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Antitrust and Competition Laws: Recent Developments

November 14, 2017

Corporate buildings

Antitrust and competition law has received greater public attention recently due to aggressive mergers in industries as diverse as air transportation, entertainment, and technology. A concern that such mergers could lead to higher prices and less industry innovation has resulted in a call for greater antitrust law enforcement.

New Bill Aims to Reform Antitrust and Competition Laws

Sen. Amy Klobuchar (D-Minn.), the ranking member of the subcommittee on Antitrust, Competition Policy and Consumer Rights, has introduced a bill that aims to reform antitrust laws. Called the Merger Enforcement Improvement Act, the bill seeks to shift the burden of proof on merging parties to prove that their merger does not harm competition.

This would have the effect of lessening the burden of proof on the Justice Department and the Federal Trade Commission, which currently must prove to a judge that consumers would be harmed by a merger. In the case of smaller deals, if an agency sought to stop a transaction, they would need to show that the acquisition would “materially” lessen competition, rather than “substantially.”

In addition, the bill would: 

  • Add the term “monopsony” (defined as a “buyer’s monopoly”) to the Clayton Antitrust Act so that single buyers controlling the market are also illegal
  • Create an Office of the Competition Advocate, which would help consumers with complaints, encourage antitrust investigations, and analyze and publish reports on merger activity

A second bill would cut fees substantially for smaller deals ($500 million or less). Fees would increase from $285,000 to $2.25 million for larger deals (worth $5 billion or more). 

DOJ and FTC Release Antitrust Guidance

In September, the Department of Justice Antitrust Division and the Federal Trade Commission  released antitrust guidance regarding relief efforts in the aftermath of Hurricanes Harvey and Irma. The guidance reminds businesses and individuals that while cooperation between competitors will be necessary to rebuild areas affected by the disasters, such projects must remain compliant with competition and antitrust laws

Recovery efforts for Hurricanes Harvey and Irma may necessitate a broad range of collaborative efforts among competing firms. These may include joint ventures, joint licensing, and other contractual agreements. Such collaborative efforts will be subject to review under antitrust laws. 

In particular, the antitrust guidance warns against anticompetitive conduct such as:

  • Price-fixing
  • Bid-rigging
  • Market-allocation agreements

The agencies indicated that when scrutinizing these types of collaborative arrangements, they will also take into account changes in market conditions as a result of the hurricanes. 

Higher Penalties for Competition Breaches Under Australian Law

Higher penalties now apply for various breaches of Australia’s Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL). These include violations such as:

  • Cartel conduct
  • Unconscionable conduct
  • Unfair practices
  • Multiple pricing
  • Violations of safety information standards/recall standards
  • Various other types of violations

The increase in penalties comes at a time when the Australian Competition and Consumer Commission has been seeking higher fines in proceedings. The penalties for breaches of competition laws in the EU and the U.S. are much higher than in Australia

For instance, the largest fine on a company for a competition law breach in the U.S. is USD $925 million. The European Commission handed down its largest cartel fine ever in the amount of €2.93 billion. In comparison, Australia’s biggest fine for a breach of competition law is AU $36 million. 

Australia’s regulators, legislators, and judiciary will likely continue seeking higher competition breach penalties given the large gap between Australia and other competition law jurisdiction fines. 

UK Competition Authority Warns Creative Sector About Price Fixing 

In September, the UK Competition and Markets Authority (CMA) sent an open letter to businesses operating in the creative industries sector, warning that illegal behavior such as price fixing and information sharing will not be tolerated. 

The CMA has developed the practice of delivering advisory letters to firms when there is concern that their businesses could be breaking the law, in hopes that recipients ensure their compliance. Consequences for violating competition law can be serious and may include fines of up to 10% of annual turnover, disqualification of company directors, and criminal charges.

The CMA’s revamped efforts spring from research into the creative sector that showed relatively low comprehension of competition law (over 50% of creative firms surveyed by the CMA). This can put such firms at risk of not being able to recognize whether they or third parties they interact with are violating the law.  

Effects of Brexit on Competition Law

The effects of Brexit on competition law are far-reaching and will involve a complex interaction between existing EU competition rules and enforcement of laws by UK authorities. Post-Brexit, EU competition rules will continue to apply to agreements and conduct of UK businesses that have an effect in the EU. This is much the same as when U.S. or Asian businesses are subject to EU competition law when their agreements or conduct affect EU markets. 

On the other hand, the European Commission will not have power to conduct on-site investigations in the UK. It will not be able to request UK competition authorities do so on its behalf. Also, the Commission’s investigative powers would be limited to written requests for information.   

There will be numerous other effects of Brexit. In order to obtain a better grasp of post-Brexit competition policies and issues, the House of Lords EU Committee (plus its six Sub-Committees) launched a series of enquiries. The enquiries covered topics such as:

  • Re-strategizing UK competition policy after Brexit
  • Implications of Brexit for UK competition law
  • Whether UK authorities possess the resources and capacity to handle an increased caseload post-Brexit
  • State aid obligations for potential UK-EU free trade agreements
  • Future coordination and cooperation between the UK and the EU on matters of investigations and enforcement

Other procedural requirements for interaction between UK and EU authorities may fall away as a result of Brexit. For businesses, it is important to keep pace with these changes and to ensure that company policies do not violate requirements. 

Recent Antitrust Cases

In other antitrust and competition law news, social media site Gab had its antitrust lawsuit against Google voluntarily dismissed. Gab originally alleged that Google’s removal of its app from the Play Store constituted an anti-competitive action in service of its “partnership” with Twitter. Gab had been in productive talks with Google since the initial filling of the case. Google has instead offered Gab an opportunity to re-submit their app for appeal in placement in the Play Store. 

The U.S. Supreme Court is set to decide American Express’s antitrust case. The case revives government allegations that American Express Co. violated competition laws by prohibiting merchants from steering customers to cards associated with lower fees. A federal appeals court had previously thrown out the suit, stating that the U.S. government and 11 states did not adequately prove that the company harmed cardholders as well as merchants.

Navigating the Antitrust Landscape

Many jurisdictions are aiming for more stringent antitrust and competition laws and policies, and stricter enforcement. These types of adjustments can create complex webs of legal requirements for companies to navigate, especially where regional rules overlap and interact with one another. If you have any inquiries or questions regarding antitrust claims, contact us today at Kessler Topaz. 

Clients look to our firm for experienced representation in complex antitrust lawsuits. Courts throughout the country consistently appoint our team to leadership positions in actions that involve anticompetitive conduct in major industries.