State antitrust enforcers step into the spotlight

Federal antitrust enforcement is entering a period of uncertainty in the second Trump administration. It is an open question what priorities Andrew Ferguson, the newly-appointed Federal Trade Commission (FTC) Chair, and Gail Slater, President Trump’s nominee to head the Department of Justice Antitrust Division (DOJ), will advance as leaders of those agencies. However, based on past history and recent developments, state attorneys general (AGs) will likely play a substantial role in shaping the antitrust enforcement landscape during President Trump’s second term. While state AGs have always been active antitrust enforcers, over the past few years states have increasingly stepped out of the federal enforcers’ shadow and flexed their state jurisdictional muscles in novel ways; and these efforts are not always aligned with the agenda of their federal counterparts. It is critical to understand not only the states’ growing role in shaping U.S. antitrust enforcement, but also what unique interests and motivations are driving the various state AGs as they pursue their own antitrust agendas.

State AG antitrust enforcement generally

Almost every state has its own antitrust law. These statutes can vary in substance, but the majority mirror federal laws and include some or all of the Sherman and Clayton Acts’ prohibitions against price fixing, bid-rigging, exclusionary unilateral conduct, and anticompetitive mergers. State AGs may engage in both civil and criminal enforcement of their respective antitrust laws and can bring cases in either state or federal court. State AGs can also enforce federal antitrust laws through civil lawsuits.

Although State AGs’ power to enforce federal antitrust law is similar to that of private litigants, in early 2023, Congress passed the State Antitrust Enforcement Venue Act, which exempts state AG antitrust cases from the federal statute authorizing multi-district litigation proceedings in federal court. The law allows state AGs to select the most beneficial venue in which to bring their cases, and avoid defendants’ attempts to utilize multi-district litigation proceedings to consolidate state-led actions with similar cases brought by private plaintiffs.

In recent years, State AGs have outpaced federal enforcers in bringing novel antitrust lawsuits

Over the past 25 years, states have joined their federal counterparts as plaintiffs in significant enforcement actions targeting a variety of industries, including technology, health care, telecommunications, food retail, and entertainment. Some of the most significant current antitrust enforcement actions are being jointly litigated by federal and state antitrust authorities. For example, dozens of states have joined the FTC and DOJ in the Big Tech monopolization cases making their way through the federal courts.

In the past, state enforcers would generally follow the FTC or DOJ’s lead, joining as co-plaintiffs in antitrust cases that were primarily run by the federal agencies. As the role and impact of state AGs continues to ascend in law, policy, and enforcement, state AGs are now shaping antitrust policy by being the first to bring cases, often relying on creative theories of antitrust harm. For example, state AGs have been aggressive in targeting alleged price-fixing in the generic pharmaceutical industry: since 2016, a coalition now numbering 51 states and territories have filed multiple lawsuits in federal court alleging a price-fixing scheme among generic drug manufacturers. The first state AG actions were filed while DOJ criminal investigations were proceeding, and were followed by numerous private lawsuits and class actions seeking damages based on the same alleged facts.

State AGs have also led the way in enforcement against certain novel technologies, like artificial intelligence. For example, the District of Columbia and Arizona were the first public enforcers to bring antitrust suits targeting algorithmic pricing. In November 2023, the AG for the District of Columbia filed a lawsuit in D.C. Superior Court against real estate services company RealPage and fourteen of the largest residential landlords in D.C., alleging that defendants unlawfully colluded to raise rents for D.C. residents by “collectively delegating price-setting authority to RealPage, which used a centralized pricing algorithm to inflate prices, costing renters millions of dollars.”¹ Three months later, the Arizona AG filed a similar lawsuit in Arizona state court, alleging that defendants engaged in a similar conspiracy.² The D.C. and Arizona³ lawsuits against RealPage preceded DOJ’s own lawsuit against RealPage, which mirrors the allegations in the D.C. and Arizona complaints.⁴

Looking ahead – state enforcement

We expect the recent expansion of state antitrust enforcement to continue over the next few years. And several recent developments at the state level may provide some clue as to state AG priorities in the year ahead.

The closing months of 2024 saw Republican AGs ramp up their focus on environmental, social and governance (ESG) initiatives as alleged antitrust violations. In November, a coalition of Republican states led by the Texas AG filed a federal lawsuit alleging that three large investment firms colluded by leveraging their holdings and voting shares in privately held coal companies to “facilitate an output reduction scheme” that purportedly led to supra-competitive “cartel-level” profits for themselves and their portfolio.⁵ The complaint argues that the “Defendants’ belief that concern for the climate confers a license to suppress competition is ‘mistaken,’” and dismisses the defendants’ effort to “publicly defend[] their anticompetitive scheme with appeals to environmental stewardship.”⁶ The complaint alleges violations of the Sherman and Clayton Acts, as well as Texas, Montana, and West Virginia state laws. That lawsuit was filed just over a year after 21 Republican state attorneys general sent a letter in September 2023 to signatories of the Net Zero Financial Services Provider Alliance (NZFSPA), warning that “your joint commitments under the NZFSPA may run afoul of United States antitrust law and its state equivalents,” and alleging that, although NZFSPA signatories are “direct competitors with each other, they nevertheless commit to using their market influence to enforce their collective climate agenda in the broader economy . . .”⁷ The state AGs’ letter includes a dozen separate requests for information regarding the companies’ NZFSPA commitments.

In late November 2024, the Nebraska AG filed an antitrust lawsuit in Nebraska State Court against heavy-duty truck manufacturers alleging a “plot to stifle the availability of internal-combustion semi-trucks in favor of electric ones”⁸ by signing the Clean Truck Partnership (CTP). The CTP is an agreement launched in June 2023 between the California Air Resources Board (CARB) and truck manufacturers that commits the signatory manufacturers to reduce the output of certain internal-combustion engine (ICE) vehicles in favor of electric alternatives. The complaint alleges that the CTP is “nakedly anti-competitive” and “represents an industrywide commitment by companies to reduce their output of [ICE] vehicles and eliminate consumer choice”, leading to increased prices.⁹ Announcing the lawsuit, Nebraska AG Michael Hilgers said that the defendants are engaged in an “industry-wide conspiracy” to phase out diesel-powered semi-trucks,” and alleging that the “manufacturers’ collusion will raise prices, reduce output, increase costs on Nebraskans, and is a classic antitrust violation.”¹⁰

Notably, the complaint also alleges that CARB is part of the conspiracy, and that the CTP violates the antitrust laws of the State of Nebraska because the agreement provides competitive advantages to CTP partners “largely at the expense of states, such as Nebraska, who have no intention of following California’s regulations, and at the expense of consumers who have no desire to purchase electric vehicles but will have to pay higher prices for the ICE vehicles they want.”¹¹ While cases like these may have been one-off state-led initiatives if Democrats had won the presidency in 2024, in Trump’s second term they may instead serve as a roadmap for the Republican-led DOJ and FTC to bring similar actions.¹²

New Republican leadership at the federal antitrust agencies may also motivate Democratic state AGs to pick up where Lina Khan, the former FTC Chair, and Jonathan Kanter, the former head of the DOJ Antitrust Division, left off when they stepped down from their leadership roles in January 2025. For instance, during the first Trump administration, Democratic state AGs in Washington and New Jersey led successful efforts targeting the use of no-poach clauses in franchise agreements.¹³ Similar efforts could be on the horizon during Trump’s second term. In addition, California Assistant Attorney General Paula Blizzard recently signaled that the state’s antitrust enforcers intend to reinvigorate criminal prosecutions under the state’s primary antitrust statute, the Cartwright Act, for the first time in twenty-five years.¹⁴

Although the FTC’s rule banning non-compete agreements—which was finalized in April 2024 but set aside by a Texas federal court in August—will most likely be on the chopping block in a conservative-majority FTC, companies operating in certain states will still have to contend with the patchwork of state laws regulating the use of non-compete agreements in employment contracts.¹⁵ Some states, such as California, North Dakota, Oklahoma, and Minnesota, have laws banning the majority of non-compete agreements. Other states ban the use of non-compete agreements in specific industries¹⁶ or for employees earning below a certain income level.¹⁷ These laws will continue to fill at least some of the gap in regulating the allegedly anticompetitive labor agreements that the FTC’s rule was intended to address on a broader scale.

Looking ahead – state legislative developments

In New York, the state Senate recently passed the 21st Century Antitrust Act (NY S. 6748), which would significantly expand the state antitrust law by, among other things, making certain exclusive dealing agreements presumptively unlawful when engaged in by a “dominant” entity and articulating a stated policy interest against employee non-compete agreements.¹⁸ The law would also require parties to a merger transaction subject to the Hart-Scott-Rodino (HSR) filing requirements to file the same notice and documentation with the NY AG. While Republican leadership at the federal antitrust agencies in the Trump administration may pull back on some of the more boundary-pushing provisions outlined in the 2023 Merger Guidelines,¹⁹ legislation such as NY S. 6748, if passed, would allow state enforcers to continue to pursue novel theories of harm in their merger cases²⁰ and potentially implement a more aggressive merger enforcement program than that of their federal counterparts.

In addition, NY S. 6748 adopts a “prohibition on unfair methods of competition” provision, that includes “any act or practice that threatens an incipient violation of an anti-trust law, or violates the policy or spirit of an anti-trust law because its effects are comparable to or the same as a violation of the law.” It also empowers the NY AG to engage in rulemaking to declare certain conduct or practices as unfair methods of competition. Given that the FTC’s 2021 Section 5 Policy Statement—which outlines the previous FTC majority’s broad understanding of its authority to target “unfair methods of competition”— faces potential rescission by the Ferguson-led FTC, if NY S. 6748 is enacted, it would allow New York antitrust enforcers to apply an expansive interpretation of what constitutes “unfair methods of competition” under the antitrust laws.

Other potential new antitrust legislation is on the horizon in California: in January 2025 the California Law Revision Committee (CLRC) voted to adopt recommendations to revise the state’s antitrust laws and develop a new California-specific law governing single-firm conduct. The CLRC staff’s recommendation was based in part on its view that “[s]trengthening California’s antitrust laws is essential to protecting competitive freedoms within its borders, particularly because the state’s interests may not always align with the priorities of federal enforcers.”²¹

Takeaways

As President Trump’s second term begins and we anticipate a period of potential change and uncertainty in federal antitrust enforcement, state AGs will have wide berth to effectuate their own antitrust agendas. State enforcers have unique interests and motivations separate from their federal counterparts, and an understanding of these motivations is essential to navigating state-led enforcement efforts. It is critical to consult antitrust counsel that has trust and experience with state enforcers in order to achieve non-litigation solutions to potential costly enforcement proceedings.