All questions

Antitrust: restrictive agreements and dominance

i Significant casesGoogle

On 20 October 2020, the DOJ and a group of states filed a complaint against Google (which was later amended) alleging the company violated Section 2 of the Sherman Act by illegally maintaining a monopoly in markets for general search services, search advertising and general search text advertising.22 The complaint cites Google's agreements that allegedly: (1) 'lock up the preset default positions for search access points on browsers, mobile devices, computers, and other devices'; (2) require the 'preinstallation and prominent placement of Google's apps'; (3) 'tie Google's search access points to Google Play and Google APIs'; and (4) implement other restrictions. The complaint seeks injunctive relief.

Later, on 16 December 2020, a separate group of states filed a monopolisation suit against Google in a federal court in Texas.23 This complaint describes a host of behaviours that have led to an alleged unlawful monopolisation in a number of advertising-related markets. These suits are pending.

Facebook

On 9 December 2020, the FTC and a group of states filed separate but relatively similar complaints against Facebook, alleging that the company monopolised a market for 'personal social networking services' in the United States in violation of Section 2 of the Sherman Act.24 The states' complaint also alleges that Facebook violated Section 7 of the Clayton Act when it acquired Instagram and WhatsApp. Both complaints seek injunctive relief in the form of changes to Facebook's offending business practices, and possible divestiture of Instagram and WhatsApp. The FTC alleges that Facebook's market share is in excess of 60 per cent. The complaints focus on several examples of alleged exclusionary conduct, including: buying companies that present competitive threats to Facebook; imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire, such as conditioning access by third-party apps through application programming interfaces (APIs) on the apps' agreeing not to work with Facebook competitors and not to provide the same core functions that Facebook does; and placing restrictions on exporting data to competing social networks or an app that replicates a Facebook core function.

The lawsuits allege that the company's actions have decreased user choice, quality and innovation; and suppressed competition for the sale of 'social advertising', resulting in higher prices to advertisers and decreased choice, quality and innovation. The states' complaint focuses on alleged degradation of privacy protections and options, and contains an allegation regarding the spread of misinformation and objectionable content. After the court granted Facebook's motion to dismiss the FTC complaint with leave to re-plead the complaint in June 2021, the FTC filed an amended complaint. The court largely denied Facebook's second motion to dismiss in January 2022 and the case is proceeding to the discovery phase.25 Also in June 2021, the court dismissed the states' case without leave to re-plead, finding that the states' claims were barred by the doctrine of laches.26 The states have appealed.

Pharmaceuticals

The FTC and the State of New York filed suit against Vyera Pharmaceuticals and Phoenixus and their former owners and executives Martin Shkreli and Kevin Mulleady for allegedly violating Sections 1 and 2 of the Sherman Act and New York state law by blocking 'lower-cost generic competition to Deraprim, an essential drug used to treat the potentially fatal parasitic infection toxoplasmosis' and 'maintain[ing] a monopoly on Deraprim'.27 According to the complaint, the defendants 'executed an elaborate, multi-part scheme to block generic entry', including imposing resale restraints on distributors that hampered the FDA approval process for potential competitors, cut off supply of the drug's active ingredient and prevented distributors from selling sales data to third parties.28 The complaint alleged that 'the purpose and effect' of this 'has been to thwart potential generic competition and protect the Daraprim revenues resulting from Vyera's shocking price increase'.29 Six more states joined the complaint after it was filed.

In late 2021, the FTC announced that three of the defendants settled. Pursuant to the settlement, defendant Mulleady is to be barred from the pharmaceutical industry for seven years. Vyera agreed to pay up to US$40 million in equitable monetary relief.30 Defendant Shkreli proceeded to trial and on 14 January 2022 the judge found for the government and barred Shkreli from the pharmaceutical industry for life and ordered him to disgorge US$64.6 million.31

American Airlines–JetBlue northeast alliance

In September 2021, the DOJ, joined by several states and the District of Columbia, sued American Airlines and JetBlue, alleging that the airlines' alliance with respect to their operations in Boston and the major New York City area airports 'eliminate[s] important competition in these cities' and 'harm[s] air travelers across the country by significantly diminishing JetBlue's incentive to compete with American elsewhere, further consolidating an already highly concentrated industry'.32 The airlines have moved to dismiss the DOJ's complaint.

ii Trends, developments and strategies

The agencies have continued their enforcement of civil anticompetitive conduct matters with the pending suits against Google and Facebook, which now are in the discovery phase. It remains to be seen whether the agencies will bring additional enforcement actions against technology platforms, although big-tech antitrust issues are sure to be a continued source of discussion and debate in the coming year.

In addition, we will watch to see whether the FTC engages in competition-focused rule-making. Both Chair Khan and Commissioner Slaughter have expressed support for this, and whether the FTC attempts to promulgate such rules may depend on the views of whomever is confirmed to the open seat on the commission. Further, in July, the FTC rescinded its 2015 Statement of Enforcement Principles Regarding 'Unfair Methods of Competition' Under Section 5 of the FTC Act, which provided guidance on when the FTC would use its authority to challenge anticompetitive conduct that does not fall within the prohibitions of other antitrust laws. Whether the FTC will seek to take action against a broader range of conduct it deems to be unfair – beyond what the FTC has historically found to violate Section 5 – is also likely to depend on the views of the person who fills the open seat.

iii Outlook

The monopolisation cases against the technology platforms represent the first Section 2 cases brought by the agencies in a number of years and could signal a heightened vigilance in investigating and prosecuting monopolisation offences. These suits were initiated during the prior administration. We will watch with interest to see whether the agencies, under new leadership, will pursue additional such cases.

Meanwhile, in September 2021, the FTC authorised its staff to issue compulsory process to investigate repair restrictions, abuse of intellectual property and monopolistic practices. According to the FTC, this authorisation 'will broaden the ability for FTC investigators and prosecutors to obtain evidence in critical investigations on key areas where the FTC's work can make the most impact'.33 Later in the year, the FTC announced that it is investigating supply chain disruptions.34 The outcome of these investigations may inform future enforcement initiatives.