March 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 team and why they may matter to you. The U.S. Federal Trade Commission (FTC) recently filed a complaint to stop the merger of two major U.S. supermarket chains in part, by alleging for the first time, that the transaction would substantially harm a unionized labor market. On March 21, Advocate General, Nicholas Emiliou advised the Court of Justice of the European Union (CJEU) to rethink the approach of the European Commission (EC) to reviewing mergers that fall below notification thresholds. The EC conditionally cleared an airline merger requiring a broad remedial package to address competition concerns. On March 5, the FTC   hosted a virtual workshop examining the role of private equity investment in healthcare markets. In late February, Assistant Attorney General Jonathan Kanter remarked on how the U.S. agencies’ antitrust enforcement efforts have, and will continue to focus on, gatekeeper power. At the end of February, several European media organizations launched a civil action in the Netherlands seeking €2.1 billion in damages from Google, alleging that it had abused its  dominant position in adtech, adding to several ongoing investigations by various competition authorities into the same practices. Interested? Keep reading.…

Our Take on Top-of-Mind Global Antitrust Issues

The antitrust agencies’ heightened focus on labor issues comes to a head in the FTC’s challenge to the Kroger/Albertsons merger: For the first time, the FTC is including an allegation that a potential transaction would harm competition for unionized labor in a litigated merger challenge in addition to including more traditional allegations of problematic market concentration. The FTC argued that “Kroger’s proposed acquisition of Albertsons would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions.” This challenge marks a concrete enforcement effort to prevent a transaction based on a claim of substantial harm to workers, which the antitrust agencies have publicly emphasized as one of their priorities. The Sidley Global Antitrust team previously discussed the inclusion of labor considerations in the new Horizontal Merger Guidelines (here), the collection of labor information in the draft revisions to the HSR Form (here), and the FTC’s efforts in connection with labor noncompete agreements (here).

Why it matters: The FTC’s challenge of Kroger/Albertsons on the basis of an unprecedented labor theory of harm demonstrates the antitrust agencies’ willingness to deviate from practice to aggressively defend against alleged harm to narrowly defined labor markets. Moreover, this strategy is yet another example of the agencies’ going beyond the traditional consumer welfare standard and using the antitrust laws to address a broader range of social concerns. Companies may want to consider the potential effects of any transaction on competition for labor and prepare to answer questions and produce documents regarding the same.

Advocate General Emiliou advises the EU’s top court to rethink the EC’s approach to below-threshold deals: In 2021, the EC introduced new guidance on Article 22 of the EU Merger Regulation (EUMR) encouraging national competition authorities in the EU (NCAs) to refer deals to the EC even if the NCAs lacked jurisdiction under their national merger control rules. This guidance came under scrutiny when parties involved in the first deal reviewed under the new policy challenged the EC’s jurisdiction to the EU General Court (GC). Although the GC sided with the EC, this decision was subsequently appealed to the CJEU. On March 21, 2024, Advocate General (AG) Emiliou issued his advisory opinion, in which he criticized the GC’s endorsement of the EC’s broad interpretation of Article 22 EUMR, and concluded that under a proper construction of that provision the EC would not have been able to review the deal at issue. Considering the wording, origins, context, and purpose of Article 22 EUMR — alongside key principles of EU law such as institutional balance, subsidiarity, legal certainty, and territoriality — AG Emiliou argued that affording such a broad interpretation to Article 22 EUMR would grant the EC authority to review nearly any global deal, irrespective of companies’ EU presence, turnover, or transaction value or when the merger was completed. Moreover, the AG emphasized that the approach effectively makes notification thresholds “relative” and posited that adjusting merger notification thresholds, especially to address digital economy challenges, is a matter for EU legislators, not the EC. In addition, he countered the EC’s concerns about the ineffectiveness of postmerger enforcement under Articles 101 and 102 TFEU. 

Why it matters: Although AG Emiliou’s opinion is nonbinding on the CJEU, should the CJEU decide to follow it, there could be a shift toward a more limited interpretation of the EC’s powers under Article 22 EUMR. This would imply that only NCAs with jurisdiction over a case could refer it to the EC, provided that the conditions of Article 22 EUMR are met, namely, the deal affects trade between EU member states and threatens to significantly affect competition within the territory of the referring EU member state. The outcome of the case will highlight the challenge of balancing effective regulation with the need to provide businesses with legal certainty.

The EC conditionally approves airline merger: Following an in-depth investigation, the EC conditionally approved the acquisition by Korean Air Lines Co., Ltd (Korean Air) of Asiana Airlines Inc. (Asiana). Korean Air offered remedies to address the EC’s concerns that the acquisition could reduce competition in the provision of passenger and air cargo transport services on certain routes between Europe and South Korea, potentially leading to higher prices and decreased quality for consumers. The remedies included the divestiture of Asiana’s cargo business and the provision of assets, traffic rights, and aircraft access to a competitor airline, T’Way. The EC says the remedies ensure that T’Way can operate on the routes served by both Asiana and Korean Air premerger. Korean Air committed not to complete the merger until T’Way begins operations on these routes.

Why it matters: The EC’s conditional clearance of the Korean Air/Asiana merger required more extensive remedies than had been sought in other airline mergers, in that it involved the surrender of airline slots and other elements, but also that rival offerings actually start operating. The EC publicly commented that in this particular case giving up slots was not sufficient on its own.

Antitrust agencies have expressed heightened interest in private equity’s effect on healthcare: As part of the Biden administration’s broader efforts to address high healthcare costs, the U.S. antitrust agencies have increasingly focused on the involvement of private equity investment in the healthcare industry. On March 5, 2024, the FTC, the DOJ, and the Department of Health and Human Services jointly launched a cross-government public inquiry and are seeking information through public comments on how private equity involvement in healthcare “may harm patients’ health, workers’ safety, quality of care and affordability.” That same day, the FTC hosted a virtual workshop during which several panelists criticized the effects of private equity in healthcare and sought information to bring further enforcement actions. These efforts come on the heels of increased investigations and enforcement actions aimed at alleged unlawful consolidation and rollup strategies by serial acquirers in a single buyer, often private equity firms, as FTC Chair Lina Khan noted in a speech to the American Medical Association National Advocacy Conference.

Why it matters: The recent focus by the FTC and the DOJ on rising healthcare costs and private equity investment in the industry reflects concerted attention by the regulators on the potential cumulative effects of rollup strategies through serial acquisitions. In this regard, the agencies are actively exploring the implications of frequent, short-term buying and selling of companies and obligating target companies to additional debt. Private equity firms and frequent acquirers that that operate in the healthcare sector may want to carefully consider heightened scrutiny by the antitrust agencies and the implications that scrutiny can have on deal timing and certainty.

Increased scrutiny on gatekeepers: DOJ Assistant Attorney General Kanter emphasized in recent remarks that the Antitrust Division will be “laser focused” on enforcement against alleged industry gatekeepers. Kanter emphasized that perceived gatekeepers, many of which are platforms, are seen as posing an especially high risk to marketplace competition because they control both who gets to compete and the terms on which they compete and because they can ensure their own long-term market power. The enforcement agencies, therefore, plan to prioritize enforcement where they see “monopoly chokepoints” and to prevent new ones from arising. Per the new merger guidelines, the DOJ will pay special attention to the competition between alleged gatekeeper platforms, on alleged gatekeeper platforms, and to displace alleged gatekeeper platforms. 

Why it matters: The Assistant Attorney General’s recent speech reiterates the antitrust authorities’ commitment to closely scrutinizing the effects on competition by perceived gatekeepers. It follows a speech he delivered last year in which he stated, “Gatekeeper power has become the most pressing competitive problem of our generation at a time when many of the previous generations’ tools to assess and address gatekeeper power have become outmoded.” Consistent with that message, the DOJ has brought (and is expected to bring additional) cases reflecting these concerns. Outside of the U.S., the EC’s designated “gatekeepers” are required to comply with all obligations under the EU’s Digital Markets Act starting on March 7.

Google confronts EU €2.1 billion ad tech lawsuit: On February 28, 32 European media publishers filed a private damages claim of around €2.1 billion for losses incurred as a result of Google’s allegedly anticompetitive practices in “adtech,” which comprises the various technologies used to purchase, manage, and analyze online advertising. The claimants argue that absent Google’s conduct, they would have received higher revenues and paid lower fees for adtech services. 

Why it matters: Google’s adtech business is and has been the subject of numerous antitrust investigations and private damages claims worldwide (including in the U.S., EU, and UK). This most recent case provides another example of cross-jurisdictional efforts to regulate conduct in the technology sector that affects consumers on a global level. Any coordination, or divergence, between the approaches taken by the various antitrust authorities as they advance their enforcement efforts in parallel could have important consequences. The result could mean significant structural changes to the market, with the EC indicating its preliminary view that Google should be forced to divest part of its adtech services.

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