracy won’t be found where parallel pricing can be explained by firms observing each other and acting in their independent self-interest without an explicit or tacit ‘agreement’ to coordinate pricing. The DOJ complaint doesn’t claim that firms know if their rivals are complying with a recommended algorithmic price, and each firm is free to reject or accept a RealPage price recommendation. The DOJ thus face difficulties in making its case under current law.

Pharmaceutical Benefit Managers (PBMs)

The FTC recently sued the nation’s three largest PBMs, collectively covering 80% of U.S. drug prescriptions, for the allegedly “unfair method of competition” of accepting rebates from drugmakers to cover more expensive branded insulin medications under their insurance plan clients’ formularies while excluding substitutes from coverage. It’s alleged that this practice incentivizes drugmakers to inflate the list prices of drugs as the rebates that PBMs receive are typically based on a percentage of the list price.

The lawsuit follows a controversial FTC interim report on PBMs that was criticized for methodological flaws, lack of pricing analysis and speculative conclusions based on anecdotal evidence. A prior FTC report and 2019 Congressional Budget Office study instead find that rebates to PBMs, on average, significantly lower costs for insurance plans.

The FTC may struggle to prevail on its unfair method of competition claim, as it cites no violations of the spirit, letter or public policy of the Clayton or Sherman Act.

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Author: md3d
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