How to spend it – US Antitrust Agencies outline enforcement agenda for budget increases

US antitrust enforcement agencies are expecting a sizable budget increase for fiscal year 2023 to promote “vigorous marketplace competition through robust enforcement of antitrust law”, reflecting broader global trends in increased enforcement and collaboration. The US agencies have previewed that they are focused on bolstering litigation capabilities and expanding theories of harm across all areas of enforcement, notwithstanding recent setbacks in several high-profile cases. Companies can expect a further scrutiny of both merger and conduct cases, with a particular focus on tech markets.

Outlining the enforcement agenda

At the recent ABA Antitrust Law Spring Meeting in Washington, DC, the agencies previewed how aim to spend it. With landmark budget increases of $139 million to the Federal Trade Commission (FTC) and $88 million to the Department of Justice, Antitrust Division (DOJ), the two US federal antitrust enforcers plan to fund additional manpower for their ambitious enforcement goals and burgeoning caseloads. 

Assistant Attorney General Jonathan Kanter said that the DOJ is “just getting started,” with its staff “firing on all cylinders” and “not afraid to take on big cases and big companies”. DOJ officials are ramping up flexible and long-term staffing, while FTC leadership announced plans to hire up to 10% more staff.

Expanding merger challenges

Following a substantial increase in the number of transactions filed in recent years, the agencies aim to use their budget to bring more merger challenges. The agencies have highlighted that staffing increases would help them to effectively meet this growing volume of cases.

In parallel to the growing volume of deals, the agencies are seeking to expand the theories of harm in their investigations. While these themes have emerged across sectors, the agencies have set their sights on nontraditional theories of harm in digital markets. John Newman, deputy director of the FTC’s Bureau of Competition, said that the FTC is not afraid to target:

• Non-price harms (e.g., innovation and quality)
• Non-horizontal mergers (e.g., vertically-related or adjacent markets)
• Serial transactions where “harmful ripple effects” will be considered “holistically”

They are seeking to “update” existing merger guidelines to better define these approaches.

Based on these trends, the agencies’ reviews have also been longer and more resource intensive. In response, FTC senior leadership has promoted the need for legislative initiatives to further extend waiting periods for all transactions.

Staking out new conduct enforcement 

A major focus of the budget increases will be funding new conduct cases, as the agencies are under pressure to bring the first tech challenges under the new administration. AAG Kanter said he plans to use the additional budget requested for the DOJ to “scale to litigate multiples of our current docket” by “institutionalizing shared resources” and expanding trial teams. His stated goal is to “be prepared to try cases to a verdict when we think a violation has taken place. And that means our capacity for litigation must grow with the demands of modern antitrust enforcement.”

The agencies promise to bring not only more cases but expanding theories of harm. The DOJ has set its sights on further expanding the scope of criminal enforcement, highlighting its continued criminal enforcement of novel criminal wage-fixing and no-poach claims. DOJ officials also teased recent statements that the agency was looking to bring criminal monopolization claims for the first time in nearly 50 years.

The agencies also intend to focus on novel technologies in enforcement and new approaches to analyzing allegedly anticompetitive behavior. Meanwhile the DOJ has said it hopes to hire expert data scientists to consult on the use of algorithms by tech companies that may be anticompetitive. Funding for expert consultants may allow the DOJ to create its own algorithms to detect misconduct and assist in its own decision-making process.

The agencies may also seek more structural and injunctive conduct remedies, building off the divestitures proposed in ongoing litigation. A senior FTC economist said that structural remedies should be “put back in the toolbox of competition agencies” more regularly. US regulators should also to “start to think about a more aggressive policy of breaking up companies” along the “fault lines” created by the acquisition process.

Potential hurdles to implementing this enforcement agenda

Whether the Biden administration’s enforcement goals come to fruition will ultimately be up to the courts. Just last week the DOJ was reminded of the potential challenges in pursuing novel theories of harm with broad acquittals in two separate criminal trials challenging conduct in labour markets. A Texas jury acquitted two physical therapy staffing company operators under the novel theory that colluding to fix wages is a criminal offense. The next day, a Colorado jury delivered a not-guilty verdict to a dialysis provider and its former CEO related to no-poach allegations involving allegedly agreements not to solicit competitors’ employees.

The agencies have also had recent setbacks in civil conduct and merger cases. Cases involving nascent competition in dynamic have proved most challenging for the agencies to prove harm to competition. Even within the FTC’s administrative process, an administrative law judge dismissed the FTC’s challenge to Altria’s acquisition of a minority interest in Juul in February.

While the agencies clearly take the position that they will not be deterred by the courts, the practical effect of the budget increases on enforcement decisions remains to be seen. In the meantime, companies in the tech sector should prepare for further in-depth investigations on several fronts as the agencies ramp up spending under their new budgets.