ABA ANTITRUST SPRING MEETING: ENFORCERS ROUNDTABLE TAKEAWAYS
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May 2021 | Volume 25 | Issue 5 The M&A Lawyer
ABA ANTITRUST SPRING Legislative Proposals to Change
Antitrust Competition Laws
MEETING: ENFORCERS
Proposed legislation in the United States and
ROUNDTABLE TAKEAWAYS elsewhere could produce the most dramatic
By Brian Grube and Charlie Stewart changes to antitrust and competition law and
Brian Grube is of counsel in the Cleveland office
policy in decades. In the United States, Senator
of Jones Day. Charlie Stewart is an associate in Klobuchar’s proposed Competition and Antitrust
the Washington, D.C. office of Jones Day. Reform Act, among other things, would signifi-
Contact: bkgrube@jonesday.com or cantly increase funding for federal antitrust en-
charliestewart@jonesday.com.
forcement, lower review standards and shift bur-
In late March, top antitrust and competition law dens of proof in merger challenges, and loosen
enforcers from around the globe joined a candid standards for unlawful conduct and allow the DOJ
Q&A discussion at the Enforcers Roundtable, and FTC to pursue civil penalties in monopoliza-
concluding the American Bar Association Anti- tion cases. While supporters of that legislation say
trust Law Section’s Spring Meeting. This year’s that their concerns are motivated by the so-called
roundtable focused on proposed antitrust legisla- “Big Tech” platforms, the application of some of
tion, enforcement priorities and trends, including the changes would not be limited to the high-
the global focus on Big Tech companies, and ef- technology sector. Not surprisingly the enforcers
forts to safeguard innovation in the agencies’ had some views on the proposals.
review of M&A deals. Chairwoman Slaughter (FTC) did not endorse
The participants included Rebecca Kelly any specific proposals, but supports “modernizing
Slaughter, Acting Chairwoman, U.S. Federal and updating” the U.S. antitrust laws. In her view,
Trade Commission (“FTC”); Richard A. Powers, such changes could help remedy two problems
facing antitrust enforcement agencies: a lack of
Acting Assistant Attorney General, U.S. Depart-
resources and a lack of deterrence. The agencies,
ment of Justice (“DOJ”), Antitrust Division;
she said, are “grossly under-resourced” to meet
Margrethe Vestager, Executive Vice President and
the demands of modern antitrust enforcement,
Commissioner, European Commission (“EC”);
with the FTC’s headcount remaining flat despite a
Sarah Oxenham Allen, National Chair of the
doubling of merger filings in 10 years. In her view,
National Association of Attorneys General Multi-
the lack of deterrence is reflected by companies’
state Antitrust Task Force (“NAAG”) and Senior
pursuing merger proposals that should “never
Assistant Attorney General and Antitrust Unit
have left the boardroom.” Chairwoman Slaughter
Manager, Officer of the Virginia Attorney Gen-
attributes the lack of deterrence to the prevailing
eral; and Sarah Court, Commissioner, Australian
legal standards being too stringent, requiring the
Competition & Consumer Commission
FTC to prove and balance competitive harms and
(“ACCC”). Jones Day’s Brian Grube co-
competitive benefits that are hard to measure.
moderated the Enforcers Roundtable. This article
reports on the highlights of that discussion. This problem is especially acute, she said,
10 K 2021 Thomson ReutersThe M&A Lawyer May 2021 | Volume 25 | Issue 5
where the agencies must try to prove a proposed the EC is also reevaluating its merger control
transaction’s probable impact on innovation, procedures. Changes under consideration are
which is even harder to quantify than a proposed aimed toward simplifying and reducing the burden
transaction’s potential impact on prices. Accord- of merger filings and, as further discussed below,
ing to Chairwoman Slaughter, legislation that in- identifying for review transactions of nascent
troduces more bright line rules or requires parties competitors by dominant firms that might not trig-
to prove why a transaction is procompetitive, ger the existing filing thresholds, but nonetheless
rather than requiring the agencies to prove it is raise competitive concerns.
anticompetitive, could improve the agencies’ abil-
Commissioner Court (ACCC) confirmed that,
ity to police anticompetitive conduct and
as part of its AdTech inquiry, the ACCC is study-
transactions. In the absence of any such changes,
ing the market chain for online advertising, as well
Chairwoman Slaughter said, the FTC would con-
as Google’s role in it, and considering the adop-
tinue to bring “bold” cases under the current stan-
tion of regulations similar to those under consider-
dards to raise important questions in antitrust law.
ation by the EC.
Chairwoman Slaughter also highlighted the FTC’s
recent creation of a rulemaking group. She said Turning to criminal antitrust enforcement, AAG
that the group will explore opportunities to use Powers (DOJ) highlighted Congress’ reauthoriza-
the FTC’s rulemaking authority 1 to add to its tion of the Antitrust Criminal Penalty Enhance-
“toolbox” and “promote robust competition.”2 ment and Reform Act, which supports the DOJ’s
anti-cartel enforcement program by reducing the
EVP Vestager (EC) explained that significant
exposure to private damages lawsuits of compa-
regulatory changes are also underway in the EU.
nies that report cartels under the DOJ’s lenience
Under its Digital Markets Act, the EC is develop-
policy. He also noted the newly enacted Criminal
ing regulations for digital markets like those it
Antitrust Anti-Retaliation Act, which protects in-
relies on to regulate the telecom, payment card,
dividual employees who blow the whistle on
and airline reservation sectors. The goal, in her
price-fixing cartels from retaliation by their
words, is to keep digital markets “fair and
employers. AAG Powers encouraged companies
contestable.” The regulations would not supplant,
to alert their employees to the new protections af-
but complement, existing EU and member state
forded under the anti-retaliation act and to incor-
competition laws. As contemplated, they would
porate that information into their compliance
designate dominant digital platforms as “gate-
programs.
keepers” and prescribe “dos” and “don’ts” for
their conduct. Gatekeepers would be prohibited The U.S. states, as AAG Allen (NAAG) ex-
from self-preferencing their products on their plained, also are active legislatively. On the
platforms, leveraging dominance from one area to antitrust front, Connecticut, Massachusetts, and
another, and combining certain data collected Washington recently have enacted their own
across services or platforms. At the same time, premerger notification requirements for healthcare
gatekeepers would be required to deal with com- transactions, and California and Florida soon may
petitors by providing platform access, interoper- also do so. New York also recently introduced a
ability, and data sharing. EVP Vestager added that bill that would overhaul its state antitrust statute,
K 2021 Thomson Reuters 11May 2021 | Volume 25 | Issue 5 The M&A Lawyer
and in the last four years, 16 states banned some relief or the requirement that companies divest as-
form of non-compete agreements. On the con- sets to resolve a competitive problem. Chair-
sumer protection front, AAG Allen highlighted woman Slaughter explained that in its Facebook
Virginia’s new data protection and privacy legisla- action the FTC is demanding that Facebook “at
tion, the second in the country after California, least” divest Instagram and WhatsApp (which
and how similar legislation has being introduced Facebook acquired in 2012 and 2014, respec-
in New York, Washington, Florida, and Minnesota. tively) to remedy a course of conduct that, the
These statutes, AAG Allen explained, resulted in FTC alleges, reduced consumer choices, stifled
part from inaction by Congress on a federal pri- innovation, and allowed Facebook to maintain a
vacy and data protection law. Chairwoman monopoly.3 She observed that structural relief
Slaughter agreed, referring to the emerging state long has been the preferred remedy in the US
legislative patchwork as a “clear call” for federal because it is “cleaner” than behavioral remedies
legislative action. and does not require ongoing governmental or
Antitrust Enforcement Trends court supervision. In that respect, she said, struc-
tural relief is more conservative than behavioral
The competition authorities’ alleged concerns remedies. Ultimately, Chairwoman Slaughter
about tech are not only are driving new legisla- explained, the FTC’s approach is to seek the best
tion, but also account for a substantial portion of remedy to solve a particular problem. The FTC
their active, ongoing caseloads. The FTC and DOJ
would continue to rely on structural relief where it
have filed lawsuits against Facebook and Google,
is needed, and it would prefer to litigate rather
respectively, and nearly all state AGs have joined
than accept an insufficient or unworkable remedy.
or filed parallel actions against both companies.
The EC already has levied fines against Google, EVP Vestager agreed that structural remedies
and has an open investigation into Google’s adver- are often easier to enforce, and that remedies
tising business. It also has open investigations of should be tailored and proportional to the compet-
Amazon and Apple, targeting conduct and rules itive problem at hand. But she noted that the EC
that allegedly preference their own products over has a wealth of experience (and seemingly more
their competitors or restrict the ability of app comfort) with behavioral remedies. EVP Vestager
developers to compete on other platforms. And also made reference to restorative remedies, i.e.,
earlier this year, the ACCC squared off against remedies that seek to return a market to its condi-
Google and Facebook over Australia’s Media tion before the alleged harm, but she acknowl-
Code. Two themes emerged in the discussion of edged the difficulty of this type of remedy and
these high-profile actions that could have impor- how the EC is still working through its Google
tant implications in future cases for parties across Shopping case from 2017.4
different sectors:
2. Interagency Cooperation, Coordination,
1. Remedies. and Conflict.
The panelists discussed the principles underly- Each of the panelists stressed the importance of
ing the remedies they are pursuing in their enforce- interagency cooperation and the benefits of coor-
ment actions. Chief among these is structural dinating investigations and enforcement actions.
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Chairwoman Slaughter and AAG Powers agreed stated her hope that the working group would
that the FTC and DOJ lately had been cooperating serve to improve the agencies’ analysis and better
well, both with one another and with the state protect innovation, research, and development in
AGs. AAG Allen confirmed this on behalf of the the pharmaceutical pipeline. She emphasized the
states, noting the 49 states, plus the District of Co- COVID-19 pandemic as showcasing the need for
lumbia, Guam, and Puerto Rico, had joined in the a proper understanding of these markets at an
DOJ’s lawsuit against Google or in a parallel ac- international level to foster innovation and new
tion with similar allegations; and 46 states, plus market entry.
the District of Columbia and Guam, had filed an
action paralleling the allegations in the FTC’s Not all of the agencies’ cooperative efforts,
lawsuit against Facebook. however, lead to coordinated or consistent
outcomes. The panelists conceded that the agen-
EVP Vestager explained that the agencies’ cies’ investigations of the same conduct by the
cooperation extends internationally—and not just same companies—or the same transactions—does
in the tech matters, but across all sectors. Inter- raise the risk that they may seek conflicting
agency cooperation, she observed, not only helps
remedies. Chairwoman Slaughter observed that
the agencies to alleviate resource constraints, but
where a particular transaction or company is the
it can also help private parties to the extent the
target of multiple agencies’ investigation, the
agencies can align the timing and demands of their
FTC’s goal is to align the outcomes of those
respective investigations, subject to the rules and
investigations as much as possible. But, she added,
procedures of each jurisdiction. She also stressed
the FTC’s job is to enforce U.S. antitrust law, and
that all interagency cooperation is undertaken
that may not always align with the laws of other
within a procedural framework. This provides
greater continuity in the agencies’ cooperation by jurisdictions. In her view, having to manage dif-
allowing the agencies to interact regularly, rather ferences between the laws in different countries is
than on only an ad hoc basis; and it ensures that the cost of doing business in more than one
the agencies’ cooperation complies with the agen- jurisdiction. EVP Vestager agreed. She noted that
cies’ respective procedures, such as those for the EC also seeks to coordinate with its sister
maintaining the confidentiality of parties’ infor- agencies to foster a consistent resolution, particu-
mation and exchanging it only subject to waivers. larly for mergers where a single remedy may
resolve all agencies’ concerns. However, differ-
As an example of interagency cooperation the ences in jurisdictions’ controlling laws, as well as
panelists touted their recently announced interna- how a company’s conduct or particular deal may
tional working group to examine the analysis of affect different markets, can lead to different
pharmaceutical mergers. The new group is a col- outcomes in different jurisdictions.
laboration between the FTC, DOJ, state Attorneys
General, the EC, the Canadian Competition Bu- M&A: Innovation, Nascent Competition,
and Killer Acquisitions
reau, and the UK’s Competition and Markets
Authority. Chairwoman Slaughter, who has ex- The acquisition of nascent competitors by
pressed concern over the adequacy of the conven- dominant firms to secure or protect their market
tional analysis of pharmaceutical transactions, position—so-called “killer acquisitions”—is a
K 2021 Thomson Reuters 13May 2021 | Volume 25 | Issue 5 The M&A Lawyer
priority issue for all the enforcement agencies Visa’s position and making the protection of a
represented on the roundtable. Protecting nascent relatively new entrant all the more important to
competition and innovation, Chairwoman Slaugh- competition and consumers.
ter observed, not only is “at the heart” of the
FTC’s Facebook lawsuit,5 but also provided the EVP Vestager noted a similar focus on this is-
basis for recent FTC challenges to proposed merg- sue by the EC. The EC’s concern over nascent
competition, she said, is part of the drive behind
ers in the consumer goods and healthcare sectors.
the EC’s ongoing review of its merger control
In her view, the agencies need to ensure that
regulations. In particular, the EC intends to catch
acquisitions by dominant firms are not going to
certain of these acquisitions through the proce-
interrupt the flourishing of the competitive pro-
dure by which member states may refer to the EC
cess—and waiting too long to bring challenges
for review a transaction that does not meet the
could result in significant competitive harm. When
threshold for EC review. The EC released new
asked how the agencies in such cases can distin-
guidance about this procedure specifically to catch
guish between nascent competitors that actually transactions that could have significant competi-
will flourish from those whose resources might tive implications. EVP Vestager emphasized that
benefit consumers more by being acquired, Chair- the potential for innovation will play an important
woman Slaughter observed that each case requires role in evaluating nascent competition on a case-
a fact-specific inquiry. The inquiry, she said, by-case basis in the newly released EC competi-
should include the reasons why the incumbent is tion guidelines on this issue.
seeking to acquire the target. In its Facebook case,
for example, the FTC alleges that Facebook en- Takeaways
gaged in a long-term strategy to “buy and bury”
E Legislative proposals in the United States
nascent competitors rather than to risk their
and elsewhere could significantly alter anti-
competition. In the end, she observed that in this
trust law for the first time in decades. While
particular area, she is more concerned about the
these changes are already occurring in Eu-
risk that under-enforcement poses for nascent
rope, whether they gain traction in the
competition than the risk of over-enforcement.
United States remains to be seen. At a mini-
AAG Powers agreed noting that protecting new mum, U.S. antitrust enforcers will likely
entry and innovation is also top priority for DOJ. receive increased funding, and they intend
As an example, he cited DOJ’s challenge to Visa’s to use it.
proposed acquisition of Plaid, a competing and
E Expect merger enforcers in the United States
potentially disruptive online payment services
to continue to pursue structural remedies to
provider.6 That case, in his view, showed impor-
address competitive concerns about transac-
tance of analyzing market structures and market
tions and even anticompetitive conduct, and
dynamics to understanding the competitive effects
to pursue more aggressive theories of al-
of an allegedly dominant firm’s acquisition of a
leged competitive harm in litigation to block
growing rival. In Visa/Plaid, Powers observed, the
(or even unwind) a transaction.
online debit market had not had a meaningful new
entrant in decades, raising the risk of entry to E Interagency and international cooperation is
14 K 2021 Thomson ReutersThe M&A Lawyer May 2021 | Volume 25 | Issue 5
alive and well, creating the potential for 2020), available at https://www.ftc.gov/enforcem
more streamlined global merger filings, but ent/cases-proceedings/191-0134/facebook-inc-ft
c-v.
also conflicting priorities and remedies 6
See Visa and Plaid Abandon Merger After
across agencies and jurisdictions. Antitrust Division’s Suit to Block, DOJ (Jan. 12,
2021), available at https://www.justice.gov/opa/p
E Merger enforcers around the globe continue r/visa-and-plaid-abandon-merger-after-antitrust-d
to focus on perceived risks to innovation and ivision-s-suit-block.
R&D posed by “killer acquisitions” of na-
scent competitors by allegedly dominant NEGOTIATING TIPS FOR
firms. Expect increased scrutiny of even REPRESENTATION &
modest transactions involving the acquisi-
tion of new entrants or innovations, espe-
WARRANTY INSURANCE
cially in high-profile industries like tech and POLICIES
pharmaceuticals.
By Stephen D. Bohrer
The views and opinions set forth herein are the Stephen D. Bohrer is a partner at Nishimura &
Asahi and a leader of the firm’s Cross-Border
personal views or opinions of the authors; they do
Transactions Group. Contact:
not necessarily reflect views or opinions of the law s.bohrer@nishimura.com.
firm with which they are associated. The use of insurance to cover breaches of
representations and warranties in an acquisition
ENDNOTES: agreement (“R&W Insurance”) remains a highly
touted option in Japan to protect buyers and sell-
1
Section 18 of the FTC Act (15 U.S.C.A.
§ 57a) permits the FTC to promulgate rules that ers from losses in M&A transactions, and contin-
“define with specificity acts or practices which are ues to gain in popularity. Fueling this product
unfair or deceptive acts or practices in or affecting surge are numerous papers and seminars that
commerce” within the meaning of the Section 5
discuss the pros and cons of R&W Insurance (also
of the FTC Act. In its history, the FTC has used its
rulemaking sparingly. known as W&I Insurance). However, once a trans-
2
FTC Acting Chairwoman Slaughter An- action party opts to obtain R&W Insurance and
nounces New Rulemaking Group, FTC (Mar. 25, receives a draft insurance policy, an insured party
2021), available at https://www.ftc.gov/news-eve (“insured”) may feel left at the altar to fend for
nts/press-releases/2021/03/ftc-acting-chairwoma
itself. All too often a draft R&W Insurance policy
n-slaughter-announces-new-rulemaking-group.
will be delivered in a boilerplate form a few days
3
See FTC Sues Facebook for Illegal Monopo-
lization, FTC (Dec. 9, 2020), available at https:// prior to the signing date of the acquisition agree-
www.ftc.gov/news-events/press-releases/2020/ ment when the transaction parties are scrambling
12/ftc-sues-facebook-illegal-monopolization. to reach a deal. An ill-advised insured may believe
4
See, e.g., Case AT.39740, Google Search that its R&W Insurance policy document is a stan-
(Shopping), Antitrust Procedure, European Com-
dard non-negotiable form, and may quickly pro-
mission on Competition (Jun. 27, 2017), available
at https://ec.europa.eu/competition/antitrust/case vide its sign-off after simply confirming the ac-
s/dec_docs/39740/39740_14996_3.pdf. curacy of basic factual matters. An insured
5
See FTC v. Facebook, Inc., FTC (Dec. 9, adopting this approach may have unwittingly
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