November Antitrust and Competition Bulletin: Top-of-Mind Global Antitrust Issues

Welcome to this month’s edition of the Sidley Antitrust and Competition Bulletin — thoughts on topics that are top of mind for Sidley’s global Antitrust and Competition team and why they may matter to you. What would a November 2024 edition be without an update and our thoughts on what the U.S. election may mean for antitrust? We share some of our thoughts, along with those on the other big U.S. antitrust news of the month: An effective date — February 10, 2025 — has been set for the amendments to the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) Form. Also in the U.S., “accessible luxury handbag” manufacturers abandoned their proposed merger after a federal court preliminarily blocked the deal. A recent European Court of Justice (CJEU) judgment casts doubt on the proposed European Commission (EC) approach to reviewing exclusionary rebates set out in recent draft guidelines. In the sporting arena, the CJEU ruled that certain football transfer rules violated European antitrust law and the law on the free movement of workers across the EU. The U.S. Department of Justice (DOJ) released updated guidance for evaluating corporate compliance programs in criminal antitrust investigations. Finally, the EC is preparing for a Digital Fairness Act to strengthen consumer protection law in the EU. Interested? Keep reading.…

SPECIAL BULLET - ELECTION 2024

Antitrust Enforcement in a Second Trump Administration: Assume Softer Enforcement at Your Own Risk

As the political landscape shifts with a second Trump administration, the future of antitrust enforcement at the DOJ and the Federal Trade Commission (FTC) remains uncertain. The key question is whether this administration will restore a sense of antitrust “normalcy” or continue the momentum of the vigorous, and often unpredictable, recent enforcement environment.

Transition dynamics are a crucial consideration. At the DOJ, it is common practice for leadership to resign shortly before Inauguration Day, a process that typically instigates a shift in the agency’s enforcement priorities. But the FTC offers at least the possibility of intrigue: Chair Lina Khan’s term has expired, yet she could theoretically remain in her role until a successor is confirmed. This atypical scenario could help maintain a Democratic majority into the Trump administration, as new nominations are generally not a pressing concern for incoming administrations. If Khan opts for the more conventional route and resigns, a 2–2 split among commissioners would mean that any agency actions would necessitate both Democratic and Republican Commissioner support — at least until a new Republican majority assumes control of the five-person commission. 

Conventional wisdom might suggest that Republicans coming into power would lead to a retreat from current antitrust enforcement and most of the names being considered to lead the FTC and the DOJ Antitrust Division would be expected to scale back antitrust enforcement. But some high-ranking Republicans have voiced support for certain Biden-era antitrust efforts, including regarding aggressive enforcement in the tech space and the proposed FTC national ban on employee noncompete clauses. Furthermore, Vice President-elect J.D. Vance’s support for some of Khan’s initiatives indicates potential common ground between the Trump administration and the current antitrust left. 

On the other hand, traditional Republican skepticism toward government intervention persists, as highlighted by House Judiciary Committee Chairman Jim Jordan, Republican of Ohio, and incoming Senate Commerce, Science, and Transportation Committee Chairman Ted Cruz, Republican of Texas, neither a fan of Chair Khan. The incoming FTC chair will need to be confirmed by the Senate Commerce, Science, and Transportation Committee.

President-elect Trump, of course, served as president from 2017–21. So perhaps the past is the best prologue. Well, six significant Big Tech antitrust cases remain active, and there are no indications they will be dismissed under a second Trump administration. 

Notably, two of those cases (see here and here) were filed by the first Trump administration.

In short, it would be overly simplistic to assume that a second Trump administration heralds the end of vigorous antitrust enforcement.

Effective date for new HSR filing requirements is set for February 10, 2025. The FTC published the final amendments to the HSR Form in the Federal Register on November 12. As a result of the publication, the final amendments, which the FTC announced on October 10, are set to become effective on February 10, 2025. Prior incoming administrations, including the Trump administration in January 2017, have implemented freezes on pending regulations, including a 60-day freeze for published regulations that are not yet effective. If the Trump administration institutes a similar freeze upon inauguration on January 20, 2025, the final amendments to the HSR Form would become effective on March 21, 2025. 

Why it matters: The long-awaited amendments to the HSR Form, which significantly expand the information and materials that filing parties will be required to disclose, now have an effective date. Although that date could change based on actions by the incoming administration, parties considering entering into notifiable transactions may want to start planning for the timing and burden implications of the amendments. For a more detailed description of the final amendments as well as other key takeaways, see our Sidley Update here.

Tapestry/Capri abandon proposed merger after federal court preliminarily blocks deal. A New York federal judge granted the FTC request for a preliminary injunction to halt the proposed $8.5 billion merger between Tapestry, Inc. (a New York–based fashion firm that owns Coach and Kate Spade) and Capri Holdings, Ltd. (a global fashion firm that owns Michael Kors (MK)). The FTC alleged that the merged entity would comprise approximately 59% of the “accessible-luxury-handbag” market, defined as handbags priced between $100 and $1,000, where pricing heavily relies on discounting, rendering it distinct from “mass market” and “true luxury” markets. The FTC’s case and the court’s opinion focused heavily on the firms’ ordinary-course documents that referenced a distinct “affordable luxury” market, described the firms’ brands as close competitors, and suggested that the merger would create an “opportunity to reduce MK discounting.” The preliminary injunction precluded the parties from closing the transaction while the FTC’s in-house administrative adjudication proceeds. After initially vowing to appeal, the parties subsequently abandoned the deal. 

Why it matters: This ruling reaffirms the weight that antitrust agencies and factfinders place on ordinary-course documents (e.g., internal communications and strategy materials) when assessing whether a deal would harm competition. It also shows that even in spaces that may appear to be relatively fragmented, the agencies and courts will look at evidence of the closeness of competition between the merging parties to see if there are niche segments where there could potentially be harm to competition. 

CJEU confirms Commission’s loss in long-running Intel rebates case: On October 24, the CJEU upheld the General Court’s finding that the EC failed to demonstrate that Intel abused its dominant position by granting rebates to its customers. The CJEU explained that rebates by a dominant company should be assessed in light of a number of elements, such as the extent of the dominant position of the company, the market share covered by the rebates, the conditions for granting them, their duration, and their amount. It made clear that a classification of rebates cannot be based only on their type. Moreover, the capability of rebates to foreclose competitors hinges, as a general rule, on whether an “as efficient competitor” (an AEC) can reproduce the conduct of the dominant company. 

Why it matters: The judgment calls into question the proposed presumptive approach for exclusivity rebates set out in the EC draft Guidelines on exclusionary abuses of dominance (Draft Guidelines) (see our previous Bulletin here). By requiring an assessment of several factors related to the rebate, the CJEU unsettles the EC’s suggestion that exclusivity rebates can be presumed to be capable of having exclusionary effects. In addition, the CJEU’s emphasis on the role of AECs contrasts with the EC’s attempt to downplay their importance in the Guidelines. The judgment underscores the importance of thorough economic analysis in assessing the legality of rebates granted by potentially dominant companies.

Landmark football (soccer) ruling in Europe: On October 4, the CJEU ruled that certain transfer rules contained in the Fédération Internationale de Football Association (FIFA) Regulations on the Status and Transfer of Players violated (i) EU law ensuring the free movement of workers across the EU and (ii) EU competition law. Specifically, the CJEU found that FIFA rules that hold both the player who leaves a football club by terminating his contract without “just cause” and the new football club jointly and severally liable for any compensation due to the former club incompatible with EU law. Under the FIFA rules, the new club may also be exposed to sporting sanctions, which the CJEU considered disproportionate. The CJEU also found that a player who does not hold an International Transfer Certificate should not be prohibited from competing in international football competitions. As it did in its recent European Superleague judgment, the CJEU reaffirmed that regulations of sports federations fall within the scope of the EU law unless exempted.

Why it matters: In addition to significant implications for international player transfers, the ruling more generally recognizes workers’ rights in professional sports (for detail, see our Sidley Update here). In the wake of the decision, on October 14, FIFPRO, a trade union for professional footballers, together with Spain’s La Liga, filed a complaint with the EC stating that FIFA’s failures in the management of the congested international match schedules amount to an abuse of a dominant position under EU’s competition laws, potentially further chipping away at FIFA’s authority on antitrust grounds.

DOJ updates its corporate compliance program guidance for criminal investigations: In November, the DOJ published its updated Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations guidance document (2024 Compliance Guidance). The 2024 Compliance Guidance is intended to assist Antitrust Division prosecutors evaluating company compliance programs at both the charging and sentencing stages of criminal violations of the Sherman Act. The updated guidance follows the Division’s Policy to Incentivize Corporate Compliance and original Antitrust Compliance Guidance, both of which were released in 2019.  

Why it matters: Key updates and emphases in the 2024 Compliance Guidance include the following:

• consideration of corporate policies governing the use of personal devices and electronic communication platforms (such as for ephemeral messaging) to ensure business communications are preserved

• consideration of the use of artificial intelligence (AI), pricing tools, and revenue management software, including whether a company’s compliance personnel assess the antirust risks posed by AI and other new technologies prior to deployment

• the need for a culture of compliance with managers setting “the tone from the middle” — specifically, the Division states: “[a]n effective compliance program requires leadership to implement a culture of compliance at all levels of the organization …”

• the importance of confidential reporting mechanisms, a fair process for assessing complaints, and avoiding the perception of deterring whistleblowers

While its title clearly refers to criminal investigations, the DOJ cautions that its civil teams will “consider many of the same factors” when evaluating and resolving civil conduct.

Recent initiatives to strengthen consumer protection in Europe: The EC announced plans for a  following its recent Digital Fairness Fitness Check, which recommended updating EU consumer protection frameworks to address challenges in the digital era. The Fitness Check identified several key risks that online consumers face, including (i) manipulative “dark patterns” in online interfaces, (ii) addictive design features, (iii) targeted advertising practices, and (iv) barriers to canceling digital subscriptions. In response, the proposed Digital Fairness Act, expected as early as next year, aims to enhance transparency and fairness in online markets. In the UK, the government recently opened a public consultation seeking views from streaming, e-commerce, and other digital platforms on the implementation of the new subscriptions contracts regime set out in the upcoming Digital Markets, Competition and Consumers Act 2024 (DMCCA). 

Why it matters: Once introduced, the Digital Fairness Act is expected to provide new protections for consumers in the EU facing emerging digital risks, expand the range of consumer harms for which individuals can seek redress, and increase penalties for violations. This enhanced regulatory framework is likely to drive a surge in consumer complaints, triggering more regulatory requests and investigations into digital practices across the EU. In the UK, the DMCCA (see our Sidley Update here) sets out a broad framework of rules for subscription contracts that will require traders, amongst others, to provide precontract information, reminder notices, and straightforward exit routes to consumers in subscription agreements. Stakeholders are invited to contribute their views to the implementation of these rules until February 10, 2025. This intensified approach to consumer protection law enforcement in the EU and the UK mirrors a broader global trend. In particular, the FTC recently ramped up its consumer protection efforts (see our Sidley Update here) and finalized a new “click-to-cancel” rule regulating free trial and subscription-based services (see our Sidley Update here).

Counsel J. Matthew Schmitten contributed to this Sidley Update.