The Antitruster is WilmerHale’s bi-weekly newsletter on the latest antitrust and competition developments in the US and abroad.

Regulatory Update

  • Senate Confirms Alvaro Bedoya as FTC Commissioner. The Senate has confirmed Alvaro Bedoya’s nomination, giving Democrats a 3–2 majority on the Commission. Bedoya comes to the Commission from Georgetown Law’s Center on Privacy and Technology and was confirmed by a party-line vote of 51–50, with Vice President Harris breaking a tie. Now that the Democrats have a majority, FTC Chair Lina Khan may have latitude to implement the more ambitious parts of her agenda. We may see, among other things, the Commission voting to bring aggressive challenges to mergers, including based on novel theories, now that it no longer has a split of two Democrats and two Republicans.

  • OPM Survey Indicates FTC Staffers Increasingly Dissatisfied. On April 28, the US Office of Personnel Management (OPM) released its annual survey of government employees, which covers federal agencies, departments and commissions and is seen as a barometer of morale by agency. Though the FTC has consistently been a top performer, this year’s results showed a precipitous drop in employees’ characterization of their own morale. Commissioner Wilson tweeted that the FTC “has gone from first to worst in major metrics.” Wilson observed that the survey indicated a sharp drop in the proportion of FTC employees agreeing that they have a “[h]igh level of respect for [the FTC’s] senior leaders” and that the FTC’s “[s]enior leaders maintain high standards of honesty & integrity.”

  • AAG Kanter Preliminarily Recused From Google Work. On May 10, Bloomberg reported that Jonathan Kanter, the Assistant Attorney General for the Antitrust Division, has been preliminarily recused from the Division’s cases involving Google pending a DOJ determination as to whether permanent recusal is appropriate. Until a formal determination is reached, Kanter’s principal deputy, Doha Mekki, will step in to oversee the Division’s Google work.

  • DOJ Supports Exclusion of Divestiture Buyer That Implicates Vertical Foreclosure. On May 9, the DOJ submitted a statement of interest (SOI) in Steves and Sons v. Jeld-Wen supporting the special master’s decision to exclude a potential buyer from the court-administered divestiture process. The case marks the first successful private challenge to unwind a consummated transaction and involved a 3-to-2 merger between two input manufacturers that were vertically integrated downstream. The special master, who was appointed to supervise the divestiture, excluded a potential buyer from the process, citing a vertical relationship between the potential buyer and business to be divested and a resulting possibility of foreclosure of downstream rivals’ access to key inputs. The SOI observed that “post-consummation divestitures should restore lost competition in the relevant market without creating new competition issues.” For additional information regarding this litigation, please see our prior alert.

Legislative Update

  • Senators Consider Introducing Digital Ad Divestiture Legislation. A bipartisan group of senators, including Sen. Mike Lee (R-UT), Sen. Amy Klobuchar (D-MN) and Sen. Richard Blumenthal (D-CT), is reportedly considering legislation that would require large technology platforms to divest certain digital advertising technology businesses. According to press reports, the proposed legislation would, among other changes, bar large digital advertising platforms from owning the tools that help buy and sell online ads.

  • Senate Committee Reports Out Legislation to End OPEC Antitrust Immunity. On May 5, S.977, the No Oil Producing or Exporting Cartels Act of 2021, or NOPEC, was advanced out of the Senate Judiciary Committee, by a vote of 17–4. NOPEC would amend the Sherman Act to add a new section that prohibits foreign states or their instrumentalities from taking “joint action” to limit oil or gas production or fix prices, or otherwise “take [] action[s] in restraint of trade” for such commodities. It would also deny sovereign immunity protections for foreign states and their national oil companies for claims or judgments under the new section, as well as related defenses such as the act of state doctrine. The proposed legislation would authorize only the US Attorney General (i.e., not the FTC or state enforcers) to make claims under the new section against members of OPEC and other oil and gas-producing state instrumentalities.

​Europe

  • EC Adopts New Vertical Block Exemption Rules and Vertical Guidelines. On May 10, the EC adopted its new vertical guidelines, which provide competition law guidance on restrictions in agreements between parties at different levels of the distribution chain, and its new vertical block exemption, which provides competition law “safe harbors” for vertical agreements under certain conditions. This is the first update of the rules and guidelines since the 2010 revision. The EC aims to account for e-commerce growth over the past decade and signals increased scrutiny of exchanges of information in “dual distribution” (i.e., a manufacturer selling directly to end-customers in competition with its own distributors). The new rules remove from the safe harbor certain practices by “online intermediation services” (OIS) (Amazon is a prominent example of an OIS). Those practices include, for example, hybrid distribution (an OIS sells products in competition with retailers using the OIS platform) and imposing minimum sale prices for transactions they facilitate. In certain cases, the safe harbor is expanded to (i) “dual pricing” (charging a retailer more for products to be sold online than offline) and (ii) “shared exclusive distribution” (appointing a maximum of five distributors for the same territory or group of customers). The new rules will become effective on June 1, 2022, though parties to existing agreements will have until May 31, 2023, to bring their agreements into compliance. Firms that operate in the EU are well advised to evaluate their practices for compliance with the new rules and guidelines.

  • EC Seeking to Expand Scope of Simplified Merger Reviews. On May 6, the EC began consulting on proposed measures to expand the availability of its simplified merger review process. Some important aspects need to be worked through during this consultation. New categories of vertical transactions would benefit from the simplified procedure (which substantially shortens the time to prepare a notification) where the parties’ upstream and downstream shares are moderate. In addition, the EC proposes to introduce “flexibility clauses” to enable the EC to decide to apply the simplified process to certain transactions that would not otherwise qualify, such as transactions with a horizontal overlap but combined shares in all overlapping markets below 25%, or vertical deals where the parties’ respective competitive positions are unlikely to raise competitive concerns. Additionally, the EC proposes a new “check the box” format for simplified cases, instead of parties having to draft full-fledged responses for all questions. The EC is accepting comments from interested parties until June 3.