In a blog post released on August 3, 2021, FTC Bureau of Competition Acting Director, Holly Vedova, announced that, in response to “a tidal wave of merger filings,” the FTC had begun to send standard form letters “alerting companies that the FTC’s investigation remains open and reminding companies that the agency may subsequently determine that the deal was unlawful.” Merging parties receiving such letters were warned by the blog post that although they may “choose to proceed with transactions that have not been fully investigated, they are “doing so at their own risk.”

Technically, the blog post reiterates what the law already provides. The Hart-Scott-Rodino Act already states that “any failure of [the FTC or the DOJ] to take any action … shall not bar any proceeding or any action with respect to such acquisition at any time,” and that nothing in the HSR Act limits the authority of the FTC or DOJ to obtain documents, testimony, or information under the Antitrust Civil Process Act, the FTC Act, or otherwise. 18 U.S.C. § 18a(i).

But, notwithstanding the recent FTC challenge to Facebook’s acquisition of Instagram and WhatsApp (albeit under §2 of the Sherman Act rather than §7 of the Clayton Act), such post-consummation challenges (or even investigations) of transactions that have previously been subject to HSR review are exceedingly rare.

Accordingly, we have four take-aways from Holly Vedova’s blogpost:

  • The blogpost is another indication that the FTC under Chairwoman Lina Khan may be more serious about challenging mergers — including consummated mergers.
  • Parties need carefully to consider this new policy in negotiating merger agreements, because closing conditions predicated on the expiration of relevant waiting periods are likely unaffected by the receipt of such a warning letter. Parties may wish to consider whether closing conditions predicated on the absence of a pending or threatened investigation are satisfied where the FTC has issued such a warning letter stating that the “investigation remains open and ongoing.”  And parties may wish explicitly to address in their merger agreements the effect of the receipt of such a warning letter.
  • Unless the Antitrust Division of the DOJ adopts a similar policy, this creates another meaningful distinction between the federal antitrust enforcement agencies in terms of merger review practice.
  • Because prior challenges to consummated HSR-reviewable transactions have been so rare, institutionalizing the issuance of this type of warning letter – and the potential for the perpetuation of investigations with no statutory or other limit on their duration – introduces an element of uncertainty into deal planning that runs counter to the almost 50-year course of practice under the HSR Act.

Parties should pay close attention to how aggressively the FTC proceeds under this new policy over the next few months. The policy injects another dose of uncertainty at a time when merger review practice is already being changed.

President Biden’s unprecedented July 9, 2021, Executive Order 14036 represents a potential watershed moment in U.S. competition policy. The wide-ranging Executive Order (EO) includes 72 initiatives that aim to enforce existing antitrust laws and other consumer protection regulations, to be undertaken by at least 15 federal departments, offices, and agencies. The Biden Administration’s stated hope is that these efforts will drive down prices for consumers, increase wages for workers, and facilitate innovation.

Continue Reading Biden Administration Calls for Whole-of-Government Approach to More Vigorous Antitrust Enforcement

No-poach and wage-fixing agreements – arrangements between companies seeking to prevent or limit the hiring of each other’s employees, or to suppress the wages and/or benefits of their respective current employees are not only currently under the spotlight in the US, but have also been subject to scrutiny by antitrust authorities in the European Union (EU), albeit to a more limited degree. These antitrust infringement decisions have mostly been taken by EU Member State national competition authorities (NCAs), rather than by the European Commission (EC) (the foremost enforcer of EU competition law). The US antitrust regime will be relevant to companies from third countries that have US subsidiaries or that participate in joint ventures or private equity investments in the US, but this alert focuses on the emerging body of EU and Member State law relating to anti-competitive labour practices and highlights the need for those companies with European operations or investments to take note of them. Potential liability for EU antitrust failings may extend to a number of circumstances, including where the parent holds only a minority stake, potentially coupled with nominee directors sitting on subsidiary company boards, and even where a buyout or private equity firm has no involvement in, or awareness of, the alleged wrongdoing. As with labor-related restrictions in the US, the growing use of fines by EU Member States for violations of competition law through no-poach, no-hire, wage-fixing and staff data sharing calls for increased coordination between sales managers, human resource departments, and antitrust legal and compliance officers.

Click here to read the full analysis.

Despite the UK’s withdrawal from the EU, the EU Vertical Agreement Block Exemption Regulation (retained VABER) continues to offer a safe harbor with respect to potentially anti-competitive vertical or supply agreements with an effect on trade within the UK. In this Alert, Steptoe’s EU Competition Team analyses the UK Competition and Market Authority’s recently issued consultation on its proposals for a UK Vertical Agreements Block Exemption Order that will replace the retained VABER.

Any interested party can respond to the consultation by July 22, 2021.

Our Alert highlights some of the intricacies concerning the proposed changes to UK competition law surrounding vertical agreements, and how businesses can best operate in this new environment.

To read our full analysis click here.

Steptoe’s Antitrust practice hosted a complimentary webinar on antitrust enforcement in the Biden administration. Click here to access the recording. 

During the webinar, the team compared and contrasted enforcement priorities and actions from the Trump administration with the positions the Biden administration might take that are informed by campaign proposals and actions so far. The discussion included potential legislation coming out of Congress that will focus on antitrust and competition as well as changes in leadership at the Antitrust Division at the Department of Justice (DOJ) and the Federal Trade Commission (FTC).

Topics for Discussion Include:
  • Criminal enforcement
  • Civil enforcement of both unilateral and concerted conduct
  • Potential industries of focus
  • Potential legislative changes
Steptoe Speakers:

As we predicted in Steptoe’s client webinar last week on “Antitrust Enforcement in the Biden Administration – What We Know from The First 100 Days,” on April 22, 2021 the US Supreme Court put an end to the Federal Trade Commission’s (FTC) longstanding practice under § 13(b) of the FTC Act of seeking disgorgement or restitution orders in cases brought by the agency in federal courts.

Continue Reading Supreme Court: FTC May Not Seek Restitution Directly in Federal Court

A ‘killer acquisition’ is an acquisition of a potential rival whilst they are still in the early stages of their development, whose turnover is small or zero, in order to eliminate them as a possible source of future competition. Such acquisitions often fly under the radar of EU and national merger regimes which are usually only engaged when the turn-over of a target exceeds a certain threshold. They tend to be a particular problem in digital services where companies try to expand their market share whilst charging nothing or very little to begin with and pharmaceutical companies whose new techniques or medicines may take years to develop and not yield revenue for a significant period of time.

Continue Reading Attack of the Killer Acquisitions

On March 2, 2021, the UK signed a trade partnership agreement with Ghana.  Recently, Cadbury, which is wholly owned by Mondelez, has announced that it is moving some production of its iconic Dairy Milk chocolate bars from Germany to the UK. This note, which is in two parts, considers the connection between the trade partnership agreement between the UK and Ghana and the relocation of Cadbury’s Dairy Milk chocolate production to the UK from the EU and the implications this will have in terms of supply chain management.

Continue Reading Home-Coming of Cadbury Dairy Milk Chocolate Bars (Part 1)

The following note highlights certain barriers to free trade flows between the UK and the EU that have arisen in the post-Brexit era, with particular reference to rules of origin and origin procedures. It assesses the consequences these new rules will have in determining market power, influencing supply chain practices, and the application of UK and EU competition law in the future.

Continue Reading EU/UK Trade Post-Brexit: Rules of Origin and Their Impact on Competition Law

This month has so far seen two significant actions taken by the Department of Justice (DOJ) Antitrust Division (Antitrust Division) on wage-fixing and no-poach litigation and enforcement matters, which has shed additional light in an enforcement area that has needed it. Over the last few weeks, the Antitrust Division both served up its first indictment in a criminal wage-fixing case, and filed an amicus brief in a “no-poach” case to clarify its view of how the law should be interpreted relating to franchise agreements. Continue Reading A Busy Month for DOJ on No-Poach/Wage-Fixing Enforcement Front