2020 ANTITRUST YEAR IN REVIEW - Wilson Sonsini
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2020 ANTITRUST YEAR IN REVIEW Austin Beijing Boston Brussels Hong Kong London Los Angeles New York Palo Alto San Diego San Francisco Seattle Shanghai Washington, DC Wilmington, DE
Wilson Sonsini 2020 Antitrust Year in Review
Table of Contents
Introduction.................................................................................................................................................................1
Merger Enforcement...................................................................................................................................................2
Guidance Galore: New Guidelines and HSR Rule Interpretation...................................................................2
Vertical Merger Guidelines..........................................................................................................................2
Merger Remedies Guidelines.......................................................................................................................2
Changes in HSR Interpretation...................................................................................................................3
Spotlight on Efficiencies Defenses.....................................................................................................................3
T-Mobile/Sprint..............................................................................................................................................3
Peabody Energy/Arch Resources.....................................................................................................................3
Traditional Merger Enforcement...................................................................................................................... 4
FTC’s Winning Streak Ends....................................................................................................................... 4
Both Agencies Bring Hospital Merger Challenges................................................................................... 4
Acquisitions of Nascent Competitors........................................................................................................ 4
Unusual Actions...................................................................................................................................................5
Consummated Merger Challenges..............................................................................................................5
The Historic Novelis/Aleris Arbitration...................................................................................................... 6
International Mergers........................................................................................................................................ 6
Spotlight on Data (Again)........................................................................................................................... 6
EC’s Merger Review Under Judicial Scrutiny............................................................................................ 6
Ramped-Up Enforcement in the UK: Redefining “Voluntary”............................................................... 6
The UK: A Deal Graveyard?.........................................................................................................................7
Brexit and Its Impact on Global Deals........................................................................................................7
Agency Investigations................................................................................................................................................7
U.S. Enforcement Agency Collaboration and Disagreement..........................................................................7
Collaboration Between the Federal Agencies............................................................................................7
FTC and DOJ Clash at Intersection of Antitrust and IP........................................................................... 9
Federal Trade Commission ..............................................................................................................................10
Clarification of Authority to Seek Monetary Remedies..........................................................................10
Decisions Continued to Show Notable Party-Line Split.........................................................................10
Continued Emphasis on the Pharmaceutical Sector............................................................................... 11
Department of Justice........................................................................................................................................ 11Wilson Sonsini 2020 Antitrust Year in Review
Table of Contents (cont.)
Renewed Focus on Financial Markets...................................................................................................... 11
Continued Activity on Standard-Setting Organizations and Patent Licensing Issues........................ 11
DOJ Continues Program to Terminate Decades-Old Consent Decrees................................................. 12
DOJ Drops California Emissions Standards Investigation.....................................................................12
State Enforcement.............................................................................................................................................12
Competition and Collaboration with the Federal Agencies...................................................................12
Civil Antitrust Enforcement Outside the United States................................................................................. 13
European Union Investigations................................................................................................................ 13
EU Member State Investigations...............................................................................................................14
Regulatory Efforts in Europe to Address the Digital Sphere..................................................................14
Growing Focus on Large Digital Platforms in Asia.................................................................................15
Criminal/Cartel Investigations................................................................................................................................15
Notable Developments in the DOJ’s Criminal Antitrust Enforcement Program.........................................15
Enforcement Priorities and Initiatives.....................................................................................................15
Administrative Updates.............................................................................................................................16
Legislative Developments..........................................................................................................................16
International Cooperation.........................................................................................................................16
Significant DOJ Investigations and Prosecutions...........................................................................................16
Government Procurement......................................................................................................................... 17
Generic Pharmaceuticals........................................................................................................................... 17
Hard Disk Drive Suspension Assemblies.................................................................................................18
Air Cargo and Auto Parts Executive Extraditions...................................................................................18
Financial Services: FOREX.......................................................................................................................18
Food and Consumables..............................................................................................................................18
Construction ..............................................................................................................................................19
Health Care Staffing ..................................................................................................................................19
Cartel Enforcement Outside of the U.S. ..........................................................................................................19
European Union and United Kingdom....................................................................................................19
Canada........................................................................................................................................................ 20
South Korea................................................................................................................................................ 20Wilson Sonsini 2020 Antitrust Year in Review
Table of Contents (cont.)
Japan............................................................................................................................................................21
China............................................................................................................................................................21
Brazil............................................................................................................................................................21
Civil Litigation..........................................................................................................................................................22
Section 1: Concerted Action..............................................................................................................................22
Political Bias Antitrust Claims Fail to Gain Traction..............................................................................22
Mixed Results in Cases Involving Organizations....................................................................................22
Follow-on Litigation from Cartel Investigations Remains Active.........................................................22
Section 2: Monopolization................................................................................................................................24
Technology..................................................................................................................................................24
Miscellaneous.............................................................................................................................................25
Antitrust Litigation in the Pharmaceutical Industry......................................................................................25
Class Certification............................................................................................................................................. 26
Uninjured Plaintiffs as a Bar to Class Certification................................................................................ 26
Use of Averaging.........................................................................................................................................27
Civil Litigation in the UK..................................................................................................................................28
Conclusion................................................................................................................................................................ 29
About Wilson Sonsini’s Antitrust Practice............................................................................................................ 30Wilson Sonsini 2020 Antitrust Year in Review
Introduction
Wilson Sonsini Goodrich & Rosati is the Trump administration and analyze agenda and leniency program. We
pleased to present its 2020 Antitrust actions by both U.S. antitrust agencies also describe recent actions in other
Year in Review, which summarizes the and enforcers in other jurisdictions jurisdictions, including the EU, UK,
most significant antitrust matters and around the world across a range of Canada, South Korea, Japan, China,
developments of the past year. Antitrust merger review, civil conduct, and and Brazil. This report concludes
activity has not slowed down during criminal enforcement matters. The with an update on private antitrust
the COVID-19 pandemic and may in mergers chapter highlights a range litigation, with particular emphasis
fact have accelerated. Continuing the of new guidance issued by U.S. on developments in pharmaceutical
trend of the last several years, antitrust agencies this year, developments in cases and the increasingly critical class
enforcement—both government and the treatment of efficiencies in merger certification process.
private—has become an increasingly analysis, and the growing importance
prominent part of the public discourse, of the UK Competition and Markets We hope you find our 2020 Antitrust
particularly with respect to technology Authority in merger clearance. The Year in Review to be a useful resource.
and digital platform industries. More agency investigations chapter notes As always, should you have any
traditional enforcement has proceeded continued areas of cooperation and questions or comments on any of
apace as well, with pharmaceuticals, contention between U.S. agencies and the matters, trends, or controversies
intellectual property licensing, price- discusses the priorities of U.S. enforcers discussed in the report, please contact
fixing and bid-rigging, and nascent (federal and state) and non-U.S. your regular Wilson Sonsini attorney
competitor acquisitions in the enforcers (focusing particularly on the or any member of the firm’s antitrust
spotlight. European Commission and EU member practice.
states). The criminal enforcement and
In this report, we examine the final cartel chapter provides updates on the
year of antitrust enforcement under Department of Justice’s enforcement
1Wilson Sonsini 2020 Antitrust Year in Review
Merger Guidance Galore: New and is positioned vertically or is
Guidelines and HSR Rule complementary to the products and
Enforcement Interpretation
services in the relevant market.4
Unlike horizontal mergers, the
agencies cannot use changes in
The year 2020 was an eventful one for Vertical Merger Guidelines concentration as a screen for
merger review and enforcement around
competitive effects.
the world. In the United States, the In June 2020, the DOJ and the FTC
U.S. Department of Justice (DOJ) and released the final version of the long- ● Anticompetitive effects. The
the Federal Trade Commission (FTC) awaited update to the joint Vertical guidelines recognize that vertical
published new guidance regarding Merger Guidelines, which were last mergers can harm competition
vertical merger enforcement, merger issued in 1984.1 Recent enforcement by raising rivals’ costs, causing
remedies, and Hart-Scott-Rodino (HSR) activity—such as AT&T/Time Warner and foreclosure,5 increasing the
filing requirements. The agencies, along Staples/Essendant—has exposed deep likelihood of post-merger
with their state-level counterparts, had coordination,6 or facilitating access
rifts on key questions of legal doctrine
packed merger enforcement agendas. to sensitive business information
and economic analysis both in the
The challenges to T-Mobile/Sprint and about its upstream or downstream
antitrust bar and between and within
rivals that was unavailable to it
Peabody Energy/Arch Resources put a enforcement agencies. before the merger.7
spotlight on efficiencies defenses. More
generally, the agencies continued to For example, the new guidelines are ● Procompetitive effects. The
bring traditional merger enforcement silent on the topic of remedies for guidelines also recognize that
cases, focusing on both acquisitions vertical mergers because of disagreement vertical mergers can generate
that increase concentration in already between the agencies. The FTC has been efficiencies that benefit
concentrated markets and acquisitions willing to accept behavioral remedies competition and consumers,8
of nascent competitors. That said, the such as firewalls. The DOJ, on the other such as through elimination of
FTC did bring two novel actions against hand, has been far more critical of double marginalization (EDM).
consummated mergers, while the DOJ This efficiency—unique to vertical
behavioral remedies, recently stating in
used its authority to resolve a matter in mergers—results from the merged
its Merger Guidelines Manual (discussed
arbitration—a first for the agency. firm gaining access to an upstream
below) that “no matter how well crafted,
input at cost and avoiding the
the risk of collaboration in spite of the margin that would be imposed by a
Internationally, merger enforcers firewall is great.”2 The FTC itself was separate upstream input provider.9
continued to closely review competitive sharply divided along party lines on the
effects arising from merging data or new Vertical Merger Guidelines. Both Merger Remedies Guidelines
data collection resources. The European Democratic commissioners dissented
Commission saw increased judicial from the vote adopting the guidelines, In September 2020, the DOJ issued an
scrutiny of its merger review program, criticizing them for overemphasizing the updated Merger Remedies Manual,
while European enforcers continued potential benefits of vertical mergers and which lays out the agency’s framework
to bring tough sanctions against failing to consider alternative theories of for structuring and implementing relief
procedural breaches. Finally, the United harm.3 in merger cases short of a full-stop
Kingdom’s Competition and Markets
injunction.10 Key aspects of the new
Authority continued to increase its The new Vertical Merger Guidelines lay Manual include:
jurisdictional reach and to zealously out the following key principles:
challenge global deals—a trend that is ● Structural versus behavioral
only likely to continue as the Brexit ● Market definition, market shares, remedies. The DOJ further
transition period ends. and concentration. The agencies underscored recent emphasis on its
will identify a relevant market and preference for structural remedies
one or more “related products,” involving the sale of businesses or
meaning a product that is supplied assets by the merging firms over
or controlled by the merged firm conduct remedies restraining the
2Wilson Sonsini 2020 Antitrust Year in Review
merged firm’s business conduct or determine whether the parties structured evidence that the
pricing authority.11 The Manual the deal to avoid or delay an HSR filing.17 efficiencies arising from
states that structural remedies the Proposed Merger will
are “clean and certain, effective, Spotlight on Efficiencies cause New T-Mobile to
and avoid ongoing government
Defenses compete more vigorously
entanglement in the market,”12
with its rivals in the …
while conduct remedies are
Two major enforcement litigations in market[]…evidence that
only appropriate in very limited
2020 put a spotlight on uncertainties Sprint is a weakened
situations.13
in how efficiencies should be evaluated competitor that is
● Consent enforcement. The DOJ and balanced in merger cases. Both the not likely to continue
is renewing its focus on enforcing T-Mobile/Sprint and Peabody Energy/Arch competing vigorously
obligations against merging parties Resources cases went to trial this year, in the … market[]…and
in consent decrees. The Manual and both defenses were based in part on evidence that the DOJ and
sets out new standard provisions the assertion of substantial efficiencies FCC…collective efforts to
that must be included in consent arising from the combinations. T-Mobile establish DISH as a new
decrees and highlights the role of and Sprint secured a win based in part vigorous competitor in the
the newly created Office of Decree … market[] ameliorate[s]
on those efficiencies, but the court
Enforcement and Compliance
also relied on other market structure any remaining concern of
(ODEC) to oversee compliance
evidence. The court dismissed the anticompetitive effect.20
efforts across the DOJ.14
efficiencies in Peabody Energy/Arch
Resources and forbade the joint venture. The opinion makes it clear that, while
Changes in HSR Interpretation
While these cases breathed some life efficiencies were an important factor,
into efficiencies defenses, they show approval of the merger also hinged on
In September 2020, the FTC announced
that efficiencies, standing alone, remain evidence of an effective new competitor
an important change in its interpretation
unlikely to carry the day. entering the market and Sprint’s waning
of the HSR Rules’ treatment of special
competitive significance.
dividends.15 HSR Rule 801.90 states that
merging parties cannot use a transaction T-Mobile/Sprint
Peabody Energy/Arch Resources
structure for the purpose of avoiding or
delaying their filing obligation. FTC staff On February 11, 2020, Judge Marrero of
the U.S. District Court for the Southern On September 29, 2020, Judge Pitlyk of
determines whether avoidance or delay
District of New York dismissed a the U.S. District Court for the Eastern
was the objective by applying a “but for”
challenge to the proposed merger District of Missouri considered a
test.16 If the transaction’s structure was
between T-Mobile and Sprint brought proposed joint venture between two
motivated by some benefit from avoiding
by a group of state attorneys general large coal mining facilities—Peabody
or delaying HSR filing, then it is an
(the deal received DOJ and Federal Energy and Arch Resources.21 The
“avoidance device” under the rule.
Communications Commission (FCC) defendants argued that the joint
conditional clearance while the suit was venture combining Peabody’s NARM
A 2003 informal interpretation
pending).18 Judge Marrero concluded mine with Arch’s neighboring Black
categorically excluded special dividends
that the plaintiffs “ha[d] established an Thunder mine would unlock efficiencies,
from consideration as an avoidance
initial presumption that, by reason of “strengthening coal’s competitiveness
device, allowing parties to avoid
higher concentration in fewer firms in against natural gas and renewables”—
filing by using special dividends to
the relevant market, and New T-Mobile’s sources of energy that the FTC had
get under the HSR size-of-person
much larger market share, the effect of excluded from the relevant market.22
or size-of-transaction thresholds. In
the Proposed Merger would be likely The court agreed that the joint venture
September 2020, the FTC withdrew
anticompetitive.”19 However, Judge would “clearly make possible substantial
this interpretation. Going forward,
Marrero further ruled that T-Mobile efficiencies,”23 but held that the FTC’s
FTC staff will evaluate special
and Sprint had “satisfied their burden of proposed market was properly drawn
dividends more holistically, applying
rebuttal” by providing: and that the efficiencies, even if fully
the aforementioned “but for” test to
credited, “would not offset the likely
3Wilson Sonsini 2020 Antitrust Year in Review
competitive harm” in the FTC’s coal- failed to carry its burden to show that over both cases, with trial for Methodist
based relevant market.24 insurers would accept a price increase Le Bonheur Healthcare set to begin on
rather than turn to hospitals outside of May 18, 2021.35
Traditional Merger the alleged markets, noting in particular
Enforcement that insurers’ testimony was conclusory The DOJ’s challenge to Geisinger
and not credible.31 Health’s $100 million acquisition of
Merger review statistics for 2020 have a 30 percent interest in Evangelical
not yet been published,25 but the FTC Both Agencies Bring Hospital Merger Community Hospital is somewhat
and DOJ have continued to bring Challenges unusual because minority acquisitions
enforcement actions, focusing particu- are rarely litigated.36 The DOJ alleged
larly on both acquisitions that increase The FTC has had primary responsibility the arrangement was intended to dodge
concentration in already concentrated over hospital mergers since at least the antitrust scrutiny, citing the parties’
markets and acquisitions of nascent mid-2000s, but both the FTC and DOJ documents discussing previous attempts
competitors. are currently litigating hospital merger to merge. The DOJ further asserted that
cases. The FTC filed three administrative the parties’ collaboration agreement
FTC’s Winning Streak Ends complaints in 2020. As noted above, “fundamentally alter[s] their relationship
the FTC failed to secure a preliminary as competitors and curtail[s] their
Notably, the FTC’s seven-case winning injunction in its challenge to Jefferson incentives to compete independently for
streak of litigated merger challenges Health’s proposed acquisition of Albert patients.”37 Litigation is ongoing.
came to an end in 2020 when the U.S. Einstein Healthcare. Two other suits are
District Court for the District of Colum- pending, one seeking to block Methodist Acquisitions of Nascent Competitors
bia denied the FTC’s request for a pre- Le Bonheur Healthcare’s acquisition of
liminary injunction to prevent Evonik two Memphis-area hospitals owned by In 2020, the FTC and DOJ have
Industries from acquiring PeroxyChem Tenet Healthcare and a second seeking continued to challenge mergers they
Holdings. The FTC proposed a product to block Hackensack Meridian Health’s believe would eliminate a nascent
market “for the sale of standard, special- acquisition of hospitals from Englewood competitor, especially in technology
ty, and pre-electronics grade hydrogen Healthcare Foundation in Bergen sectors. A nascent or potential
peroxide.”26 Deviating from the standard County, New Jersey.32 competition theory of harm appeared in
practice of defining product markets five of the FTC’s 22 merger enforcement
based on demand-side substitution, Both complaints follow the typical actions and three of the DOJ’s 10 merger
the FTC instead relied on evidence of pattern for hospital mergers. The enforcement actions this year.38
supply-side substitutability.27 The court Methodist Le Bonheur Healthcare
soundly rejected the FTC’s relevant mar- complaint alleges that the acquisition of On February 3, 2020, the FTC filed an
ket as “ill-conceived”28 and denied the two Saint Francis hospitals in Memphis administrative complaint challenging
injunction in part on that ground.29 will reduce the number of providers the merger of Edgewell Personal
of general acute care (GAC) inpatient Care Company, a consumer products
In December, the FTC lost another hospital services in the Memphis company that supplies multiple razor
preliminary injunction, this time area from four to three, resulting in brands—including the second-largest
in a hospital merger case. The FTC Methodist Le Bonheur Healthcare brand, Schick—and Harry’s, Inc., an
brought suit in the Eastern District of controlling over 50 percent of the market online “direct-to-consumer” supplier
Pennsylvania to enjoin Jefferson Health’s for GAC inpatient hospital services of razors that recently expanded its
proposed acquisition of Albert Einstein in the Memphis area.33 Similarly, the offerings to brick-and-mortar retailers.39
Healthcare pending an administrative Hackensack Meridian Health complaint Despite Harry’s modest market share,
trial on the merits. The court denied the alleges that the deal would consolidate the FTC concluded that Harry’s
FTC’s request, concluding that the FTC’s three of the six GAC hospitals in Bergen future competitive significance was
proposed geographic markets did not County, accounting for roughly half understated. The complaint cites an
align with the commercial realities of of GAC services in the area.34 Chief Edgewell investor deck referring to
providing healthcare in the Philadelphia Administrative Law Judge D. Michael Harry’s as “one of the most successful
region.30 The court found that the FTC Chappell has been appointed to preside challenger brands ever built”40 and
4Wilson Sonsini 2020 Antitrust Year in Review
alleges that Harry’s entry at Target and because they “do not account for the November 2020. The DOJ alleged that
Walmart “ended the long-standing leverage that airlines gain from having Credit Karma Tax’s digital do-it-yourself
practice of reciprocal price increases by Farelogix’s Open Connect available (DDIY) tax preparation product “poses
Gillette and Edgewell,” resulting in price as an alternative when negotiating a unique threat” to Intuit’s TurboTax
reductions and/or increased promotional contract terms with Sabre.”45 The DOJ business and other DDIY tax preparation
spend by Proctor & Gamble (P&G) and also presented evidence that Sabre had providers because Credit Karma Tax
Edgewell.41 Harry’s introduction of the a history of engaging in anticompetitive offered an entirely free product, whereas
Flamingo brand for women in October tactics designed to undermine and all other providers upsell consumers
2018 allegedly also prompted reduced delay the adoption of Farelogix’s for DDIY tax preparation products
prices and aggressive promotions from technology.46 The district court beyond the most basic federal tax
both Edgewell and P&G.42 One week acknowledged that Farelogix had been filings.51 The DOJ concluded that this
after the complaint was filed, Edgewell a “pioneering innovator and disruptor strategy made Credit Karma Tax “the
terminated the merger agreement. of the airline travel services ecosystem,” most disruptive competitor for DDIY
Harry’s has threatened litigation against but nonetheless ruled in favor of the tax preparation” despite serving only 3
Edgewell, though it appears that no case merging parties, concluding that the percent of customers.52 Consequently,
has yet been filed.43 DOJ had failed to prove that Sabre “will the DOJ required Intuit and Credit
likely act consistent with its history [of Karma to divest Credit Karma Tax to
Eleven months later, the FTC filed an resisting change] or these incentives Square Inc. as a condition to closing the
administrative complaint challenging [to raise prices, reduce availability transaction.53 DOJ Assistant Attorney
another proposed transaction in the of Farelogix’s technology, and stifle General (AAG) Makan Delrahim
razor industry—P&G’s acquisition of innovation].”47 The court, relying on characterized Square as “another
Billie, Inc.44 Similar to Edgewell/Harry’s, Ohio v. American Express Co., held that highly successful and disruptive fintech
the FTC alleged that Billie, a direct-to- Sabre and Farelogix do not compete in company” and stated that the divestiture
consumer seller of women’s razors and a relevant market, thereby extending to of Credit Karma Tax to Square would
body care products that launched in merger cases the U.S. Supreme Court’s “ensure[] that taxpayers will continue
2017, is a nascent, but rapidly growing, finding that courts must consider to both benefit from [disruptive
head-to-head competitor of P&G’s. interaction between both sides of two- competition from Credit Karma Tax] and
According to the FTC, competition from sided platforms to determine whether benefit from new innovative financial
Billie spurred P&G to introduce its own allegedly anticompetitive conduct harms service offerings from both Intuit and
direct-to-consumer website promoting a market.48 Square.”54
its Venus-brand razors for women.
The FTC also noted that Billie’s rapid Two days after the district court issued Unusual Actions
growth was likely to expand into brick- its opinion, the United Kingdom’s
and-mortar stores, further challenging Competition and Markets Authority Consummated Merger Challenges
P&G’s position as the market leader. published its final report prohibiting
The administrative trial is set to begin the proposed transaction, discussed Challenges to consummated mergers
on June 22, 2021, and, in the interim, the below. The parties’ merger agreement are relatively rare, but the FTC brought
FTC will seek a temporary restraining expired three weeks later, and on May two such cases in 2020. In January, the
order and preliminary injunction in 1, 2020, the parties announced that they FTC filed an administrative complaint
federal court. were abandoning the deal.49 The Third against Axon’s consummated acquisition
Circuit subsequently granted the DOJ’s of VieVu, alleging that Axon and VieVu
Nascent competition was also at motion to vacate the district court’s competed in the provision of body-worn
the center of the DOJ’s challenge to decision, holding that termination of camera systems to large, metropolitan
Sabre Corporation’s acquisition of the proposed transaction rendered the police departments across the United
Farelogix. The DOJ asserted at trial decision moot.50 States.55 On the same day, Axon filed
that both current and forward-looking suit in federal district court in Arizona,
market share estimates understate the The DOJ conditionally cleared Intuit’s arguing that the FTC’s in-house admin-
competitive significance of Farelogix acquisition of Credit Karma in istrative proceeding violated due process
5Wilson Sonsini 2020 Antitrust Year in Review
because the FTC’s commissioners vote issued in under a week—significantly committing (1) not to use Fitbit health
both to bring cases and to hear appeals faster than a typical merger trial in and wellness data for Google ads and to
from the administrative law judge. Axon federal court.63 Mr. Arquit ruled that the support other wearable manufacturers
also argued that the FTC/DOJ clearance DOJ had correctly defined the product on Android and (2) to continue to
process—through which the agencies market.64 As a result, Novelis was allow Fitbit users to connect to third-
decide which will review a particular required to divest Aleris’s aluminum party services via APIs.69 At the time of
merger—violates equal protection.56 The ABS operations in North America.65 In a writing, the EC has until January 8, 2021,
district court dismissed Axon’s lawsuit in recent speech, AAG Delrahim stated that to make a decision on the matter.70
April. Axon appealed to the Ninth Cir- arbitration in merger cases can lead to
cuit, which has yet to rule. The FTC’s ad- “tremendous” benefits for taxpayers and EC’s Merger Review Under Judicial
ministrative trial on the merits is stayed merging parties in terms of cost savings Scrutiny
pending the Ninth Circuit’s decision.57 and efficiency, and that the DOJ will
continue to evaluate whether matters In one of its most important rulings
In April, the FTC sought to unwind may be appropriate for arbitration.66 in recent years, the General Court in
Altria’s acquisition of a 35 percent stake May 2020 annulled the EC’s decision
in JUUL and associated agreements International Mergers67 to block the proposed acquisition of
between the companies.58 The FTC Telefonica UK by Hutchison 3G UK
alleged that Altria agreed not to compete Spotlight on Data (Again) and criticized the agency’s analysis of
against JUUL in the e-cigarette market in competitive effects in merger control.
exchange for the 35 percent ownership Enforcers around the world have The General Court found that the EC
interest in JUUL and a presence on continued to closely scrutinize had failed to prove that the transaction,
JUUL’s board.59 The administrative trial competitive effects arising from data. In which is a four-to-three merger in the
is scheduled to begin in April 2021. January 2020, the Pakistan Competition UK mobile telephone market, would
Commission (PCC) conditionally harm competition and significantly
The Historic Novelis/Aleris Arbitration approved Uber’s acquisition of Careem, raise prices.71 The EC has appealed,
a player in the ridesharing market. noting that the case raises important
In March, the DOJ successfully The commitments require Uber to, legal issues, such as the legal test for
challenged the merger of Novelis upon request and if certain criteria are “gap” cases (those that raise competitive
and Aleris in the first-ever exercise fulfilled, (1) enter into an arm’s length concerns despite the merging parties not
of its authority to resolve a matter agreement to license Careem’s points- being dominant), the role of efficiencies,
in arbitration. The DOJ alleged that of-interest map data to competitors and the standard of proof, the value of
the proposed merger would have (2) grant riders access to data about their the EC’s economic assessment, and
combined two of only four producers use of Uber in a format that facilitates the boundaries of the General Court’s
of automotive aluminum body sheet the transfer of that data to other judicial control.72 If the decision is
(aluminum ABS).60 The DOJ and ridesharing suppliers.68 The transaction upheld by the European Court of Justice
the parties agreed that there was a also received approval from competition (ECJ), the EC will be required to review,
single dispositive issue—whether the authorities in the United Arab Emirates, and potentially revise, its process for
product market was properly limited to Egypt, Saudi Arabia, Morocco, Kuwait, analyzing non-coordinated effects of
aluminum ABS61—and that the matter Jordan, and the Common Market for mergers in oligopolistic markets.73
was therefore suitable for arbitration Eastern and Southern Africa (COMESA).
without the need to file a federal Ramped-Up Enforcement in the UK:
complaint.62 After full fact discovery The European Commission (EC) is Redefining “Voluntary”
supervised by a federal court, the conducting an in-depth investigation
matter was heard in arbitration by into Google’s proposed acquisition of The merger control regime in the UK is,
Kevin Arquit, an experienced antitrust Fitbit that focuses on the use of data strictly speaking, voluntary. However,
lawyer and former head of the FTC’s to personalize online advertising. In the Competition and Markets Authority
Bureau of Competition. The hearing was Phase II of the investigation, Google (CMA) has the power to “call in” deals
conducted over 10 days, and a decision bolstered its initial Phase I proposal by that have not been notified and that
6Wilson Sonsini 2020 Antitrust Year in Review
meet the UK thresholds, namely where meaning parties need to prove that the longer be part of the EU’s “one-stop-
the target has more than £70 million ($85 CMA’s decision was somehow illegal, shop” regime. Transactions may be
million) in UK turnover or the merger irrational, or procedurally flawed. This subject to parallel EC and CMA reviews
creates or enhances a company’s share is a high bar, and the CAT has never (in addition to other required global
of supply of 25 percent or more.74 Since overruled a CMA decision in full, filings). Given the CMA’s increasingly
2019, the CMA has made increasingly meaning a successful challenge would be interventionist stance and deal mortality
creative use of this test to call in more unprecedented.78 rate, it will be crucial to factor in
high-profile deals. Of the 10 deals that the impact of a UK review on deal
the CMA successfully challenged at The UK: A Deal Graveyard? timetables, long-stop dates, conditions
Phase II in 2020, eight involved a target precedent, and risk allocation.
with minimal UK turnover or presence The fact that 10 of the deals challenged
that the CMA called in using the share- by the CMA in 2020 were blocked or The CMA intends to publish updated
of-supply test.75 abandoned by December underscores jurisdictional and procedural guidance,
the CMA’s zealous enforcement and including guidance on the mergers
This virtually limitless jurisdiction increasing interventionism.79 Nine intelligence function, before the end
is currently being challenged. Sabre of the deals challenged by the CMA of the year, with updated merger
is appealing the prohibition of its were blocked or abandoned in 2019. assessment guidelines to follow in
merger with Farelogix, which, as As it stands, referrals for an in-depth 2021. The updates are designed for a
noted above, was issued just two days Phase II review since January 2019 have “post-Brexit” world in which the CMA
after the DOJ lost its bid to block the resulted in a deal mortality rate over 70 expects between 30 and 50 reviews
deal in a federal court. The CMA took percent. This compares with a 33 percent per year. The guidance will focus on
jurisdiction over the matter despite mortality rate for in-depth Phase II dynamic theories of harm and potential
Farelogix not being directly active in the reviews before the EC and a 10 percent competition, the CMA’s controversial
United Kingdom.76 The appeal before mortality rate for the FTC and DOJ over jurisdictional test, and post-Brexit
the UK’s specialist competition court the same period. cooperation and coordination with other
(the Competition Appeal Tribunal, or global enforcers. Consultations on the
CAT) will be closely watched, given Brexit and Its Impact on Global Deals proposed amendments were launched in
its importance for mergers involving November.80
parties with minimal (or no) presence The Brexit transition period ends on
in the United Kingdom.77 The CAT is December 31, 2020, meaning that after
bound by a judicial review standard, that date, the United Kingdom will no
Agency accelerated as agencies rapidly adapted U.S. Enforcement Agency
to the new working environment. As Collaboration and
Investigations expected, many agencies maintained
Disagreement
a close focus on technology markets
Despite the challenges posed by and continued, advanced, or initiated Collaboration Between the Federal
the COVID-19 pandemic, the U.S. investigations into major U.S. Agencies
Department of Justice (DOJ), Federal technology firms. Notably, several
Trade Commission (FTC), European influential jurisdictions made proposals In 2020, the FTC and DOJ have
Commission (EC), and other for substantive changes in the antitrust continued their traditionally cooperative
enforcement agencies around the world law. Many of these were focused on and collaborative approach. Notable
remained very energetic in enforcement digital markets, but others aimed at areas of coordination include measures
and advocacy. Enforcement activity more comprehensive reforms. to respond to the COVID-19 pandemic
has not decreased and may even have and a continued focus at both agencies
7Wilson Sonsini 2020 Antitrust Year in Review
on major technology firms and labor COVID-19-related supplies. Since the ● structural separations and line-of-
markets. publication of the guidance, the DOJ has business restrictions, which would
issued several BRLs approving proposals restrict or prohibit a platform
COVID-19 for collaboration by health care and operator from also acting as a
pharmaceutical companies.83 platform participant;
In response to the COVID-19 pandemic,
the FTC and DOJ have taken several ● nondiscrimination rules to prevent
Focus on “Big Tech”
self-preferencing;
steps to provide guidance and help
address the difficulties caused by the Antitrust scrutiny of major technology
● increasing the difficulty of
disruptions. Some of those measures, firms, sometimes called “Big Tech,”
obtaining antitrust approval for
such as consideration of exigencies was a major issue for legislators and certain transactions, including by
in assessing whether to investigate policy makers in 2020. Last year, the placing the burden of proof on the
conduct that may otherwise violate House Judiciary Committee began respondent for certain transactions;
the antitrust laws, are expected to be investigating competition in digital
temporary. Other measures, such as the markets, focusing on Google, Apple, ● facilitating more Section 2 cases by
modernization of processes through the Facebook, and Amazon (collectively overturning U.S. Supreme Court
use of e-filing and other technologies,81 “GAFA”). The committee has held precedents like Trinko; and
are expected to be made permanent. several hearings—one of which
involved the companies’ CEOs—and ● increasing the level of private
On March 24, 2020, the agencies issued enforcement by lowering pleading
issued subpoenas for documents and
standards and reducing procedural
a joint statement providing guidance other information to both the GAFA
obstacles such as limits on class
to businesses seeking to collaborate companies and third parties. In October
action formation.
to protect the health and safety of of this year, the committee’s Democratic
Americans during the pandemic. The majority released a 449-page report.84 No
The antitrust enforcement agencies
statement details an expedited antitrust Republicans signed on to the Majority
have focused closely on technology
procedure whereby the agencies Staff Report. Instead, a group of
markets as well. In October 2020, the
will respond to Advisory Opinion or Republican members issued a separate
DOJ and 11 state attorneys general filed
Business Review Letter (BRL) requests “Third Way” report that endorsed some
a Section 2 monopoly maintenance
connected to COVID-19 within seven of the Majority Staff’s allegations and
complaint against Google.86 The
calendar days of receiving all necessary conclusions without endorsing most of
complaint arises from parallel state and
information. The statement further the policy recommendations.85
federal investigations into the company
provides a list of collaborative activities
that began in 2019. The DOJ and the
designed to improve health and safety The Majority Staff Report concludes that
states allege that Google has unlawfully
in response to the pandemic that would the GAFA companies have high market
developed and maintained market
be consistent with the antitrust laws, shares, protected by entry barriers, in
power in markets for general search,
including research and development, a variety of different markets. It also
search advertising, and general search
sharing technical know-how, references hundreds of allegations of
text advertising through agreements
development of practice parameters for potentially anticompetitive behavior
with Apple and Android original
patient management, joint purchasing across nearly all lines of the companies’
equipment manufacturers (OEMs)
agreements among healthcare providers, businesses. The report advocates for
related to preinstallation and default
and private lobbying addressing the use far-reaching changes to antitrust law
settings for search. Notably, Assistant
of the federal emergency use authority.82 and policy to redress the issues and
Attorney General Makan Delrahim
The agencies also indicated that they allegations it describes, including:
and Deputy Assistant Attorney General
will account for exigent circumstances,
Barry Nigro recused themselves during
such as where health care facilities ● abandoning the consumer welfare
the investigation phase,87 and the case
work together to provide equipment standard in favor of broader
consideration of the interests of has been overseen by Attorney General
and services to communities without
workers, independent businesses, William Barr’s office under the direction
access to them, or where businesses
and other groups; of the Deputy Attorney General, Jeffrey
need to combine resources to facilitate
Rosen.88
the production and distribution of
8Wilson Sonsini 2020 Antitrust Year in Review
Following the DOJ and state attorneys’ not, and were never intended to be, a certain understatement, that “there
general lawsuit against Google, the covered by Section 230 immunity.”93 may be some potential inconsistency”
FTC and 48 state attorneys general filed The FTC announced in February that it between the approaches of the
separate suits under Section 2 against would conduct a Section 6(b) study of FTC and DOJ to the intersection of
Facebook on December 9, 2020.89 several acquisitions made in the 2010s antitrust and IP law.98 One of the more
The complaints arise from parallel by Alphabet/Google, Amazon, Apple, significant areas of tension has been
investigations into Facebook that Facebook, and Microsoft that were not the antitrust significance of a patent
began in 2019.90 The states and FTC reported under the HSR Act.94 The FTC holder’s intentionally false commitment
cooperated on their investigations. The aims to “assess whether U.S. antitrust to a standard-setting organization
complaints allege that Facebook has authorities are receiving adequate notice (SSO) to license its standard-essential
unlawfully monopolized the market of transactions that might limit or patents (SEPs) on fair, reasonable, and
for “personal social networking” or eliminate competition.”95 nondiscriminatory (FRAND) terms and
“personal social networking services” subsequent breach of that commitment.
through the acquisitions of Instagram Focus on Labor Markets DOJ AAG Makan Delrahim has
and WhatsApp. The complaints also repeatedly expressed his view that
include allegations that Facebook The FTC and DOJ have continued disputes about whether FRAND
imposed anticompetitive conditions on to examine antitrust issues in labor commitments have been honored sound
third-party software developers’ access markets, including new labor market in contract rather than antitrust.99 In
to Facebook APIs, which restricted concerns arising from the pandemic. late 2019, the DOJ withdrew from a 2013
developers from developing competing The agencies held a two-part series joint policy statement with the U.S.
functionalities or connecting with of workshops together covering a Patent and Trademark Office on this
competing social networking services. wide variety of labor competition issue and joined a new policy statement
issues, including no-poach and wage- to clarify its position that SEP holders
The FTC voted 3-2 to file suit, with fixing agreements, market definition, should be permitted to seek injunctions
Chairman Joe Simons joining with agreements between employers against implementers after the standard
Democratic commissioners Rohit on competition for workers, labor is adopted.100
Chopra and Rebecca Slaughter. monopsony in merger enforcement,
Commissioners Noah Phillips and antitrust exemptions for union FTC v. Qualcomm, one of the most
Christine Wilson voted against bringing activity and collective bargaining, significant antitrust decisions of this
suit.91 The FTC and state attorneys and the use of non-compete clauses year, brought the agencies’ disagreement
general seek a number of different in employer-employee employment on this point to a head. The FTC alleged
forms of relief from the court, including contracts.96 Additionally, in response that, among other things, Qualcomm
divestiture of Instagram and WhatsApp, to the COVID-19 pandemic, the DOJ violated the antitrust laws by refusing
enjoining various types of conduct, and and FTC issued a statement in April to license its chips on FRAND terms,
prior notice of future acquisitions. indicating that they would be “on alert” and sought to enjoin Qualcomm from
for employers, staffing companies, and continuing to do so. The DOJ filed a
On the policy side, the DOJ also issued recruiters that engage in collusion or statement of interest warning the district
recommendations this year to reform other anticompetitive conduct in labor court against an overly broad remedy.101
Section 230 of the Communications markets, focusing on doctors, nurses, The district court sided with the FTC
Decency Act.92 Section 230 was enacted first responders, and those who work and issued a permanent worldwide
in 1996 to protect technology companies in grocery stores, pharmacies, and injunction.102 In a rare move of direct
by providing that online platforms warehouses, among other essential confrontation, the DOJ filed an amicus
would not be treated as the publisher service providers on the front lines.97 brief with the Ninth Circuit arguing
or speaker for third-party content against the district court decision. The
appearing on their services, effectively FTC and DOJ Clash at Intersection of DOJ’s brief attacked the basis of the
insulating them from civil liability for Antitrust and IP district court decision, which is also the
such conduct. Among other changes, FTC’s theory of harm, arguing that
the DOJ recommended that it be made In 2018, FTC Chairman Joseph Simons “[p]remising liability on ‘unreasonably
clear that “federal antitrust claims are noted, in what would turn out to be high’ prices, as the court did here—
9Wilson Sonsini 2020 Antitrust Year in Review
instead of harm to competition—can that “Section 13(b) of the FTC Act 3-2 splits, with Commissioners Chopra
radically undermine important authorizes a court to ‘enjoin’ antitrust and Slaughter arguing in dissent that
incentives to innovate.”103 The DOJ also violations,” but does not authorize it to the majority’s analysis failed to consider
participated in oral argument on appeal. seek disgorgement because it is a form all potential harms. Examples include
of restitution, which is not contemplated the AbbVie/Allergan merger and Bristol-
The Ninth Circuit ultimately by Section 13(b).108 The panel remanded Myers Squibb/Celgene acquisition,
rejected the lower court’s (and thus the case to the district court for further where the dissents emphasized the
the FTC’s) reasoning, vacated the proceedings. need to assess the transactions’ effects
judgment, and reversed the injunction on innovation and, more broadly,
against Qualcomm.104 The decision The AbbVie decision contributed to advocated for industry-wide studies into
underscores the importance of the circuit split previously taken up the potential harms caused by mergers.
proof of anticompetitive effects in by the Supreme Court in AMG Capital
monopolization cases. The Ninth Circuit Management, LLC v. FTC in July 2020. The FTC’s investigation into and
found that the district court had (1) Noting that eight circuits hold that settlement of market allocation
erroneously imposed a duty to deal on Section 13(b) does allow the FTC to seek charges against rent-to-own operators
Qualcomm, (2) impermissibly looked restitution, petitioners in AMG Capital is an example of this split arising in a
outside the relevant antitrust market in argued that the Court should adopt the conduct investigation. The complaint
order to infer an anticompetitive act, minority rule instead and hold that alleged that rent-to-own operators
and (3) relied on outdated evidence (e.g., Section 13(b) does not permit the FTC to Aaron’s Inc., Buddy’s Newco, LLC, and
agreements that were terminated before seek monetary relief.109 The Third Circuit Rent-A-Center, Inc. each entered into
the suit was filed) to justify a broad, panel in AbbVie joined the minority agreements that resulted in one party
forward-looking global injunction.105 approach, and the decision is likely to closing stores and exiting a local market
The Ninth Circuit further rejected the strengthen the petitioners’ arguments. where the two parties had previously
argument that a SEP holder’s violation The parties in AMG Capital have competed.111 The exiting competitors
of FRAND commitments could completed briefing and are awaiting a allegedly also agreed not to compete
independently create antitrust liability, date for oral argument. within a specified geographic area for
and pointed to patent and contract law a specific time period, typically three
as sources for potential remedies.106 Decisions Continued to Show Notable years.112
Indeed, the court noted that the FTC had Party-Line Split
not even shown that a breach of these The FTC settled the case with a consent
commitments would hurt Qualcomm’s FTC decisions across all areas have order that prohibited the respondents
rivals, and declined “to ascribe antitrust continued to reflect a sharp split on and their franchisees from entering into
liability in these dynamic and rapidly party lines. Generally, the Democratic any reciprocal purchase agreement,
changing technology markets without dissents have criticized the Republican or inviting others to do so, and from
clearer proof of anticompetitive majority for not taking a more enforcing the non-compete clauses still
effect.”107 aggressive approach to enforcement in effect.113 Commissioners Chopra and
and for accepting inadequate remedy Slaughter dissented, and Chopra filed a
Federal Trade Commission packages. dissenting statement strongly criticizing
the decision and remedy. Among other
Clarification of Authority to Seek As noted in the Mergers chapter of things, he argued that the FTC should
Monetary Remedies this report, the FTC vote to issue the have analyzed the conduct under the per
Vertical Merger Guidelines in June 2020 se framework, rather than the rule of
The FTC’s statutory authority to seek was 3-2, with Commissioners Rohit reason, and characterized the majority’s
monetary remedies under Section Chopra and Rebecca Kelly Slaughter analysis and settlement as “a recipe for
13(b) of the FTC Act is expected to be voting against and arguing in dissenting weak enforcement that does little to
diminished following FTC v. AbbVie. On statements for recognition of additional deter market distortions and undermines
September 30, 2020, the Third Circuit theories of harm that may result from fair competition.”114
overturned a district court’s order vertical mergers.110 Several FTC merger
requiring profit disgorgement, reasoning clearance decisions have also entailed
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