The Antitrust Year in Preview: Six Antitrust Developments to Watch in 2022
, Daniel Vitelli
As we enter the third year of the COVID-19 pandemic, it’s become clear that one thing the pandemic hasn’t slowed is the revival of antitrust activity. Here are six major antitrust developments expected this year, with potentially big implications for tech antitrust, merger enforcement, and criminal antitrust enforcement against no-poach agreements.
- Antitrust Bills in the U.S. Congress
We expect Congress to continue its efforts to revitalize antitrust enforcement in 2022. In 2021 we saw the Criminal Antitrust Anti-Retaliation Act go into effect as the first federal statute to afford protections to private-sector employees who report criminal antitrust activity, and the repeal of a 75-year-old antitrust immunity for health and dental insurers. There was also a plethora of proposed legislation, much of which remains in various stages of legislative play. Two of the bills in particular bear watching.
The first bill is the Competition and Antitrust Law Enforcement Reform Act (CALERA), introduced by Sen. Amy Klobuchar (D-MN), the lead Democrat on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, and an influential voice in Congress on antitrust. CALERA would invigorate antitrust enforcement in a number of fundamental ways: (1) increasing federal antitrust enforcement budgets; (2) amending the Clayton Act so that it prohibits mergers that could lessen competition only “more than a de minimus amount” and so that the burden of proof on justifying such a merger in court is on the merging parties instead of the government; and (3) prohibiting “exclusionary conduct” by dominant firms, which is defined as conduct that materially disadvantages competitors or limits their opportunity to compete.
The second bill is the Open App Markets Act, which was introduced by Sen. Richard Blumenthal (D-CT) and co-sponsored by Sen. Klobuchar. The Act would regulate digital technology platforms, most notably by: (1) prohibiting platforms from requiring app developers to use the platforms’ in-app payment functionality; (2) allowing app developers to sell their software directly to users; (3) prohibiting the use of developers’ proprietary app data to develop a competing product; and (4) unreasonably preferencing the platform’s apps.
- New York’s 21st Century Antitrust Act
Not to be outdone, New York took significant steps towards reforming and strengthening its antitrust laws in a way that would make New York a go-to jurisdiction for antitrust plaintiffs. During last year’s legislative session, the New York Senate passed Sen. Michael Gianaris’s groundbreaking antitrust bill (S933A) by a vote of 43 to 20. Constantine Cannon lawyers have extensively covered the bill’s potential impact, including what its “abuse of dominance” provisions would mean for companies; its premerger review program; how “New York May Become Antitrust Central”, including by its allowing for recovery of expert fees; and how it would give antitrust plaintiffs a means to avoid federal precedent on two-sided markets.
Constantine Cannon also hosted a webinar featuring Sen. Gianaris and several leading antitrust scholars and practitioners who examined how the bill would change antitrust law and the competitive landscape. During his remarks, Sen. Gianaris spoke of his desire to see continued progress on getting a version of the bill enacted, which is a real possibility in 2022. If enacted, such a bill would fundamentally transform antitrust law and enforcement in New York, with potential reverberations across the nation. Keep an eye on New York.
- Continuing Developments in Epic Games, Inc. v. Apple Inc.
As this blog reported in September 2021—An Epic Fail or an Epic Win for Tech Antitrust? – Constantine Cannon—the U.S. district court’s decision in Epic’s antitrust lawsuit against Apple—largely in Apple’s favor—was the first exposition, by a U.S. court, of antitrust issues involving the digital media platforms that have recently been the focus of legislators and antitrust enforcers. But it certainly won’t be the last.
Both Epic and Apple have appealed the trial court’s judgment to the U.S. Court of Appeals for the Ninth Circuit. The appeal will be briefed in 2022, and the Ninth Circuit may hear the case this year given its significance. On December 8, 2021, the Ninth Circuit granted Apple’s motion for a stay of the trial court’s injunction based on the one claim on which Epic prevailed. The Ninth Circuit noted that the case raised “serious questions.” No kidding.
- The FTC’s Case Against Facebook
In June 2021, the U.S. District Court for the District of Columbia dismissed the Federal Trade Commission’s complaint against Facebook for monopolizing the market for personal social networking services (PSNS). The district court held that the complaint failed to allege exactly how the FTC calculated Facebook’s alleged 60 percent market share and which other PSNS providers comprised the 40 percent of the market allegedly not held by Facebook. This blog questioned the court’s rationale for dismissing the complaint on the basis of what were—at most—technical flaws in the pleading of antitrust claims and factual issues inappropriate for resolution before discovery. See The FTC’s Revival of its Facebook Complaint Shows That it’s Serious – Constantine Cannon.
The district court permitted the FTC to amend its complaint to cure the court’s perceived deficiencies, which the FTC did by beefing up its market allegations. Will FTC v. Facebook turn out to be a major loss for federal enforcement in tech antitrust that establishes a new and higher standard for pleading antitrust cases? Or was the dismissal just a glitch in the program that’s now been fixed?
- Merger Enforcement
Merger enforcement will continue to be a key source of antitrust developments in 2022. The latest page in this chapter was the DOJ’s filing of a civil lawsuit in November seeking to block Penguin Random House’s proposed $2.18 billion acquisition of its competitor Simon & Schuster. See DOJ Seeks to Close the Book on Penguin Random House’s Acquisition of Simon & Schuster – Constantine Cannon. The trial is currently scheduled for August 2022. We will be watching this and other merger challenges closely as the DOJ and the FTC continue to police anticompetitive mergers. Paragraph 1 of the DOJ’s complaint quotes Penguin Random House’s Global CEO as stating, “Books matter . . . .” So will merger enforcement in 2022.
- Enforcement Actions Against No-Poach Agreements
In 2021, federal antitrust enforcers continued to scrutinize anticompetitive conduct in labor markets, with particular emphasis on no-poach agreements. The DOJ has brought criminal actions for anticompetitive conduct in healthcare labor markets, and just a few weeks ago the DOJ announced that a “federal grand jury . . . returned an indictment . . . charging a former manager of a major aerospace engineering company and five executives of outsource engineering suppliers . . . for participating in a long-running conspiracy to restrict the hiring and recruiting of employees among their respective companies.”
Similarly, New York Attorney General Letitia James stated in an August 2021 interview with Competition Policy International that New York is “prioritizing antitrust enforcement in labor markets. We are investigating allegations of anticompetitive conduct affecting workers, such as no-poach and non-compete agreements, and we examine the potential effects of proposed transactions on labor markets when conducting merger reviews.” New York is not alone. See Washington State Office of the Attorney General Press Release on No-Poach Practices.
Executives, managers, HR professionals, recruiters, and franchisors and franchisees be advised. In 2022, we expect to see more activity by federal, state, and private antitrust enforcers pursuing claims of anticompetitive conduct in labor markets.
Edited by Gary J. Malone