Antitrust Enforcement: A Vigorous Expansion of Competition Law

The following alert is included in Insights 2023, a collection of articles and videos addressing important emerging legal issues in the year ahead.

Government enforcers reinvigorating—some would say rewriting—antitrust law.

A year and a half ago, the new administration made headlines with its Executive Order on Promoting Competition in the American Economy, a blueprint for the vigorous “whole-of-government” enforcement of the antitrust laws. It was more than rhetoric. Since then, government enforcers have been promoting a new vision of competition law, one that looks beyond the welfare of consumers to the protection of individual businesses and their workers. The enforcers’ theories eschew the long-established focus on price, quality, and quantity to embrace broader goals of social justice. They are reinvigorating—some would say rewriting—antitrust law.

Antitrust was designed to evolve with economic realities. It began as a statute only a few sentences long. But what followed—both legislatively and judicially—covers volumes. This most recent era of reinterpretation has spawned new and aggressive approaches to enforcement:

Monopsony or Buyer-Power Theories, Especially in the Labor Context

These cases allege that competitors have agreed to restrict worker compensation or that parties are merging to increase their power to artificially depress wages.

Main Street Protectionism

These cases take on the so-called “too big to fail” phenomenon by: challenging vertical mergers, which grow the size of a business without consolidating a specific market; scrutinizing horizontal mergers, particularly those that involve incentives for research and innovation; viewing merger efficiencies with increased skepticism; exploring refusal-to-deal theories when firms use their power to hobble nascent competitors; and reintroducing criminal liability for monopolization.

Shaping the New Economy

Another iteration of Main Street protectionism, these cases target technological innovators that have earned a loyal consumer following and have allegedly leveraged that position to buttress their core business  and take control of other markets. Lurking in the subtext are questions over the role of data, privacy, and artificial intelligence in the economics of antitrust: What counts as “payment”? How can a “free” good or service become anticompetitive (if at all)? And is a diminution in privacy protections a competitive harm?

Directing Millennial-Era Economic Theories

These cases aim to develop the law that governs a changing economy. For example, two-sided markets, and the law governing them, date back well before social media. But the dynamics of two-sided transaction platforms, a digital-age development, have put pressure on courts to explain how the law should be advanced to define those markets, measure competitive harm, and assess damages.

To execute this far-reaching agenda, enforcers have used every tool at their disposal in ways unseen for years—invoking the Sherman Act for criminal monopolization claims, broadening the application of the Federal Trade Commission Act to a range of “unfair practices,” reinvigorating the Clayton Act’s prohibition on interlocking directorates, and reviving the Robinson-Patman Act for rebates and fees paid to pharmacy benefit managers. And while their efforts against brand- name Fortune 100 companies have received the most attention, enforcers have been equally active in investigating or prosecuting claims against smaller companies, such as construction contractors and healthcare staffing firms. Further, at the behest of the current administration, enforcers have announced a particular interest in agriculture, airlines, information technology, prescription drugs and healthcare, and telecommunications.

In short, companies across the economy— especially those launching strategic initiatives or shifting business practices or policies—must consider both traditional antitrust rules and the principles emerging from the recent flood of enforcement efforts. Knowing how to construe agency guidelines, policy directives, and public statements will help companies assess potential antitrust risk, leverage case law to defend existing business models, and endorse long-term, procompetitive business initiatives that will not call for costly course corrections.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Katrina Robson, an O’Melveny partner licensed to practice law in the District of Columbia and California, Ian Simmons, an O’Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, and Julia Schiller, an O’Melveny partner licensed to practice law in the District of Columbia, New Jersey, and New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2023 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, T: +1 212 326 2000.