We expect that this year’s antitrust outlook will continue to carry a degree of uncertainty, whether in the United States, the European Union, or elsewhere. Our next two posts will cover some of the causes of present uncertainty, a few questions as well as some predictions.
Going back at least 50 or more years, U.S. antitrust enforcement has been marked more by continuity than abrupt radical change. During this period, there was a gradual evolution in enforcement trends in the United States. This evolution is best characterized at the federal level by a movement away from blanket rules of per se legality or illegality (e.g., resale price maintenance and inflexible merger standards), greater emphasis on economic analysis of likely competitive effects, and an attempt to strike a rough balance between too-aggressive enforcement (which inhibits potentially procompetitive conduct benefiting consumer welfare) and too-lenient enforcement (which risks unacceptable competitive/consumer welfare consequences).
During the political run-up to the election, the now president, Donald Trump, frequently expressed populist themes. He criticized rhetorically “big business” and “special interests.” Such stump speeches led some people to speculate whether the new administration might take a harder and more restrictive line on certain mergers, as well as unilateral and vertical arrangements, or at least continue an “aggressive” enforcement posture motivated by “populist” sentiments.
The new administration will be making senior appointments at both the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission, and these appointments will impact the direction and priorities of antitrust enforcement. Based on individuals that President Trump has included in antitrust transitional planning efforts, and those rumored to be leading contenders for top antitrust posts, there is some reason to believe that the antitrust enforcement priorities of the new administration may largely resemble enforcement priorities of recent Republican administrations. Assuming so, that would suggest less interventionist antitrust enforcement efforts than those pursued in the Obama administration, particularly in the more “close call” matters, but overall, for most matters, likely more continuity than change. More clues to the administration’s antitrust approach will continue to come out in the weeks and months ahead as nominations get made for top posts, and decisions start to be made under the new leadership.
It is important to recognize that U.S. antitrust enforcement is characterized by strong, continuous enforcement priorities. Statistics published by the department annually confirm this trend. The Antitrust Division has, for decades, aggressively enforced per se anti-cartel conduct. This long-standing effort has generated an increasing number of criminal prosecutions, billions of dollars of fines, and dramatically longer terms of incarceration for individual offenders. The number of grand jury investigations continues to be robust. The number of criminal antitrust cases filed has virtually doubled in the last 10 years. It is highly unlikely that criminal enforcement will be relaxed.
Further, antitrust enforcement often comes from the bottom up, rather than from the top down. For example, merger enforcement is most often triggered by mandatory premerger notification requirements, which bring potentially problematic deals to the attention of regulators. Civil enforcement has been often precipitated by customer and/or competitor complaints. Enforcement standards have long been, and continue to be, grounded in a series of widely respected guidelines – e.g., merger guidelines, technology transfer guidelines, health care, and international enforcement guidelines. These enforcement patterns and guidelines will slow any attempt to make radical changes in enforcement.
Additionally, it is important to remember that not all antitrust enforcement occurs at the federal level, with states also playing an important role in antitrust enforcement. While antitrust investigations by state attorney general offices often are done in close coordination with the federal antitrust authorities, a change in priorities or approach at the federal level does not necessarily mean that individual states will follow the same path.
Finally, U.S. antitrust enforcement is subject to federal court review that should help contribute to continuity based on judicial precedents addressing enforcement standards that have evolved over time. On balance, while we would not be surprised by some redirection, we anticipate that evolutionary change, rather than radical new priorities, will shape enforcement trends in the future.