2020 ANTITRUST YEAR IN REVIEW

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Table of Contents

Introduction...... 1 Merger Enforcement...... 2 Guidance Galore: New Guidelines and HSR Rule Interpretation...... 2 Vertical ...... 2 Merger Remedies Guidelines...... 2 Changes in HSR Interpretation...... 3 Spotlight on Efficiencies Defenses...... 3 T-Mobile/Sprint...... 3 Peabody Energy/Arch Resources...... 3 Traditional Merger Enforcement...... 4 FTC’s Winning Streak Ends...... 4 Both Agencies Bring Hospital Merger Challenges...... 4 Acquisitions of Nascent Competitors...... 4 Unusual Actions...... 5 Consummated Merger Challenges...... 5 The Historic Novelis/Aleris Arbitration...... 6 International Mergers...... 6 Spotlight on Data (Again)...... 6 EC’s Merger Review Under Judicial Scrutiny...... 6 Ramped-Up Enforcement in the UK: Redefining “Voluntary”...... 6 The UK: A Deal Graveyard?...... 7 Brexit and Its Impact on Global Deals...... 7 Agency Investigations...... 7 U.S. Enforcement Agency Collaboration and Disagreement...... 7 Collaboration Between the Federal Agencies...... 7 FTC and DOJ Clash at Intersection of Antitrust and IP...... 9 ...... 10 Clarification of Authority to Seek Monetary Remedies...... 10 Decisions Continued to Show Notable Party-Line Split...... 10 Continued Emphasis on the Pharmaceutical Sector...... 11 Department of Justice...... 11 Wilson Sonsini 2020 Antitrust Year in Review

Table of Contents (cont.)

Renewed Focus on Financial Markets...... 11 Continued Activity on Standard-Setting Organizations and Patent Licensing Issues...... 11 DOJ Continues Program to Terminate Decades-Old Consent Decrees...... 12 DOJ Drops California Emissions Standards Investigation...... 12 State Enforcement...... 12 and Collaboration with the Federal Agencies...... 12 Civil Antitrust Enforcement Outside the United States...... 13 European Union Investigations...... 13 EU Member State Investigations...... 14 Regulatory Efforts in Europe to Address the Digital Sphere...... 14 Growing Focus on Large Digital Platforms in Asia...... 15 Criminal/ Investigations...... 15 Notable Developments in the DOJ’s Criminal Antitrust Enforcement Program...... 15 Enforcement Priorities and Initiatives...... 15 Administrative Updates...... 16 Legislative Developments...... 16 International Cooperation...... 16 Significant DOJ Investigations and Prosecutions...... 16 Government Procurement...... 17 Generic Pharmaceuticals...... 17 Hard Disk Drive Suspension Assemblies...... 18 Air and Auto Parts Executive Extraditions...... 18 Financial Services: FOREX...... 18 Food and Consumables...... 18 Construction ...... 19 Health Care Staffing...... 19 Cartel Enforcement Outside of the U.S...... 19 European Union and United Kingdom...... 19 Canada...... 20 South Korea...... 20 Wilson Sonsini 2020 Antitrust Year in Review

Table of Contents (cont.)

Japan...... 21 China...... 21 Brazil...... 21 Civil Litigation...... 22 Section 1: Concerted Action...... 22 Political Bias Antitrust Claims Fail to Gain Traction...... 22 Mixed Results in Cases Involving Organizations...... 22 Follow-on Litigation from Cartel Investigations Remains Active...... 22 Section 2: ...... 24 Technology...... 24 Miscellaneous...... 25 Antitrust Litigation in the Pharmaceutical Industry...... 25 Class Certification...... 26 Uninjured Plaintiffs as a Bar to Class Certification...... 26 Use of Averaging...... 27 Civil Litigation in the UK...... 28 Conclusion...... 29 About Wilson Sonsini’s Antitrust Practice...... 30 Wilson Sonsini 2020 Antitrust Year in Review

Introduction

Wilson Sonsini Goodrich & Rosati is the Trump administration and analyze agenda and leniency program. We pleased to present its 2020 Antitrust actions by both U.S. antitrust agencies also describe recent actions in other Year in Review, which summarizes the and enforcers in other jurisdictions jurisdictions, including the EU, UK, most significant antitrust matters and around the world across a range of Canada, South Korea, , China, developments of the past year. Antitrust merger review, civil conduct, and and Brazil. This report concludes activity has not slowed down during criminal enforcement matters. The with an update on private antitrust the COVID-19 pandemic and may in mergers chapter highlights a range litigation, with particular emphasis fact have accelerated. Continuing the of new guidance issued by U.S. on developments in pharmaceutical trend of the last several years, antitrust agencies this year, developments in cases and the increasingly critical class enforcement—both government and the treatment of efficiencies in merger certification process. private—has become an increasingly analysis, and the growing importance prominent part of the public discourse, of the UK Competition and Markets We hope you find our 2020 Antitrust particularly with respect to technology Authority in merger clearance. The Year in Review to be a useful resource. and digital platform industries. More agency investigations chapter notes As always, should you have any traditional enforcement has proceeded continued areas of cooperation and questions or comments on any of apace as well, with pharmaceuticals, contention between U.S. agencies and the matters, trends, or controversies intellectual property licensing, price- discusses the priorities of U.S. enforcers discussed in the report, please contact fixing and bid-rigging, and nascent (federal and state) and non-U.S. your regular Wilson Sonsini attorney competitor acquisitions in the enforcers (focusing particularly on the or any member of the firm’s antitrust spotlight. European Commission and EU member practice. states). The criminal enforcement and In this report, we examine the final cartel chapter provides updates on the year of antitrust enforcement under Department of Justice’s enforcement

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Merger Guidance Galore: New and is positioned vertically or is Guidelines and HSR Rule complementary to the products and Enforcement services in the .4 Interpretation Unlike horizontal mergers, the agencies cannot use changes in The year 2020 was an eventful one for Vertical Merger Guidelines concentration as a screen for merger review and enforcement around competitive effects. the world. In the United States, the In June 2020, the DOJ and the FTC U.S. Department of Justice (DOJ) and released the final version of the long- ● Anticompetitive effects. The the Federal Trade Commission (FTC) awaited update to the joint Vertical guidelines recognize that vertical published new guidance regarding Merger Guidelines, which were last mergers can harm competition vertical merger enforcement, merger issued in 1984.1 Recent enforcement by raising rivals’ costs, causing 5 remedies, and Hart-Scott-Rodino (HSR) activity—such as AT&T/Time Warner and foreclosure, increasing the filing requirements. The agencies, along Staples/Essendant—has exposed deep likelihood of post-merger coordination,6 or facilitating access with their state-level counterparts, had rifts on key questions of legal doctrine to sensitive business information packed merger enforcement agendas. and economic analysis both in the about its upstream or downstream The challenges to T-Mobile/Sprint and antitrust bar and between and within rivals that was unavailable to it Peabody Energy/Arch Resources put a enforcement agencies. before the merger.7 spotlight on efficiencies defenses. More generally, the agencies continued to For example, the new guidelines are ● Procompetitive effects. The bring traditional merger enforcement silent on the topic of remedies for guidelines also recognize that cases, focusing on both acquisitions vertical mergers because of disagreement vertical mergers can generate that increase concentration in already between the agencies. The FTC has been efficiencies that benefit concentrated markets and acquisitions willing to accept behavioral remedies competition and consumers,8 of nascent competitors. That said, the such as firewalls. The DOJ, on the other such as through elimination of FTC did bring two novel actions against hand, has been far more critical of double marginalization (EDM). This efficiency—unique to vertical consummated mergers, while the DOJ behavioral remedies, recently stating in mergers—results from the merged used its authority to resolve a matter in its Merger Guidelines Manual (discussed firm gaining access to an upstream arbitration—a first for the agency. below) that “no matter how well crafted, input at cost and avoiding the

the risk of collaboration in spite of the margin that would be imposed by a Internationally, merger enforcers 2 firewall is great.” The FTC itself was separate upstream input provider.9 continued to closely review competitive sharply divided along party lines on the effects arising from merging data or new Vertical Merger Guidelines. Both Merger Remedies Guidelines data collection resources. The European Democratic commissioners dissented Commission saw increased judicial from the vote adopting the guidelines, In September 2020, the DOJ issued an scrutiny of its merger review program, criticizing them for overemphasizing the updated Merger Remedies Manual, while European enforcers continued potential benefits of vertical mergers and which lays out the agency’s framework to bring tough sanctions against failing to consider alternative theories of for structuring and implementing relief procedural breaches. Finally, the United 3 harm. in merger cases short of a full-stop Kingdom’s Competition and Markets injunction.10 Key aspects of the new Authority continued to increase its The new Vertical Merger Guidelines lay Manual include: jurisdictional reach and to zealously out the following key principles: challenge global deals—a trend that is ● Structural versus behavioral only likely to continue as the Brexit ● Market definition, market shares, remedies. The DOJ further transition period ends. and concentration. The agencies underscored recent emphasis on its will identify a relevant market and preference for structural remedies one or more “related products,” involving the sale of businesses or meaning a product that is supplied assets by the merging firms over or controlled by the merged firm conduct remedies restraining the

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merged firm’s business conduct or determine whether the parties structured evidence that the pricing authority.11 The Manual the deal to avoid or delay an HSR filing.17 efficiencies arising from states that structural remedies the Proposed Merger will are “clean and certain, effective, Spotlight on Efficiencies cause New T-Mobile to and avoid ongoing government Defenses compete more vigorously entanglement in the market,”12 with its rivals in the … while conduct remedies are Two major enforcement litigations in market[]…evidence that only appropriate in very limited Sprint is a weakened situations.13 2020 put a spotlight on uncertainties in how efficiencies should be evaluated competitor that is ● Consent enforcement. The DOJ and balanced in merger cases. Both the not likely to continue is renewing its focus on enforcing T-Mobile/Sprint and Peabody Energy/Arch competing vigorously obligations against merging parties Resources cases went to trial this year, in the … market[]…and in consent decrees. The Manual and both defenses were based in part on evidence that the DOJ and sets out new standard provisions the assertion of substantial efficiencies FCC…collective efforts to that must be included in consent arising from the combinations. T-Mobile establish DISH as a new decrees and highlights the role of and Sprint secured a win based in part vigorous competitor in the the newly created Office of Decree on those efficiencies, but the court … market[] ameliorate[s] Enforcement and Compliance also relied on other market structure any remaining concern of (ODEC) to oversee compliance evidence. The court dismissed the anticompetitive effect.20 efforts across the DOJ.14 efficiencies in Peabody Energy/Arch The opinion makes it clear that, while Changes in HSR Interpretation Resources and forbade the joint venture. efficiencies were an important factor, While these cases breathed some life approval of the merger also hinged on In September 2020, the FTC announced into efficiencies defenses, they show evidence of an effective new competitor an important change in its interpretation that efficiencies, standing alone, remain entering the market and Sprint’s waning of the HSR Rules’ treatment of special unlikely to carry the day. competitive significance. dividends.15 HSR Rule 801.90 states that merging parties cannot use a transaction T-Mobile/Sprint Peabody Energy/Arch Resources structure for the purpose of avoiding or delaying their filing obligation. FTC staff On February 11, 2020, Judge Marrero of On September 29, 2020, Judge Pitlyk of determines whether avoidance or delay the U.S. District Court for the Southern the U.S. District Court for the Eastern was the objective by applying a “but for” District of New York dismissed a District of Missouri considered a test.16 If the transaction’s structure was challenge to the proposed merger proposed joint venture between two motivated by some benefit from avoiding between T-Mobile and Sprint brought large coal mining facilities—Peabody or delaying HSR filing, then it is an by a group of state attorneys general Energy and Arch Resources.21 The “avoidance device” under the rule. (the deal received DOJ and Federal defendants argued that the joint Communications Commission (FCC) venture combining Peabody’s NARM A 2003 informal interpretation conditional clearance while the suit was 18 mine with Arch’s neighboring Black categorically excluded special dividends pending). Judge Marrero concluded Thunder mine would unlock efficiencies, from consideration as an avoidance that the plaintiffs “ha[d] established an “strengthening coal’s competitiveness device, allowing parties to avoid initial presumption that, by reason of against natural gas and renewables”— filing by using special dividends to higher concentration in fewer firms in sources of energy that the FTC had get under the HSR size-of-person the relevant market, and New T-Mobile’s excluded from the relevant market.22 or size-of-transaction thresholds. In much larger market share, the effect of The court agreed that the joint venture September 2020, the FTC withdrew the Proposed Merger would be likely 19 would “clearly make possible substantial this interpretation. Going forward, anticompetitive.” However, Judge efficiencies,”23 but held that the FTC’s FTC staff will evaluate special Marrero further ruled that T-Mobile proposed market was properly drawn dividends more holistically, applying and Sprint had “satisfied their burden of and that the efficiencies, even if fully the aforementioned “but for” test to rebuttal” by providing: credited, “would not offset the likely

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competitive harm” in the FTC’s coal- failed to carry its burden to show that over both cases, with trial for Methodist based relevant market.24 insurers would accept a price increase Le Bonheur Healthcare set to begin on rather than turn to hospitals outside of May 18, 2021.35 Traditional Merger the alleged markets, noting in particular Enforcement that insurers’ testimony was conclusory The DOJ’s challenge to Geisinger and not credible.31 Health’s $100 million acquisition of Merger review statistics for 2020 have a 30 percent interest in Evangelical not yet been published,25 but the FTC Both Agencies Bring Hospital Merger Community Hospital is somewhat and DOJ have continued to bring Challenges unusual because minority acquisitions enforcement actions, focusing particu- are rarely litigated.36 The DOJ alleged larly on both acquisitions that increase The FTC has had primary responsibility the arrangement was intended to dodge concentration in already concentrated over hospital mergers since at least the antitrust scrutiny, citing the parties’ markets and acquisitions of nascent mid-2000s, but both the FTC and DOJ documents discussing previous attempts competitors. are currently litigating hospital merger to merge. The DOJ further asserted that cases. The FTC filed three administrative the parties’ collaboration agreement FTC’s Winning Streak Ends complaints in 2020. As noted above, “fundamentally alter[s] their relationship the FTC failed to secure a preliminary as competitors and curtail[s] their Notably, the FTC’s seven-case winning injunction in its challenge to Jefferson incentives to compete independently for streak of litigated merger challenges Health’s proposed acquisition of Albert patients.”37 Litigation is ongoing. came to an end in 2020 when the U.S. Einstein Healthcare. Two other suits are District Court for the District of Colum- pending, one seeking to block Methodist Acquisitions of Nascent Competitors bia denied the FTC’s request for a pre- Le Bonheur Healthcare’s acquisition of liminary injunction to prevent Evonik two Memphis-area hospitals owned by In 2020, the FTC and DOJ have Industries from acquiring PeroxyChem Tenet Healthcare and a second seeking continued to challenge mergers they Holdings. The FTC proposed a product to block Hackensack Meridian Health’s believe would eliminate a nascent market “for the sale of standard, special- acquisition of hospitals from Englewood competitor, especially in technology ty, and pre-electronics grade hydrogen Healthcare Foundation in Bergen sectors. A nascent or potential 32 peroxide.”26 Deviating from the standard County, New Jersey. competition theory of harm appeared in practice of defining product markets five of the FTC’s 22 merger enforcement based on demand-side substitution, Both complaints follow the typical actions and three of the DOJ’s 10 merger 38 the FTC instead relied on evidence of pattern for hospital mergers. The enforcement actions this year. supply-side substitutability.27 The court Methodist Le Bonheur Healthcare soundly rejected the FTC’s relevant mar- complaint alleges that the acquisition of On February 3, 2020, the FTC filed an ket as “ill-conceived”28 and denied the two Saint Francis hospitals in Memphis administrative complaint challenging injunction in part on that ground.29 will reduce the number of providers the merger of Edgewell Personal of general acute care (GAC) inpatient Care Company, a consumer products In December, the FTC lost another hospital services in the Memphis company that supplies multiple razor preliminary injunction, this time area from four to three, resulting in brands—including the second-largest in a hospital merger case. The FTC Methodist Le Bonheur Healthcare brand, Schick—and Harry’s, Inc., an brought suit in the Eastern District of controlling over 50 percent of the market online “direct-to-consumer” supplier Pennsylvania to enjoin Jefferson Health’s for GAC inpatient hospital services of razors that recently expanded its 33 proposed acquisition of Albert Einstein in the Memphis area. Similarly, the offerings to brick-and-mortar retailers.39 Healthcare pending an administrative Hackensack Meridian Health complaint Despite Harry’s modest market share, trial on the merits. The court denied the alleges that the deal would consolidate the FTC concluded that Harry’s FTC’s request, concluding that the FTC’s three of the six GAC hospitals in Bergen future competitive significance was proposed geographic markets did not County, accounting for roughly half understated. The complaint cites an 34 align with the commercial realities of of GAC services in the area. Chief Edgewell investor deck referring to providing healthcare in the Philadelphia Administrative Law Judge D. Michael Harry’s as “one of the most successful region.30 The court found that the FTC Chappell has been appointed to preside challenger brands ever built”40 and

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alleges that Harry’s entry at Target and because they “do not account for the November 2020. The DOJ alleged that Walmart “ended the long-standing leverage that gain from having Credit Karma Tax’s digital do-it-yourself practice of reciprocal price increases by Farelogix’s Open Connect available (DDIY) tax preparation product “poses and Edgewell,” resulting in price as an alternative when negotiating a unique threat” to Intuit’s TurboTax reductions and/or increased promotional contract terms with Sabre.”45 The DOJ business and other DDIY tax preparation spend by Proctor & Gamble (P&G) and also presented evidence that Sabre had providers because Credit Karma Tax Edgewell.41 Harry’s introduction of the a history of engaging in anticompetitive offered an entirely free product, whereas Flamingo brand for women in October tactics designed to undermine and all other providers upsell consumers 2018 allegedly also prompted reduced delay the adoption of Farelogix’s for DDIY tax preparation products prices and aggressive promotions from technology.46 The district court beyond the most basic federal tax both Edgewell and P&G.42 One week acknowledged that Farelogix had been filings.51 The DOJ concluded that this after the complaint was filed, Edgewell a “pioneering innovator and disruptor strategy made Credit Karma Tax “the terminated the merger agreement. of the travel services ecosystem,” most disruptive competitor for DDIY Harry’s has threatened litigation against but nonetheless ruled in favor of the tax preparation” despite serving only 3 Edgewell, though it appears that no case merging parties, concluding that the percent of customers.52 Consequently, has yet been filed.43 DOJ had failed to prove that Sabre “will the DOJ required Intuit and Credit likely act consistent with its history [of Karma to divest Credit Karma Tax to Eleven months later, the FTC filed an resisting change] or these incentives Square Inc. as a condition to closing the administrative complaint challenging [to raise prices, reduce availability transaction.53 DOJ Assistant Attorney another proposed transaction in the of Farelogix’s technology, and stifle General (AAG) Makan Delrahim razor industry—P&G’s acquisition of innovation].”47 The court, relying on characterized Square as “another Billie, Inc.44 Similar to Edgewell/Harry’s, Ohio v. American Express Co., held that highly successful and disruptive fintech the FTC alleged that Billie, a direct-to- Sabre and Farelogix do not compete in company” and stated that the divestiture consumer seller of women’s razors and a relevant market, thereby extending to of Credit Karma Tax to Square would body care products that launched in merger cases the U.S. Supreme Court’s “ensure[] that taxpayers will continue 2017, is a nascent, but rapidly growing, finding that courts must consider to both benefit from [disruptive head-to-head competitor of P&G’s. interaction between both sides of two- competition from Credit Karma Tax] and According to the FTC, competition from sided platforms to determine whether benefit from new innovative financial Billie spurred P&G to introduce its own allegedly anticompetitive conduct harms service offerings from both Intuit and direct-to-consumer website promoting a market.48 Square.”54 its Venus-brand razors for women. The FTC also noted that Billie’s rapid Two days after the district court issued Unusual Actions growth was likely to expand into brick- its opinion, the United Kingdom’s and-mortar stores, further challenging Competition and Markets Authority Consummated Merger Challenges P&G’s position as the market leader. published its final report prohibiting The administrative trial is set to begin the proposed transaction, discussed Challenges to consummated mergers on June 22, 2021, and, in the interim, the below. The parties’ merger agreement are relatively rare, but the FTC brought FTC will seek a temporary restraining expired three weeks later, and on May two such cases in 2020. In January, the order and preliminary injunction in 1, 2020, the parties announced that they FTC filed an administrative complaint federal court. were abandoning the deal.49 The Third against Axon’s consummated acquisition Circuit subsequently granted the DOJ’s of VieVu, alleging that Axon and VieVu Nascent competition was also at motion to vacate the district court’s competed in the provision of body-worn the center of the DOJ’s challenge to decision, holding that termination of camera systems to large, metropolitan Sabre Corporation’s acquisition of the proposed transaction rendered the police departments across the United Farelogix. The DOJ asserted at trial decision moot.50 States.55 On the same day, Axon filed that both current and forward-looking suit in federal district court in Arizona, market share estimates understate the The DOJ conditionally cleared Intuit’s arguing that the FTC’s in-house admin- competitive significance of Farelogix acquisition of Credit Karma in istrative proceeding violated due process

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because the FTC’s commissioners vote issued in under a week—significantly committing (1) not to use Fitbit health both to bring cases and to hear appeals faster than a typical merger trial in and wellness data for Google ads and to from the administrative law judge. Axon federal court.63 Mr. Arquit ruled that the support other wearable manufacturers also argued that the FTC/DOJ clearance DOJ had correctly defined the product on Android and (2) to continue to process—through which the agencies market.64 As a result, Novelis was allow Fitbit users to connect to third- decide which will review a particular required to divest Aleris’s aluminum party services via APIs.69 At the time of merger—violates equal protection.56 The ABS operations in North America.65 In a writing, the EC has until January 8, 2021, district court dismissed Axon’s lawsuit in recent speech, AAG Delrahim stated that to make a decision on the matter.70 April. Axon appealed to the Ninth Cir- arbitration in merger cases can lead to cuit, which has yet to rule. The FTC’s ad- “tremendous” benefits for taxpayers and EC’s Merger Review Under Judicial ministrative trial on the merits is stayed merging parties in terms of cost savings Scrutiny pending the Ninth Circuit’s decision.57 and efficiency, and that the DOJ will continue to evaluate whether matters In one of its most important rulings In April, the FTC sought to unwind may be appropriate for arbitration.66 in recent years, the General Court in Altria’s acquisition of a 35 percent stake May 2020 annulled the EC’s decision in JUUL and associated agreements International Mergers67 to block the proposed acquisition of between the companies.58 The FTC Telefonica UK by Hutchison 3G UK alleged that Altria agreed not to compete Spotlight on Data (Again) and criticized the agency’s analysis of against JUUL in the e-cigarette market in competitive effects in . exchange for the 35 percent ownership Enforcers around the world have The General Court found that the EC interest in JUUL and a presence on continued to closely scrutinize had failed to prove that the transaction, JUUL’s board.59 The administrative trial competitive effects arising from data. In which is a four-to-three merger in the is scheduled to begin in April 2021. January 2020, the Pakistan Competition UK mobile telephone market, would Commission (PCC) conditionally harm competition and significantly The Historic Novelis/Aleris Arbitration approved Uber’s acquisition of Careem, raise prices.71 The EC has appealed, a player in the ridesharing market. noting that the case raises important In March, the DOJ successfully The commitments require Uber to, legal issues, such as the legal test for challenged the merger of Novelis upon request and if certain criteria are “gap” cases (those that raise competitive and Aleris in the first-ever exercise fulfilled, (1) enter into an arm’s length concerns despite the merging parties not of its authority to resolve a matter agreement to license Careem’s points- being dominant), the role of efficiencies, in arbitration. The DOJ alleged that of-interest map data to competitors and the standard of proof, the value of the proposed merger would have (2) grant riders access to data about their the EC’s economic assessment, and combined two of only four producers use of Uber in a format that facilitates the boundaries of the General Court’s of automotive aluminum body sheet the transfer of that data to other judicial control.72 If the decision is (aluminum ABS).60 The DOJ and ridesharing suppliers.68 The transaction upheld by the European Court of Justice the parties agreed that there was a also received approval from competition (ECJ), the EC will be required to review, single dispositive issue—whether the authorities in the United Arab , and potentially revise, its process for product market was properly limited to Egypt, Saudi Arabia, Morocco, Kuwait, analyzing non-coordinated effects of aluminum ABS61—and that the matter Jordan, and the Common Market for mergers in oligopolistic markets.73 was therefore suitable for arbitration Eastern and Southern Africa (COMESA). without the need to file a federal Ramped-Up Enforcement in the UK: complaint.62 After full fact discovery The European Commission (EC) is Redefining “Voluntary” supervised by a federal court, the conducting an in-depth investigation matter was heard in arbitration by into Google’s proposed acquisition of The merger control regime in the UK is, Kevin Arquit, an experienced antitrust Fitbit that focuses on the use of data strictly speaking, voluntary. However, lawyer and former head of the FTC’s to personalize online advertising. In the Competition and Markets Authority Bureau of Competition. The hearing was Phase II of the investigation, Google (CMA) has the power to “call in” deals conducted over 10 days, and a decision bolstered its initial Phase I proposal by that have not been notified and that

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meet the UK thresholds, namely where meaning parties need to prove that the longer be part of the EU’s “one-stop- the target has more than £70 million ($85 CMA’s decision was somehow illegal, shop” regime. Transactions may be million) in UK turnover or the merger irrational, or procedurally flawed. This subject to parallel EC and CMA reviews creates or enhances a company’s share is a high bar, and the CAT has never (in addition to other required global of supply of 25 percent or more.74 Since overruled a CMA decision in full, filings). Given the CMA’s increasingly 2019, the CMA has made increasingly meaning a successful challenge would be interventionist stance and deal mortality creative use of this test to call in more unprecedented.78 rate, it will be crucial to factor in high-profile deals. Of the 10 deals that the impact of a UK review on deal the CMA successfully challenged at The UK: A Deal Graveyard? timetables, long-stop dates, conditions Phase II in 2020, eight involved a target precedent, and risk allocation. with minimal UK turnover or presence The fact that 10 of the deals challenged that the CMA called in using the share- by the CMA in 2020 were blocked or The CMA intends to publish updated of-supply test.75 abandoned by December underscores jurisdictional and procedural guidance, the CMA’s zealous enforcement and including guidance on the mergers This virtually limitless jurisdiction increasing interventionism.79 Nine intelligence function, before the end is currently being challenged. Sabre of the deals challenged by the CMA of the year, with updated merger is appealing the prohibition of its were blocked or abandoned in 2019. assessment guidelines to follow in merger with Farelogix, which, as As it stands, referrals for an in-depth 2021. The updates are designed for a noted above, was issued just two days Phase II review since January 2019 have “post-Brexit” world in which the CMA after the DOJ lost its bid to block the resulted in a deal mortality rate over 70 expects between 30 and 50 reviews deal in a federal court. The CMA took percent. This compares with a 33 percent per year. The guidance will focus on jurisdiction over the matter despite mortality rate for in-depth Phase II dynamic theories of harm and potential Farelogix not being directly active in the reviews before the EC and a 10 percent competition, the CMA’s controversial United Kingdom.76 The appeal before mortality rate for the FTC and DOJ over jurisdictional test, and post-Brexit the UK’s specialist competition court the same period. cooperation and coordination with other (the Competition Appeal Tribunal, or global enforcers. Consultations on the CAT) will be closely watched, given Brexit and Its Impact on Global Deals proposed amendments were launched in its importance for mergers involving November.80 parties with minimal (or no) presence The Brexit transition period ends on in the United Kingdom.77 The CAT is December 31, 2020, meaning that after bound by a judicial review standard, that date, the United Kingdom will no

Agency accelerated as agencies rapidly adapted U.S. Enforcement Agency to the new working environment. As Collaboration and Investigations expected, many agencies maintained Disagreement a close focus on technology markets Despite the challenges posed by and continued, advanced, or initiated Collaboration Between the Federal the COVID-19 pandemic, the U.S. investigations into major U.S. Agencies Department of Justice (DOJ), Federal technology firms. Notably, several Trade Commission (FTC), European influential jurisdictions made proposals In 2020, the FTC and DOJ have Commission (EC), and other for substantive changes in the antitrust continued their traditionally cooperative enforcement agencies around the world law. Many of these were focused on and collaborative approach. Notable remained very energetic in enforcement digital markets, but others aimed at areas of coordination include measures and advocacy. Enforcement activity more comprehensive reforms. to respond to the COVID-19 pandemic has not decreased and may even have and a continued focus at both agencies

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on major technology firms and labor COVID-19-related supplies. Since the ● structural separations and line-of- markets. publication of the guidance, the DOJ has business restrictions, which would issued several BRLs approving proposals restrict or prohibit a platform COVID-19 for collaboration by health care and operator from also acting as a pharmaceutical companies.83 platform participant; In response to the COVID-19 pandemic, nondiscrimination rules to prevent the FTC and DOJ have taken several Focus on “Big Tech” ● self-preferencing; steps to provide guidance and help address the difficulties caused by the Antitrust scrutiny of major technology ● increasing the difficulty of disruptions. Some of those measures, firms, sometimes called “Big Tech,” obtaining antitrust approval for such as consideration of exigencies was a major issue for legislators and certain transactions, including by in assessing whether to investigate policy makers in 2020. Last year, the placing the burden of proof on the conduct that may otherwise violate House Judiciary Committee began respondent for certain transactions; the antitrust laws, are expected to be investigating competition in digital temporary. Other measures, such as the markets, focusing on Google, Apple, ● facilitating more Section 2 cases by modernization of processes through the Facebook, and Amazon (collectively overturning U.S. Supreme Court use of e-filing and other technologies,81 “GAFA”). The committee has held precedents like Trinko; and are expected to be made permanent. several hearings—one of which involved the companies’ CEOs—and ● increasing the level of private enforcement by lowering pleading On March 24, 2020, the agencies issued issued subpoenas for documents and standards and reducing procedural a joint statement providing guidance other information to both the GAFA obstacles such as limits on class to businesses seeking to collaborate companies and third parties. In October action formation. to protect the health and safety of of this year, the committee’s Democratic Americans during the pandemic. The majority released a 449-page report.84 No The antitrust enforcement agencies statement details an expedited antitrust Republicans signed on to the Majority have focused closely on technology procedure whereby the agencies Staff Report. Instead, a group of markets as well. In October 2020, the will respond to Advisory Opinion or Republican members issued a separate DOJ and 11 state attorneys general filed Business Review Letter (BRL) requests “Third Way” report that endorsed some a Section 2 maintenance connected to COVID-19 within seven of the Majority Staff’s allegations and complaint against Google.86 The calendar days of receiving all necessary conclusions without endorsing most of complaint arises from parallel state and information. The statement further the policy recommendations.85 federal investigations into the company provides a list of collaborative activities that began in 2019. The DOJ and the designed to improve health and safety The Majority Staff Report concludes that states allege that Google has unlawfully in response to the pandemic that would the GAFA companies have high market developed and maintained market be consistent with the antitrust laws, shares, protected by entry barriers, in power in markets for general search, including research and development, a variety of different markets. It also search advertising, and general search sharing technical know-how, references hundreds of allegations of text advertising through agreements development of practice parameters for potentially anticompetitive behavior with Apple and Android original patient management, joint purchasing across nearly all lines of the companies’ equipment manufacturers (OEMs) agreements among healthcare providers, businesses. The report advocates for related to preinstallation and default and private lobbying addressing the use far-reaching changes to antitrust law settings for search. Notably, Assistant of the federal emergency use authority.82 and policy to redress the issues and Attorney General Makan Delrahim The agencies also indicated that they allegations it describes, including: and Deputy Assistant Attorney General will account for exigent circumstances, Barry Nigro recused themselves during such as where health care facilities ● abandoning the consumer welfare the investigation phase,87 and the case work together to provide equipment standard in favor of broader has been overseen by Attorney General and services to communities without consideration of the interests of William Barr’s office under the direction access to them, or where businesses workers, independent businesses, and other groups; of the Deputy Attorney General, Jeffrey need to combine resources to facilitate Rosen.88 the production and distribution of

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Following the DOJ and state attorneys’ not, and were never intended to be, a certain understatement, that “there general lawsuit against Google, the covered by Section 230 immunity.”93 may be some potential inconsistency” FTC and 48 state attorneys general filed The FTC announced in February that it between the approaches of the separate suits under Section 2 against would conduct a Section 6(b) study of FTC and DOJ to the intersection of Facebook on December 9, 2020.89 several acquisitions made in the 2010s antitrust and IP law.98 One of the more The complaints arise from parallel by Alphabet/Google, Amazon, Apple, significant areas of tension has been investigations into Facebook that Facebook, and Microsoft that were not the antitrust significance of a patent began in 2019.90 The states and FTC reported under the HSR Act.94 The FTC holder’s intentionally false commitment cooperated on their investigations. The aims to “assess whether U.S. antitrust to a standard-setting organization complaints allege that Facebook has authorities are receiving adequate notice (SSO) to license its standard-essential unlawfully monopolized the market of transactions that might limit or patents (SEPs) on fair, reasonable, and for “personal social networking” or eliminate competition.”95 nondiscriminatory (FRAND) terms and “personal social networking services” subsequent breach of that commitment. through the acquisitions of Instagram Focus on Labor Markets DOJ AAG Makan Delrahim has and WhatsApp. The complaints also repeatedly expressed his view that include allegations that Facebook The FTC and DOJ have continued disputes about whether FRAND imposed anticompetitive conditions on to examine antitrust issues in labor commitments have been honored sound third-party software developers’ access markets, including new labor market in contract rather than antitrust.99 In to Facebook APIs, which restricted concerns arising from the pandemic. late 2019, the DOJ withdrew from a 2013 developers from developing competing The agencies held a two-part series joint policy statement with the U.S. functionalities or connecting with of workshops together covering a Patent and Trademark Office on this competing social networking services. wide variety of labor competition issue and joined a new policy statement issues, including no-poach and wage- to clarify its position that SEP holders The FTC voted 3-2 to file suit, with fixing agreements, market definition, should be permitted to seek injunctions Chairman Joe Simons joining with agreements between employers against implementers after the standard Democratic commissioners Rohit on competition for workers, labor is adopted.100 Chopra and Rebecca Slaughter. in merger enforcement, Commissioners Noah Phillips and antitrust exemptions for union FTC v. Qualcomm, one of the most Christine Wilson voted against bringing activity and collective bargaining, significant antitrust decisions of this suit.91 The FTC and state attorneys and the use of non-compete clauses year, brought the agencies’ disagreement general seek a number of different in employer-employee employment on this point to a head. The FTC alleged forms of relief from the court, including contracts.96 Additionally, in response that, among other things, Qualcomm divestiture of Instagram and WhatsApp, to the COVID-19 pandemic, the DOJ violated the antitrust laws by refusing enjoining various types of conduct, and and FTC issued a statement in April to license its chips on FRAND terms, prior notice of future acquisitions. indicating that they would be “on alert” and sought to enjoin Qualcomm from for employers, staffing companies, and continuing to do so. The DOJ filed a On the policy side, the DOJ also issued recruiters that engage in or statement of interest warning the district recommendations this year to reform other anticompetitive conduct in labor court against an overly broad remedy.101 Section 230 of the Communications markets, focusing on doctors, nurses, The district court sided with the FTC Decency Act.92 Section 230 was enacted first responders, and those who work and issued a permanent worldwide in 1996 to protect technology companies in grocery stores, pharmacies, and injunction.102 In a rare move of direct by providing that online platforms warehouses, among other essential confrontation, the DOJ filed an amicus would not be treated as the publisher service providers on the front lines.97 brief with the Ninth Circuit arguing or speaker for third-party content against the district court decision. The appearing on their services, effectively FTC and DOJ Clash at Intersection of DOJ’s brief attacked the basis of the insulating them from civil liability for Antitrust and IP district court decision, which is also the such conduct. Among other changes, FTC’s theory of harm, arguing that the DOJ recommended that it be made In 2018, FTC Chairman Joseph Simons “[p]remising liability on ‘unreasonably clear that “federal antitrust claims are noted, in what would turn out to be high’ prices, as the court did here—

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instead of harm to competition—can that “Section 13(b) of the FTC Act 3-2 splits, with Commissioners Chopra radically undermine important authorizes a court to ‘enjoin’ antitrust and Slaughter arguing in dissent that incentives to innovate.”103 The DOJ also violations,” but does not authorize it to the majority’s analysis failed to consider participated in oral argument on appeal. seek disgorgement because it is a form all potential harms. Examples include of restitution, which is not contemplated the AbbVie/Allergan merger and Bristol- The Ninth Circuit ultimately by Section 13(b).108 The panel remanded Myers Squibb/Celgene acquisition, rejected the lower court’s (and thus the case to the district court for further where the dissents emphasized the the FTC’s) reasoning, vacated the proceedings. need to assess the transactions’ effects judgment, and reversed the injunction on innovation and, more broadly, against Qualcomm.104 The decision The AbbVie decision contributed to advocated for industry-wide studies into underscores the importance of the circuit split previously taken up the potential harms caused by mergers. proof of anticompetitive effects in by the Supreme Court in AMG Capital monopolization cases. The Ninth Circuit Management, LLC v. FTC in July 2020. The FTC’s investigation into and found that the district court had (1) Noting that eight circuits hold that settlement of market allocation erroneously imposed a duty to deal on Section 13(b) does allow the FTC to seek charges against rent-to-own operators Qualcomm, (2) impermissibly looked restitution, petitioners in AMG Capital is an example of this split arising in a outside the relevant antitrust market in argued that the Court should adopt the conduct investigation. The complaint order to infer an anticompetitive act, minority rule instead and hold that alleged that rent-to-own operators and (3) relied on outdated evidence (e.g., Section 13(b) does not permit the FTC to Aaron’s Inc., Buddy’s Newco, LLC, and agreements that were terminated before seek monetary relief.109 The Third Circuit Rent-A-Center, Inc. each entered into the suit was filed) to justify a broad, panel in AbbVie joined the minority agreements that resulted in one party forward-looking global injunction.105 approach, and the decision is likely to closing stores and exiting a local market The Ninth Circuit further rejected the strengthen the petitioners’ arguments. where the two parties had previously argument that a SEP holder’s violation The parties in AMG Capital have competed.111 The exiting competitors of FRAND commitments could completed briefing and are awaiting a allegedly also agreed not to compete independently create antitrust liability, date for oral argument. within a specified geographic area for and pointed to patent and contract law a specific time period, typically three as sources for potential remedies.106 Decisions Continued to Show Notable years.112 Indeed, the court noted that the FTC had Party-Line Split not even shown that a breach of these The FTC settled the case with a consent commitments would hurt Qualcomm’s FTC decisions across all areas have order that prohibited the respondents rivals, and declined “to ascribe antitrust continued to reflect a sharp split on and their franchisees from entering into liability in these dynamic and rapidly party lines. Generally, the Democratic any reciprocal purchase agreement, changing technology markets without dissents have criticized the Republican or inviting others to do so, and from clearer proof of anticompetitive majority for not taking a more enforcing the non-compete clauses still effect.”107 aggressive approach to enforcement in effect.113 Commissioners Chopra and and for accepting inadequate remedy Slaughter dissented, and Chopra filed a Federal Trade Commission packages. dissenting statement strongly criticizing the decision and remedy. Among other Clarification of Authority to Seek As noted in the Mergers chapter of things, he argued that the FTC should Monetary Remedies this report, the FTC vote to issue the have analyzed the conduct under the per Vertical Merger Guidelines in June 2020 se framework, rather than the rule of The FTC’s statutory authority to seek was 3-2, with Commissioners Rohit reason, and characterized the majority’s monetary remedies under Section Chopra and Rebecca Kelly Slaughter analysis and settlement as “a recipe for 13(b) of the FTC Act is expected to be voting against and arguing in dissenting weak enforcement that does little to diminished following FTC v. AbbVie. On statements for recognition of additional deter market distortions and undermines September 30, 2020, the Third Circuit theories of harm that may result from fair competition.”114 overturned a district court’s order vertical mergers.110 Several FTC merger requiring profit disgorgement, reasoning clearance decisions have also entailed

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Continued Emphasis on the In 2020, the FTC also argued Impax with the Securities and Exchange Pharmaceutical Sector Labs. v. FTC—its first pay-for-delay case Commission (SEC) to increase since the Supreme Court rejected the competition in securities markets.123 The Enforcement activities regarding agency’s view that reverse payments are MOU aims to increase communication reverse payment settlements have per se unlawful in 2013—before the Fifth and cooperation between the slowed, but the FTC remained active in Circuit. After a lengthy administrative agencies, including through periodic the pharmaceutical sector this year by hearing, the ALJ concluded that “no meetings between agency officials and shifting its focus to unilateral conduct. authorized generic” (no-AG) provisions facilitating exchange of information in settlement agreements related to relevant to oversight and enforcement The FTC filed a complaint in federal Opana ER constituted a large and responsibilities. The Antitrust Division court against pharmaceutical unjustified payment, but nevertheless also solicited comments on whether manufacturer Vyera (formerly known as dismissed the FTC’s complaint because it should revise the 1995 Bank Merger Turing) and the company’s founders in the settlement allowed consumers access Competitive Review Guidelines conjunction with several state AGs. The to generic Opana sooner than they (Banking Guidelines),124 which outline complaint alleges that the defendants otherwise would have. The commission a process for the DOJ to identify and prevented generic competition for the reversed, reasoning that the settlement clear mergers, which the DOJ reviews brand drug Daraprim by: (1) restricting had no such procompetitive benefits and independently in parallel with review by sales of reference-listed drug samples that the parties could have chosen “a less the applicable bank regulatory agency, to generic manufacturers by instituting restrictive alternative.”119 that do not have significantly adverse a restricted distribution program with effects on competition. distributors; (2) restricting sales of the In its briefing, Impax argues that the active pharmaceutical ingredient to FTC “ignored” the Supreme Court ruling On the enforcement side, the Antitrust generic manufacturers through exclusive in Actavis, substituting the Court’s Division took several notable actions agreements; and (3) agreeing with “” mandate with a new, with regard to financial markets. First, distributors to withhold sales data to bright-line rule that “a reverse-payment the DOJ opened a civil investigation prevent generic manufacturers from settlement has an anticompetitive effect into FICO (formerly the Fair Isaac having a sense of Daraprim’s financial whenever the generic manufacturer Corporation), which issues credit viability.115 Notably, this is the first time ‘might plausibly have entered the scores used in banking, credit cards, the FTC has filed its own complaint marketplace prior to the agreed entry and mortgages.125 Second, the Antitrust based on a restricted distribution system, date.’”120 The Fifth Circuit heard oral Division issued a BRL approving the despite having previously submitted arguments on June 9, 2020. At the time International Swaps and Derivatives amicus briefs asserting that they had of writing, the panel had not issued an Association (ISDA) proposal to “amend been used anticompetitively.116 On opinion. its standardized model documentation August 18, 2020, the district court denied for derivatives to account for the the defendants’ motions to dismiss Department of Justice potential discontinuation of certain almost in their entirety.117 interbank offered rates (collectively Renewed Focus on Financial Markets referred to as ‘IBORs’).”126 Certain IBORs In another unilateral conduct case, the are being transitioned to alternative FTC secured a $600 million agreement Throughout 2020, the Antitrust Division reference rates used in derivatives with Indivior to settle, without any has shown increased interest in financial contracts after regulatory scrutiny in the admission of wrongdoing, allegations markets and even reorganized some United States, UK, and other countries. related to its opioid treatment, of its civil sections in August to create Suboxone.118 The FTC alleged that a section focused solely on financial Continued Activity on Standard-Setting Indivior performed an unfair “product services, fintech, and banking.121 Organizations and Patent Licensing Issues hop,” falsely claiming that its new, DAAG Michael Murray emphasized in patent-protected sublingual opioid film October that the DOJ would “lean in” on As noted above, in recent years the was safer than the tablet dosage form in enforcement in financial markets.122 Antitrust Division has taken a strong an effort to persuade patients to switch interest in SSOs and SEPs. DAAG Alex treatments and thus avoid competition In June 2020, the DOJ signed a Okuliar gave a speech to the Intellectual from generic tablet manufacturers. Memorandum of Understanding (MOU) Property Rights Policy Advisory Group

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of the American National Standards S.D.N.Y. court terminated the Paramount enforcers, but competition and even Institute (ANSI) outlining the Antitrust Consent Decrees, which had been in outright conflict have arisen in high- Division’s approach to standards effect for several decades and required profile cases. For example, state issues.127 The DOJ also filed a statement that movie studios separate their attorneys general are both competing of interest in three notable antitrust distribution and exhibition businesses.134 and collaborating with the federal cases with patents at their core. First, The decrees also banned certain agencies (and each other) in their in Continental Automotive Systems v. distribution practices. The Antitrust various antitrust investigations and Avanci, the DOJ filed a statement of Division reported that, to date, nearly lawsuits against Google. In their most interest explaining its view that Section 800 perpetual consent decrees have been notable collaboration, the DOJ and 2 antitrust claims cannot be based on terminated under the program.135 11 states in October filed a complaint breaches of commitments made during against Google (described further the standard-setting process to license In July 2020, the Antitrust Division above) related to Google’s agreements patents on FRAND terms.128 Second, in held a workshop on competition in the to promote its search services.139 Intel v. Fortress, the DOJ argued that the licensing of public performance rights, On the other hand, some state AGs plaintiffs’ proposed market definition including a discussion of whether have announced that their separate was overbroad and that the plaintiffs the American Society of Composers, investigations into Google will continue had failed to adequately plead an Authors and Publishers (ASCAP) and even after the joint lawsuit has been impact on competition under Section Broadcast Music, Inc. (BMI) consent filed.140 Wilson Sonsini represents 1 or Section 7.129 Third, the DOJ filed a decrees should be modified.136 The virtual Google in both the litigation and statement of interest and participated in workshop featured keynotes by LeAnn continuing investigations. oral argument in Lenovo v. InterDigital, Rimes and Jon Bon Jovi. The workshop discussed below, arguing in favor of also attracted a large number of public The most prominent instance of direct InterDigital’s motion to dismiss claims comments afterward. At a conference conflict between state and federal related to FRAND licensing disputes.130 in November 2020, AAG Delrahim said agencies arose in the T-Mobile/Sprint that the Antitrust Division was aiming merger case, which is also discussed The DOJ also issued two BRLs in this to modify the ASCAP and BMI consent in the Mergers chapter of this report. area in 2020. First, the DOJ updated its decrees before the end of the year.137 Wilson Sonsini represented Deutsche 2015 BRL for the Institute of Electrical Telekom in the matter. Shortly before and Electronics Engineers (IEEE) DOJ Drops California Emissions Standards the DOJ and the FCC announced regarding revisions to IEEE’s Patent Investigation settlements, 14 states filed suit to enjoin Policy after concerns were raised about the transaction. This was the first time misinterpretations, including that In February 2020, the DOJ informed state enforcers had sought to block a the Antitrust Division had endorsed automakers that it had closed its major national merger approved by the Patent Policy.131 The DOJ also investigation into their agreement and subject to consents with federal issued a BRL to Avanci regarding with California for stricter emissions agencies. The DOJ filed a statement of its “5G Platform” for licensing 5G standards than those sought by the interest opposing the states, arguing telecommunications technology for federal government.138 Four automakers that the court should pay deference to the automotive industry, concluding had reached a separate agreement with the decisions made by the DOJ and the that the platform was unlikely to harm California for higher miles-per-gallon FCC.141 Following a trial in December competition and noting the safeguards efficiency targets after the Trump 2019 and January 2020, the court rejected Avanci had installed.132 administration moved to relax emissions the states’ challenge.142 DOJ AAG standards. Delrahim and some state AGs continued DOJ Continues Program to Terminate to make public statements defending Decades-Old Consent Decrees State Enforcement their respective positions and criticizing the opposition after the court rendered The DOJ has continued its program, Competition and Collaboration with the its decision,143 suggesting that conflict started in 2018, to consider whether Federal Agencies between state and federal agencies may termination would be appropriate continue in the future. for hundreds of consent decrees that There is a long history of cooperation lacked a sunset date.133 In August 2020, a between state and federal antitrust

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Civil Antitrust Enforcement The EC also took its ongoing these measures after finding that Outside the United States investigation into Amazon’s use of Broadcom’s system of exclusive dealings business data of marketplace sellers to and conditional advantages would likely European Union Investigations the next level and issued a statement have affected upcoming tenders and thus of objections in November.150 The EC resulted in serious and irreparable harm Continued Focus on Large Digital has taken the preliminary view that to competition. Following the interim Platforms Amazon has breached EU antitrust rules measures, Broadcom engaged in remedy by systematically collecting and using discussions that culminated in a binding As expected, the European Commission third-party sellers’ data to adjust its package of comprehensive commitments (EC) has stayed on course and own retail offers and business decisions. entered in Summer 2020. Absent these continued to make digital platforms a In parallel, the EC opened a second commitments, the EC likely would have major enforcement priority following investigation addressing conduct related been forced to undertake a protracted Competition Commissioner Margrethe to Amazon’s “Buy Box” and Prime two-to-three-year investigation before Vestager’s five-year term of office label.151 The EC is considering allegations a cease-and-desist order and fine would extension in 2019. After closing a series that Amazon has systematically favored issue. of cases against Google,144 questioning its own retail offers and the offers of Google and Facebook about their data marketplace sellers that use Amazon’s The EC’s more pragmatic approach is use,145 and opening an investigation logistics and delivery services. not limited to technology markets and against Amazon146 last year, the EC has has also been applied, for example, in in 2020 expanded its focus to include Increased Focus on Early-Stage the energy sector, where an antitrust Apple as well. Resolution and Settlements investigation into Romanian firm Transgaz’s export restrictions was settled In June, the EC opened an investigation The EC has shown an increased sense through a commitment decision.154 into Apple Pay policies,147 including of pragmatism in dealing with alleged the terms for integrating Apple Pay in infringements while continuing to Scrutiny on Pharmaceutical Markets: iOS apps and limitations on access to expand its investigations into major Pay-for-Delay and Excessive Pricing the Near Field Communication (NFC) technology platforms. In part due to functionality for in-store payments. criticism of its handling of cases where In January 2020, the European Court The EC is also investigating reported long-running investigations have led of Justice (ECJ) handed down a refusals of access to Apple Pay. On the to fining decisions with debatable preliminary ruling clarifying its position same day, the EC opened investigations impact for consumers, the EC is concerning pay-for-delay agreements in into Apple’s iOS App Store practices as seeking to speed up investigations response to a request from UK judges well, with a focus on music streaming,148 and deliver quicker and more market- regarding a Competition and Markets e-books, and audiobooks.149 The EC oriented results. To this end, the EC Authority (CMA) infringement finding. has preliminary concerns that Apple is has increasingly encouraged informal, The ECJ confirmed that potential abusing its dual role as the operator of pre-investigation remedies and settling competition should be viewed broadly the iOS App Store and a competitor in cases in the investigation stage through in pay-for-delay cases and emphasized certain categories of mobile apps. The commitments. that such arrangements can also be EC has taken the view that Apple may analyzed under the rules for an abuse have exploited this position by forcing This shift in enforcement strategy of dominance. To constitute an abuse competitors to disable in-app purchases is reflected in an October 2020 of dominance, the cumulative effects and prohibiting them from informing commitment decision against Broadcom, of the various agreements must have a users about ways to purchase outside the in which the company settled the EC’s significant foreclosure effect, depriving app. The EC has further concerns that investigation into its conduct in chipset consumers of the benefits of new market 152 Apple has cut off competing developers markets. The settlement follows the entries. from important customer data, while EC’s 2019 interim measures decision The aforementioned trend to early-stage tapping their apps for data Apple can use against Broadcom, the first such decision 153 resolution affected pharmaceutical to improve its own offerings. in nearly 20 years. The EC imposed cases as well. In a rare excessive pricing

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probe, the EC has been investigating operators from making offers across the Amazon Marketplace, limiting intra- Aspen’s 300 percent price increases for EU. Meliá cooperated with the EC to brand competition. an anti-cancer drug. The case was widely receive a 30 percent fine reduction. expected to lead to a landmark decision, In March 2020, during the peak of the but instead it ended with a settlement EU Member State Investigations first wave of the COVID-19 pandemic, with the drug maker in July 2020, the Italian Competition Authority wherein Aspen committed to lower The national competition authorities (AGCM) launched two investigations prices for six drugs by an average of over of EU Member States have been active into potentially anticompetitive 70 percent, cap prices for 10 years, and antitrust enforcers in 2020, including on practices of Amazon and eBay in the keep the drugs on the market. matters involving major U.S. technology market for health and hygiene products, firms. National authorities have pursued having received complaints alleging Proportionality of EC Inspections investigations both independently and excessive pricing.159 In October, the in coordination with the EC. AGCM launched an investigation into Inspections (dawn raids) have Google’s alleged abuse of a dominant historically been used primarily in cartel In March 2020, the French Competition position in the Italian market for display investigations, but their use has become Authority (ADC) imposed a €1.1 billion advertising.160 more and more common in non-cartel fine on Apple, the highest fine ever cases and has spawned an increasingly imposed in France.157 The ADC found Regulatory Efforts in Europe to Address the large number of EC investigations. that Apple allocated products and Digital Sphere Inspections in such cases usually do customers between its two wholesalers not start with “smoking guns” provided between 2005 and 2013 by instructing In June 2020, the EC announced a by leniency-seeking insiders, leading them as to the exact product quantities Digital Services Act (DSA) package as to questions as to the level of evidence to be supplied to each downstream part of its European Digital Strategy.161 needed to initiate an inspection. The reseller. The ADC also found that The DSA mainly seeks to provide an ECJ took up the issue and affirmed Apple had fixed resale prices for “[e]x ante regulatory instrument for the EC’s decision to inspect the Apple Premium Resellers (APRs) by large online platforms with significant premises of České Dráhy, a Czech train publishing its own prices on its website network effects acting as gate-keepers in operator.155 The judges confirmed that and preventing discounts from those the European Union’s internal market.” where the EC has sufficiently serious prices by monitoring and sanctioning The proposed DSA includes new rules indications of a breach of Article 102 unauthorized promotions. Finally, the that allow targeted collections of TFEU, it is not obliged to balance those ADC concluded that Apple had violated information from large online platforms, indications against contrary evidence the French commercial law prohibiting blacklist certain business practices, when assessing the proportionality of the abusive exploitation of a commercial and allow the EC to issue “tailor-made an inspection. In the same vein, the partner’s economic dependency by remedies” covering the activities of such EC is not obliged to precisely define treating APRs differently from Apple’s platforms. Depending on its ultimate the relevant market or demonstrate an own sales channels. scope, the DSA is to be complemented appreciable effect on trade in advance of by a “New Competition Tool” targeting carrying out an inspection. After judges in Germany’s Federal practices such as monopolization Court upheld the essence of the strategies of non-dominant companies Continued Focus on Market 2019 Federal Cartel Office (FCO) or parallel leveraging strategies in Harmonization decision against Facebook, the FCO several adjacent markets.162 The EC continued its campaign of technology is contemplating several options for The EC’s imposition of a fine against sector enforcement by launching addressing such practices that would Meliá underscores the EC’s continued an investigation into brand-gating not involve a finding of infringement or focus on market partitioning between arrangements between Amazon and imposition of a fine—and thus would not Member States.156 The EC fined Meliá Apple.158 The investigation focuses on an provide a basis for private actions. €6.7 million for clauses in its standard agreement between Amazon and Apple terms and conditions for tour operators that ensures that only Apple-authorized Germany is an early front-runner in that limited offers to residents of certain sellers may sell Apple products on the implementing the tools and strategies EU Member States, preventing tour contemplated by the DSA. The German

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parliament is expected to adopt a law in code of competitive conduct and the rights to withdraw their consent to December 2020 that will give the FCO ability to break up platforms “where Google’s YouTube Premium service.166 new early intervention powers and an necessary.” Later in the year, the Korean Federal ex ante tool to deal with “undertakings Trade Commission (KFTC) launched an with paramount significance for Growing Focus on Large Digital Platforms investigation into potentially excessive competition across markets.” Several in Asia pricing and other alleged abuses of other EU Member States, as well as Google’s and Apple’s app platforms the UK, are contemplating similar Antitrust enforcers in Asia have following a class action.167 Finally, the amendments of their antitrust laws. stepped up enforcement activity Competition Commission of In July 2020, the UK CMA adopted a related to technology companies (CCI) continued to investigate Google’s final report on online platforms and and digital platforms in 2020 as well. alleged abuse of dominance in the digital advertising, recommending In September, the Japan Fair Trade smart television market168 and launched that the British government establish a Commission ( JFTC) accepted Amazon’s an investigation into the Google Play pro-competition regulatory regime for commitments to return $19 million to Store.169 However, the CCI also closed an online platforms.163 Largely following suppliers and reevaluate its co-op fees in investigation into Facebook/WhatsApp’s the recommendations of the Furman order to settle allegations of abuse of a alleged abuse of dominance in the report published in 2019,164 the CMA superior bargaining position.165 Korea’s market for messaging services, finding report advocates for the introduction of Communication Commission (KCC) no evidence of WhatsApp bundling its an ex ante regulatory regime addressing imposed a fine and corrective orders payment and messaging services.170 digital markets, as well as an enforceable on Google for restricting consumers’

Enforcement Priorities and Initiatives agencies’ cooperation where collusive Criminal/Cartel conduct is uncovered in securities and Investigations In 2020, the DOJ’s newly formed financial markets.172 The partnership Procurement Collusion Strike Force furthers the DOJ’s goal to more closely This chapter (1) identifies several (PCSF) opened nearly two dozen grand scrutinize markets in the financial significant developments in the DOJ’s jury investigations into potential services, banking, and fintech sectors.173 criminal enforcement program in violations of the antitrust laws.171 The 2020; (2) summarizes the DOJ’s major PCSF entails a partnership between the The DOJ made a series of less formal criminal prosecutions of corporations DOJ and other federal law enforcement announcements or “warnings” this and individuals in the past year; and agencies, including the FBI, aimed at year that may signal areas the agency (3) highlights developments in cartel preventing bid-rigging for government is keeping a close watch on from a enforcement worldwide in 2020. contracts. DOJ Assistant Attorney policy and enforcement perspective. General (AAG) Makan Delrahim For example, the DOJ singled out Notable Developments in indicated that at least 5,500 government information exchanges among the DOJ’s Criminal Antitrust employees in roughly 500 state and local competitors as fraught with risk and Enforcement Program agencies have received training under often a source of collusive, illegal that effort. activity such as price-fixing or bid- rigging.174 Along with regulators in the This year saw developments across a In June 2020, the DOJ signed a European Union (EU), the DOJ turned number of significant DOJ enforcement Memorandum of Understanding (MOU) its attention to the risks posed by and policy priorities, administrative with the Securities and Exchange algorithms and how they can be misused changes, legislative and international Commission (SEC) to coordinate their to further anticompetitive goals.175 AAG developments, and signals from the enforcement activities. Among other Delrahim explained that the DOJ is DOJ regarding conduct it is closely measures, the MOU strengthens the educating its attorneys and economists monitoring.

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on algorithms, machine learning, The DOJ updated its Civil Investigative liable jointly and severally, assuming artificial intelligence, and blockchain Demand (CID) forms and depositions they cooperate with plaintiffs in a timely technologies to understand how process, which are used in merger and and satisfactory manner. The DOJ, businesses may use these tools and their civil investigations, in September 2020.179 which held a roundtable on ACPERA possible effect on competition.176 He also All CIDs issued by the Antitrust Division reauthorization last year,182 has relied indicated that the DOJ anticipates seeing will now provide notice to recipients on ACPERA to provide an important more algorithmic collusion in the future that their documents, interrogatory incentive to parties coming forward and noted that the DOJ now expects responses, and/or testimony may be used to participate in the DOJ’s leniency companies to address risks posed by by the DOJ in other investigations— program. pricing algorithms and similar tools in including criminal investigations. their compliance programs. Depositions pursuant to CIDs will also International Cooperation feature preliminary questions to ensure Notably absent from the DOJ’s 2020 deponents understand this possibility. Encouraged by the DOJ, the enforcement roster was a criminal International Competition Network prosecution stemming from a “no Early in the year, Deputy Assistant (ICN) released guidance in June 2020 on poach” hiring agreement. The DOJ Attorney General (DAAG) Richard leniency cooperation.183 The guidance announced in 2016 that such agreements Powers gave a speech stating that is designed to assist competition could constitute criminal antitrust the DOJ expects that pleading and agencies in engaging and cooperating violations, and speculation swirled that cooperating defendants will engage with their international counterparts the DOJ was planning to bring such a in covert monitoring where those when dealing with leniency applicants case following April 2020 remarks from opportunities arise, for example and other cooperating companies AAG Delrahim announcing a major by wearing a wire and recording in cross-border investigations.184 In forthcoming enforcement action.177 conversations with co-conspirators.180 addition, the DOJ joined the FTC Although in late 2020 the DOJ indicted DAAG Powers further emphasized in signing the Multilateral Mutual an executive for wage-fixing conduct, that pleading defendants may not Assistance and Cooperation Framework discussed below, the long-awaited and make public statements that contradict for Competition Authorities with long-promised criminal “no poach” their admission of wrongdoing in a competition agencies in Australia, case has not yet materialized. Still, this plea agreement, viewing such acts Canada, New Zealand, and the United remains an enforcement priority for the as incompatible with accepting Kingdom.185 The agreement sets out a DOJ and in 2020, the agency continued responsibility and the obligation to framework to strengthen cooperation to aggressively identify and investigate cooperate under a plea agreement. among the agencies, including sharing “no poach” and other potential collusion Companies defending against follow-on confidential information and gathering surrounding recruiting and hiring. civil damages actions must take great cross-border evidence in both criminal care when litigating to avoid making and civil contexts. Administrative Updates such statements. Significant DOJ In August 2020, the DOJ created an Legislative Developments Investigations and Office of Decree Enforcement and Prosecutions Compliance (ODEC). On the criminal In June 2020, Congress reauthorized and side, ODEC is charged with promoting made permanent the Antitrust Criminal Criminal antitrust enforcement compliance programs and working Penalty Enhancement and Reform Act remained a major focus of the DOJ in with the criminal enforcement (ACPERA), which provides advantages 2020. Notably, the DOJ secured $529 sections when parties seek credit for to leniency applicants that ultimately million in criminal fines and penalties, their corporate compliance programs receive amnesty from the DOJ’s leniency reversing a multi-year decline.186 The 181 during plea negotiations or at the program. Under ACPERA, in follow- DOJ has continued to investigate and charging stage, as well as providing on civil litigation, recipients of amnesty prosecute collusive conduct across a advice when compliance monitors are are only liable for actual damages (i.e., variety of industries, with a few new 178 recommended. not treble damages) and are not held sectors emerging as areas of enforcement

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interest in the past year. Below we violate the Procurement Integrity Act.190 Sandoz and announced a DPA summarize some of the significant DOJ Cajan Welding admitted to conspiring pursuant to which Sandoz agreed enforcement actions of 2020. with two unnamed co-conspirators to to pay a $195 million criminal defraud the United States by obtaining penalty, cooperate fully with the Government Procurement non-public procurement information investigation, and admit that sales affected by the charged conspiracies and using it to gain subcontract awards exceeded $500 million.194 The launch and evolution of the PCSF, and payments from the U.S. Department described above, reflects the DOJ’s of Energy in connection with the ● Apotex Corp.: In May, the DOJ commitment to pursuing procurement operation of the U.S. Strategic Petroleum reached a DPA with Apotex for its collusion and related crimes, even as Reserve. The charge carries a statutory role in fixing the price of the generic procurement has grown to become a maximum fine of $500,000, as well as up drug pravastatin.195 Apotex agreed to focus of DOJ enforcement efforts in to five years’ probation. pay a $24.1 million criminal penalty, recent years. In 2020, the DOJ advanced admit that it conspired with other several such investigations. Drainage Infrastructure. In October generic drugmakers, and cooperate 2020, a federal grand jury in North fully with the investigation. Online GSA Auctions. In February 2020, Carolina returned an indictment Missouri businessman Alan Gaines charging Contech Engineered Solutions ● Glenmark Pharmaceuticals: In became the third individual indicted for LLC and former executive Brent June, the DOJ filed an Information charging Glenmark Pharmaceuticals participating in a conspiracy to rig bids Brewbaker with conspiring to rig with conspiring to fix the price of submitted to the U.S. General Services bids and defraud the North Carolina pravastatin with other generic drug Administration in online auctions Department of Transportation.191 companies from approximately May for surplus government equipment.187 According to the indictment, Contech 2013 until December 2015, at a loss Gaines and his co-conspirators allegedly and Brewbaker conspired to rig bids for of $200 million to consumers.196 communicated before and during the federal- and state-funded aluminum Glenmark is the first company auctions to decide who would submit structure projects for nearly a decade. charged in the investigation not to winning bids and whether the items The indictment also included charges of enter into a DPA. Instead, Glenmark purchased would be split among them.188 mail fraud and wire fraud.192 alleges that the DOJ’s charge violates federal rules and the Fifth Fuel Supply to the U.S. Military. In April Generic Pharmaceuticals Amendment because the company 2020, the DOJ finalized the resolution did not waive indictment by a grand of civil claims arising from its criminal This year saw significant developments jury but was nevertheless charged 197 investigation of bid-rigging and price- in the DOJ investigation of alleged price- by Information. fixing for fuel supply contracts to U.S. fixing affecting generic pharmaceuticals. ● Taro Pharmaceuticals: In July, the military bases located in South Korea.189 The DOJ has increasingly relied on DOJ charged Taro Pharmaceuticals Jier Shin Korea agreed to pay $2 million Deferred Prosecution Agreements for conspiring to fix prices, allocate to resolve antitrust and False Claims (DPAs) as tools to resolve charges customers, and rig bids for generic Act allegations, an amount that the against defendant pharmaceutical drugs.198 The DOJ also announced DOJ noted reflected the value of the companies. The DOJ has entered into a DPA pursuant to which the company’s cooperation, limitations DPAs with some corporate defendants— company agreed to pay a $205.6 on its ability to pay, and cost savings allowing them to both resolve the million criminal penalty and to pay realized by avoiding extended litigation. criminal allegations and continue $213.3 million to resolve all civil In all, civil settlements arising from the to participate in federal health care claims related to federal health care 199 DOJ’s investigation totaled over $205 programs—while prosecuting others.193 programs. million. Wilson Sonsini represented Jier The DOJ has also pursued indictments Teva Pharmaceuticals: In August, Shin Korea in this matter. or guilty pleas for individual executive ● the DOJ charged Teva with defendants. price-fixing conduct across three Welding. In September 2020, Louisiana conspiracies involving Glenmark company Cajan Welding & Rentals, Ltd. Corporate Defendants Pharmaceuticals, Apotex, Taro, pleaded guilty to one count of conspiracy ● Sandoz Inc.: In March, the DOJ filed and Sandoz, alleging consumers to defraud the United States and to a four-count felony charge against were overcharged by at least $350

17 Wilson Sonsini 2020 Antitrust Year in Review

million.200 While the DOJ has investigations. In January, Maria conspiracy.213 That same month, offered Teva a DPA, the company Christina Ullings, a Dutch national and former Citigroup foreign exchange has indicated that it will only accept former top executive of air cargo carrier trader Christopher Cummins, who also a non-prosecution agreement to Holland, was extradited from cooperated in the investigation, was 201 resolve the charges. to the United States in connection sentenced to two years of probation.214 with 2010 price-fixing charges, despite Both executives received leniency Individual Executives having no ties to the United States.208 for their cooperation in the DOJ’s Ullings had spent an entire decade as investigation. In February, Ara Aprahamian, a former a fugitive until she was apprehended top executive of Taro Pharmaceuticals, in Sicily. Ullings was sentenced to 14 Food and Consumables was indicted by a federal grand jury for months in prison, with credit for the his role in conspiracies to fix prices, rig time she was held in custody pending Packaged Seafood. In March, former bids, and allocate customers for generic extradition, and fined $20,000.209 Bumble Bee CEO Christopher drugs and for making false statements to Lischewski sought to overturn a jury 202 federal investigators. The same month, In February, Eun Soo Kim, a former verdict finding him guilty of price-fixing Hector Armando Kellum, a former key accounts manager for Continental of canned tuna.215 The court denied senior executive of Sandoz Inc., pleaded Automotive Korea Ltd., was extradited his request, stating there was “ample guilty for his role in a conspiracy to fix from Germany in connection with the evidence on which the jury could have prices, rig bids, and allocate customers DOJ’s auto parts investigation. Kim is a found a conspiracy between Bumble Bee 203 in the generic drugs market. Korean national and had been a fugitive and Starkist and/or Chicken of the Sea,” for five years.210 Kim was sentenced to and going so far as to say the evidence Hard Disk Drive Suspension Assemblies nine months in prison, with credit for was “legion.”216 At sentencing, the DOJ the time he was held in custody pending recommended the most severe sentence In February, Hitoshi Hashimoto and extradition and prior to sentencing, and proposed to date for an individual Hiroyuki Tamura, two executives of fined $130,000. convicted of an antitrust crime in the Japanese manufacturer NHK Spring Co. United States: a criminal fine of $1 Ltd., were indicted by a federal grand Financial Services: FOREX million, along with eight to 10 years in jury for their roles in a long-running prison.217 In June, the court sentenced antitrust conspiracy to fix the prices of In September, former JPMorgan Lischewski to pay a criminal fine of and allocate the market for suspension currency trader Akshay Aiyer was $100,000 and to serve 40 months in assemblies, a component found in sentenced to eight months in federal prison,218 in part because of evidence 204 hard disk drives. These individuals’ prison and fined $150,000 for his that Lischewski served as the ringleader indictments followed the 2019 guilty participation in a conspiracy to of the conspiracy, which affected over plea by NHK Spring, which was manipulate prices for emerging market $600 million in sales.219 205 sentenced to pay a $28.5 million fine. currencies in the foreign currency A number of private plaintiffs, including exchange (FOREX) market.211 In Poultry. In June, the DOJ secured its first hard disk drive manufacturer Seagate December, two days prior to the start indictments in an ongoing investigation Technology—represented by Wilson of Aiyer’s eight-month sentence, the into price-fixing of broiler chickens,220 Sonsini—have since initiated follow-on Second Circuit overruled a lower court charging two executives of Pilgrim’s 206 civil suits for damages. These suits decision denying Aiyer bail and instead Pride and two executives of Claxton with have been consolidated into an MDL in granted Aiyer’s motion for bail pending conspiring to fix prices and rig bids from 207 the Northern District of California. appeal.212 2012 to at least 2017.221 In October, six additional executives were indicted,222 Air Cargo and Auto Parts Executive In October, former Barclays foreign and Pilgrim’s Pride agreed to plead Extraditions exchange trader Jason Katz was guilty and pay a criminal fine of $110.5 sentenced to two years of probation million.223 Tyson Foods—which, along In 2020, the DOJ successfully secured and a criminal fine of $50,000 for with Pilgrim’s Pride, is one of the three extradition of executives in two of its his participation in the FOREX top poultry producers in the United most prominent, long-running cartel

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States—has disclosed that it applied for payments through contracts and on Celanese €260 million for participating leniency and is cooperating with the projects that were affected by the alleged in a purchasing cartel with leniency DOJ in the investigation.224 conspiracy. applicant Westlake from December 2011 to March 2017.232 The four companies Construction Health Care Staffing coordinated price negotiation strategies and exchanged commercially sensitive Insulation. In February, insulation In December, a Texas grand jury indicted information regarding a component of contracting firm Langan Insulation and the owner of a health care staffing the ethylene price formula. its co-owner, Thomas Langan, pleaded company for wage-fixing conduct.230 The guilty for their roles in schemes to rig indictment alleged that Neeraj Jindal Interestingly, the EC considered the bids and engage in fraud with respect to conspired with competitors to pay lower value of purchases (rather than sales the insulation contracts for construction wages to physical therapists and physical made by the defendants) as the base projects at universities, hospitals, and therapist assistants over a six-month amount to determine the fine. Given other public and private entities in New period in 2017. The indictment notes that that the conduct was likely to have England.225 The DOJ noted that the the cost of home health care services lowered the value of purchases, the EC defendants effectuated the scheme using is often borne by federal programs like discretionarily increased the amount encrypted, disappearing messaging Medicare. In addition to wage-fixing, of the fine by 10 percent. Second, as apps on devices with registrations that the indictment charges Jindal with the first leniency applicant, Westlake masked user information, reflecting obstructing a related FTC investigation. avoided a €190 million fine, and since how the DOJ has and will continue to In announcing the indictment, the DOJ all other participants also applied for scrutinize ephemeral messaging during reiterated its commitment to prosecuting leniency, they benefited from fine investigations. collusion in labor markets.231 reductions of 45 percent (Orbia), 30 percent (Clariant), and 20 percent Flooring. The DOJ has continued to Cartel Enforcement Outside (Celanese). Finally, all participants investigate collusive behavior in the of the U.S. benefited from a 10 percent fine commercial flooring and services reduction through settlement. This industries. Executives for flooring is the first time the settlement fine Cartel enforcement has remained a manufacturers pleaded guilty in reduction procedure—which provides major priority for antitrust agencies February, March, and November to a a 10 percent reduction in exchange for and authorities worldwide. Below we conspiracy to rig bids and fix prices, cooperation and clear and unequivocal discuss some of the more significant bringing the total number of individual acknowledgement of liability—has been developments in cartel enforcement guilty pleas to six.226 In August, applied to a purchasing cartel. outside the United States in 2020. commercial flooring contractor Vortex Commercial Flooring Inc. was charged Submarine Power – Cable Appeal. The European Union and United Kingdom for its role in the conspiracy.227 Vortex year 2020 also saw the conclusion of the pleaded guilty and agreed to pay $1.4 Power Cables cartel saga. The European While the European Commission million in fines and restitution, marking Court of Justice (ECJ) largely upheld the (EC) and European courts were active the second corporate guilty plea in the EC’s 2014 decision fining 11 producers in cartel enforcement in 2020, as investigation.228 of underground and submarine high- detailed below, the UK’s Competition voltage power cables €302 million for and Markets Authority (CMA) largely Ready-Mix Concrete. In September, a 10-year market-sharing agreement.233 remained on the sidelines as Brexit Evans Concrete LLC, a ready-mix Two of the appeals, NKT’s and ABB’s, continues to unfold. In the year ahead, concrete company, and four individuals were partially successful and will likely we may see increased cartel enforcement were indicted for fixing prices, rigging result in reduced fines.234 The ECJ’s activity by the CMA, but thus far its bids, and allocating markets for ready- decision has important ramifications for impact and influence as an independent mix concrete used in residential and the EC’s investigation and enforcement enforcer remain unclear. commercial projects.229 According to the powers: DOJ, from 2010 to 2016, conspirators Buyers – Ethylene Purchasing. submitted rigged bids and accepted ● Investigative powers. In Nexans’ and In July, the EC fined Orbia, Clariant, and Prysmian’s appeals, the ECJ clarified

19 Wilson Sonsini 2020 Antitrust Year in Review

the procedure applicable to dawn ECJ found that the EC was right to bureau’s experience since 2009 and the raids.235 The ECJ found that the EC hold Prysmian CS liable for the full relevant decisions of the Competition may copy documents during the duration of the infringement, as Tribunal and courts; they are not dawn raid and only review them at the economic activities related to meant to substantially alter the CCB’s a later stage at the EC’s premises. the infringement were transferred practice.242 Among other updates, the Ruling otherwise would have to it. In addition, the EC was right guidelines provide greater context seriously impeded the EC’s ability in finding that Prysmian was liable regarding the types of evidence the CCB to effectively carry out dawn raids for the duration from 1999 to 2001, will consider in assessing whether firms by de facto limiting the timing of its despite the fact that the legal entity review and substantially increasing responsible for the infringement are competitors, clarify circumstances the cost of its investigations. during that period of time still in which the CCB will investigate existed. The ECJ’s judgment thus agreements between competitors for ● Duty to define the scope of the confirms that the EC has broad the purchase of products as a criminal anticompetitive conduct. The discretion to determine which matter, and provide updated examples ECJ clarified the EC’s duty to entities to ultimately hold liable. of conduct that could raise competitive appropriately define the scope of concerns. The final version of the the conduct investigated before and Evolution of private damages legal Competitor Collaboration Guidelines is after an infringement decision. In framework. As we observed last year, yet to be published. ABB’s appeal, the ECJ stressed that leniency applications have decreased in the EC may not rely on evidentiary recent years at least in part because of South Korea shortcuts when determining the the rise of follow-on damages actions in material scope of the infringement— the EU. In 2020, the ECJ strengthened In March, the Korea Fair Trade demonstrating that both the EC Commission (KFTC) fined and the ECJ engage in an in-depth the effectiveness of the follow-on analysis of a cartel participant’s damages legal framework by granting and Canon Medical Systems Korea involvement meeting by meeting.236 standing to any direct customer, approximately KRW 54 million for The EC should thus adduce indirect customer, or final customer rigging bids to supply computed sufficiently concrete and direct affected by the conduct. Austrian tomography scan equipment.243 The evidence that a product category courts dealing with follow-on damages KFTC found that the two companies is covered by the practice at stake. against Otis for its participation in agreed that Canon should submit a The ECJ also found in NKT’s appeal the Elevator Cartel, one of the largest false bid in order to help Siemens that the evidentiary requirement EU cartels to date, asked the ECJ to win a KRW 1.55 billion contract with extends to the demonstration of clarify whether undertakings active in Chungbuk National University Hospital participation in all aspects of the a connected market who suffered harm in 2015.244 The KFTC’s action followed cartel.237 Thus, if a cartel involves as a result of the infringement could an announcement earlier in the year that both a market-sharing agreement 239 it would step up enforcement against and a price-fixing agreement for the seek compensation. In this case, the same products, it should present undertaking seeking compensation collusive conduct related to public safety 245 sufficient evidence on the awareness was an entity responsible for granting and public health. Also in March, the of all aspects, even if one is non- subsidies to the buyers of the elevators. KFTC fined Citibank Korea, JPMorgan essential or accessory. The ECJ stressed that any market Chase, HSBC, and Crédit Agricole participant having suffered any loss over $1 million for rigging foreign ● Liability. In Prysmian’s appeal, that has a causal connection with the exchange swap bids.246 In July, the KFTC the ECJ found that the EC could infringement should have standing.240 fined seven companies in the steel hold subsidiary Prysmian CS transportation industry KRW 46 billion liable for the entire duration of the Canada (approximately $38 million) for bid- infringement under the principle rigging over a period of 17 years.247 of economic continuity.238 From In July, the Canadian Competition 1999 to 2001, the infringement Bureau (CCB) published a draft of In November, the Korean Prosecution was carried out by Pirelli CS, a its revised Competitor Collaboration Service (KPS) and the DOJ signed an Pirelli subsidiary, which in a series 241 of transactions was eventually Guidelines for comment. The CCB antitrust MOU to promote increased transferred to Prysmian CS. The announced that the updates reflect the cooperation and coordination on

20 Wilson Sonsini 2020 Antitrust Year in Review

criminal antitrust enforcement, such consider cooperation in determining make no mention of any confidentiality as helping to facilitate the extradition fines that may be imposed. Under the protections. process.248 The MOU reflects the more new rules, the limitation that only prominent role that the KPS has pledged allowed five applicants to seek leniency In addition, in September, SAMR to play in South Korea’s efforts to pursue has been removed, opening the door for released final antitrust compliance criminal cartel conduct. The KFTC and the sixth and later applicants to seek a guidelines to encourage businesses to the DOJ signed a similar MOU in 2015.249 reduction in fines from 5 percent up to create in-house capability to evaluate 20 percent.254 antitrust risk and to avoid engaging in Japan anticompetitive practices.258 Obstruction of justice. The new rules In 2020, the Japan Fair Trade increase the threshold for criminal Brazil Commission ( JFTC) adopted new fines imposed for obstructing an leniency rules and guidelines pursuant investigation.255 In June, Brazil’s antitrust authority, the to Japan’s Antimonopoly Act that Administrative Council for Economic promise to significantly impact cartel China Defence (CADE), approved a major enforcement in Japan in the years collaboration among competing global ahead.250 The guidelines include a In August, China’s State Administration food and beverage manufacturers— number of significant updates, including for Market Regulation (SAMR) including Coca-Cola, Nestle, and the following: published formal guidelines relating PepsiCo—to respond to the COVID-19 to the enforcement of China’s Anti- pandemic.259 In May, the companies Attorney-client confidentiality. The new Monopoly Law, including guidelines for signed an MOU to assist small- and guidelines indicate that the JFTC will cartel leniency and commitments.256 medium-sized point-of-sale retail respect a quasi attorney-client privilege businesses and minimize the economic in its civil cartel investigations or in Leniency Guidelines. The new effects of the pandemic in the beverage connection with leniency applications.251 guidelines explain that leniency is only industry. To avoid antitrust concerns, Underlying “primary materials or fact available to major cartel offenses, such the companies agreed not to disclose finding materials” remain subject to as price-fixing and market allocation.257 any sensitive business information, with investigation and production.252 Leniency can typically be granted to up necessary information to be transmitted to three parties, and the first applicant through a third party. CADE permitted Calculation of fines. The new rules can obtain immunity from all penalties the collaboration, concluding it was cap automatic discounts for cartel and if it reports before the agency establishes not a collusive attempt to achieve anti- bid-rigging self-reporters, but allow a case. The second applicant will be competitive and instead the JFTC to adjust the reduction rate considered for reduction in fines by 30 was justified by the current economic according to the degree of cooperation.253 to 50 percent, and the third by 20 to 30 conditions.260 Previous fine calculations did not percent. Importantly, the guidelines

21 Wilson Sonsini 2020 Antitrust Year in Review

The D.C. Circuit affirmed the lower the “National Best Efforts” rule that Civil Litigation court’s decision in May 2020. Following required a certain percentage of business the D.C. Circuit’s refusal to rehear the to come from the BCBS brand. Under Private litigation has continued case, Freedom Watch stated that the the proposed settlement terms, the to play a central role in the U.S. plaintiffs would seek review from the Blue Cross plans agreed to pay $2.67 antitrust enforcement landscape. U.S. Supreme Court. billion and to eliminate the National Major areas of Section 1 litigation Best Efforts rule and any other rule in 2020 included challenges to Mixed Results in Cases Involving that established a cap on non-Blue organization rules, intellectual Organizations competition. property licensing arrangements, and follow-on cartel suits. Section 2 Nat’l Ass’n of Realtors.262 Judge Andrea Avanci.264 Judge Barbara M.G. Lynn monopolization challenges against R. Wood of the Northern District of of the Northern District of Texas technology companies and challenges Illinois denied a motion to dismiss made dismissed a suit from Continental to pharmaceutical settlements have also by the National Association of Realtors Automotive Systems targeting Nokia, been a focus of private plaintiffs this (NAR), finding that allegations that Sharp Corp, and other technology year. Class certification remains a crucial each class plaintiff would have paid a firms that license standard essential stage in many private antitrust suits, and substantially lower commission but for patents (SEPs) through the licensing 2020 saw important decisions related to the NAR Buyer-Broker Commission entity Avanci, LLC. The plaintiffs the inclusion of uninsured plaintiffs and rules (BBC Rules) were sufficient to alleged that SEP holders violated the the use of averages to establish injury. state a claim. The court found that the antitrust laws by using a patent pool This chapter concludes with an overview home sellers had not merely alleged to coordinate efforts to impose non- of significant developments in civil parallel conduct, but that the purported FRAND terms on licensees. Judge Lynn antitrust litigation in the UK. anticompetitive restraints were part of dismissed the claims on the basis that the written rules issued by NAR. The SEP holders’ membership in Avanci Section 1: Concerted Action court further rejected NAR’s argument did not preclude them from negotiating that the plaintiffs’ allegations of injury individual licenses with OEMs and, Political Bias Antitrust Claims Fail to were insufficient because the plaintiffs in fact, the plaintiffs had entered into Gain Traction did not allege that they had attempted several individual licenses. Significantly, to negotiate a lower commission or that the complaint also alleged that the Freedom Watch, Inc. v. Google Inc.261 The the brokers had refused to engage in companies abused monopoly power D.C. Circuit Court of Appeals denied such negotiation. Judge Wood deemed arising from the standard-setting a request from Freedom Watch and the argument “perfunctory,” noting process to exclude certain implementers Laura Loomer to rehear a panel decision that it ignored homeowners’ allegations from practicing the standard and extract affirming the dismissal of a class action that the BBC Rules precluded any unfairly high royalty rates from those case alleging that Google, Facebook, opportunity for effective negotiation. that did take the license. The court held Twitter, and Apple had conspired to that this conduct sounded in contract suppress conservative viewpoints on BlueCross BlueShield.263 Blue Cross Blue rather than antitrust, following a their platforms. The suit, filed in 2018, Shield Association and its member plans statement of interest that the DOJ had alleged that the companies entered (collectively BCBS) reached a tentative filed in the case. into an “illegal agreement to refuse $2.7 billion settlement to resolve to deal with conservative news and antitrust claims that the insurance Follow-on Litigation from Cartel media outlets” that is “plainly anti- group’s member companies conspired Investigations Remains Active competitive” and a violation of the class to limit competition and increase prices members’ free speech rights. In March for policyholders. The plaintiffs alleged Capacitors.265 On September 17, 2020, 2019, the district court dismissed the that BCBS violated the Sherman Act Judge James Donato of the Northern case on the grounds that the plaintiffs by: (1) geographically dividing health District of California granted final had failed to prove (1) that the platforms insurance markets, (2) agreeing not approval of the $232 million settlement colluded in any alleged censorship of to compete with one another across between AVX, Panasonic, and other conservative viewpoints and (2) that the these geographic markets, and (3) electronic component manufacturers companies were “quasi-state actors.” limiting non-Blue competition through and a class of direct purchasers of

22 Wilson Sonsini 2020 Antitrust Year in Review

capacitors. The plaintiffs accused more Despite noting that “the lines between Inductors.275 Japanese electronics than a dozen manufacturers of colluding conscious parallelism and conspiracy suppliers Panasonic Corp., Murata to fix prices for aluminum, tantalum, may blur,” the court found that the Manufacturing Co. Ltd., TDK Corp., and film capacitors over a decade. Buyers plaintiffs’ amended complaint still Taiyo Yuden Co., and other suppliers claim that the alleged price-fixing failed to sufficiently identify “plus won a motion to dismiss antitrust scheme began as early as 2002 and lasted factors” to support a plausible finding allegations brought by Flextronics until 2013. of a conspiracy.270 While the court International USA. Judge Edward analyzed the plaintiffs’ enumerated plus J. Davila of the Northern District of After the September 17 settlement, only factors (e.g., price signaling, historically California found that Flextronics two defendants remain with respect to unprecedented changes, supply cuts, had failed to bring forward adequate the direct purchaser plaintiffs—Nippon etc.) both individually and collectively, evidence that it was affected by the Chemi-Con Corp./United Chemi-Con it found that the plaintiffs’ allegations alleged price-fixing and bid-rigging Corp. and Matsuo Electric Co. Trial had merely suggested conscious parallelism conspiracy that targeted a different begun in March for the two remaining and that no factors pushed the analysis equipment manufacturer. Flextronics defendants (along with those only now toward a plausible conspiracy.271 In did not attempt to amend its complaint. subject to the September 17 settlement particular, the court noted that “[a] agreement), but a mistrial was declared ‘follow the leader’ strategy where the Railroads.276 Four railway giants— due to delays stemming from COVID-19 dominant market player increases prices BNSF, CSX, Norfolk Southern, and and concerns regarding the safety and or reduces output with the hope that Union Pacific—have been battling logistics of continuing a jury trial at that others follow suit does not become an antitrust suit since 2009 accusing time. A new 10-day trial against the two conspirational simply because the other them of conspiring to hike the cost of remaining defendants will commence competitors do so.”272 freight transportation. Wilson Sonsini January 18, 2021. Claims brought by opt- represents BNSF in this action. The out plaintiffs remain pending against Optical Disk Drives.273 In June 2020, multidistrict case (now covering over numerous defendants. Hewlett-Packard Company (HP) 300 rail freight shipper plaintiffs) reached a confidential agreement with originally alleged a conspiracy to change Dynamic Random Access Memory Quanta Storage, Inc. to settle claims the method of rate calculation and break (DRAM).266 In November 2020, Judge that had resulted in a $438 million from the industry norm by switching to Jeffrey S. White of the Northern District judgment against Quanta arising from an adjustable rate that did not account of California again dismissed allegations a decade-long conspiracy to rig prices for fuel. More recent complaints have: that DRAM manufacturers “conspired for components used to store and read (1) added three additional railroads as in plain sight” to restrict output.267 media and data on DVDs, CDs, and Blu- co-conspirators; (2) added allegations The defendants collectively control 96 Ray discs. In late 2019, a Houston jury that the defendants coordinated uniform percent of the global DRAM market and, found against Quanta—the only optical implementation of mileage-based fuel following “vigorous[]” competition in disk drive maker that had not previously surcharges; and (3) alleged an expanded preceding years, all lowered supply and settled out of court—and awarded time frame for the conspiracy and its increased prices in 2016.268 The court pre-trebling damages of $176 million. effects. The defendants urged the court previously dismissed the complaint Quanta appealed to the Fifth Circuit, to dismiss these new complaints, or without prejudice in 2019, finding arguing that (1) HP could not recover otherwise strike the novel allegations, that the plaintiffs adequately alleged for overcharges for drives purchased as time barred by the four-year statute parallel conduct—that the defendants by overseas units and (2) the turnover of limitations. However, on August 25, simultaneously reduced DRAM supply— order was vague and in violation of 2020, the district court refused to do so, “but failed to allege additional facts international comity and Taiwanese pointing to the U.S. Supreme Court’s (‘plus factors’) to distinguish ‘conscious law. The Fifth Circuit affirmed the lower American Pipe decision and holding that parallelism,’ and thus raise the claims court’s decision.274 The jury award in this the consequence of any untimeliness of conspiracy above the speculative case is a striking reminder of the risk of would be to limit the scope of available level.”269 taking price-fixing cases to trial. relief.

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Section 2: Monopolization hiQ’s Scrapes with LinkedIn. In 2017, circumvent Apple’s payment system.289 hiQ Labs, Inc., a data analytics company Apple also moved to cut off Epic’s access Technology that “scrapes” data from public LinkedIn to the Apple tools needed to develop the profiles using automated bots, brought company’s Unreal graphics engine. Uncertain Rules for Standards Essential suit for monopolization, attempted Patents. In April 2020, Lenovo lodged monopolization, and unfair restraint of In a motion for a protective preliminary an antitrust suit accusing InterDigital trade against LinkedIn.281 hiQ asserts injunction, Epic argued that these of violating Section 2 of the Sherman that LinkedIn abused its market power moves demonstrated Apple’s market Act by making false and misleading, in the “people analytics market” by power and anticompetitive intent. In or ineffective, FRAND licensing preventing hiQ from accessing the October 2020, the Northern District of commitments, and violating Section 1 public information on the website.282 California granted in part and denied of the Sherman Act by agreeing with The district court granted a preliminary in part Epic’s request for a preliminary other unnamed technology holders who injunction against LinkedIn on the injunction, ruling that Apple can keep were also members of the standard- grounds that there were “serious Fortnite out of its App Store, but must setting organizations to include their questions on the merits” and a balance allow Epic’s affiliates access to developer technologies in the relevant cellular of the hardships heavily favored hiQ.283 tools for other applications. The court standards without adequate restraints on The Ninth Circuit affirmed in 2019.284 avoided signaling a view on the merits of any resulting market power.277 However, the district court dismissed Epic’s case, citing the “novelty and the hiQ’s antitrust claims in September magnitude of the issues, as well as the In June 2020, InterDigital—represented 2020. The court found that hiQ had debate in both the academic community by Wilson Sonsini—filed a motion failed to properly define the relevant and society at large.”290 A trial is to dismiss. InterDigital argues that market because it failed to allege “what scheduled for May 2021. Lenovo and its Motorola Mobility LLC substitutes there are for people analytics unit refused to license InterDigital’s products such as those offered by hiQ.”285 Uber Allegedly Driving Competition portfolio of patents covering the 3G The court noted in particular that hiQ Out of Business. Sidecar Technologies and 4G cellular standards on FRAND did not establish that “useful publicly provided vehicle-for-hire transportation terms, despite a decade-long effort to available information cannot be gleaned and delivery services until it went negotiate a deal.278 The motion further from other sources such as ... other defunct at the end of 2015. SC argues that Lenovo’s allegations assume industry directories,” such as Google Innovations (the assignee of certain InterDigital has bargaining power in and Facebook.286 Sidecar litigation rights) sued Uber in the negotiation, but that InterDigital 2018, claiming that Uber monopolized gave that power up when it agreed to Epic Showdown with Apple. In August the vehicle-for-hire market and drove have a neutral third party set the rate.279 2020, Epic Games (the maker of Sidecar out of business.291 In May InterDigital argues that if Lenovo’s Fortnite) sued Apple over Apple’s 30 2020, the U.S. District Court for the Section 1 claims are allowed to stand, the percent tax for app sales and in-app Northern District of California denied court would effectively be branding all purchases.287 Epic argued that Apple Uber’s motion to dismiss. Judge Joseph standard-setting groups as illegal cartels monopolized the app distribution Spero noted that SC Innovations had “for doing nothing more than selecting streams for iPhones and effectively plausibly suggested a mechanism technologies for standardization and blocked developers that use the App by which Uber can “leverage its implementing policies that provide Store from reaching consumers outside dominant market share to raise both for FRAND commitments.”280 Oral that marketplace. Epic also filed a passenger fares and commissions arguments on InterDigital’s motion to similar suit against Google related to withheld from drivers without a rival dismiss took place on October 27, 2020— the Play Store on Android devices.288 increasing output to restore competitive with the DOJ participating in support Shortly after Epic sued, Apple removed equilibrium.”292 Further, the court held of InterDigital, as noted above in the Fortnite from the App Store, purportedly that SC Innovations had implausibly Agency Investigations chapter of this in response to Epic’s use of a “hotfix” alleged that Uber could unilaterally report—and the court has not yet ruled. to give players a direct payments option raise its commission on rides “to for in-game purchases that would supracompetitive levels . . . while

24 Wilson Sonsini 2020 Antitrust Year in Review

insulated by network effects from Lyft brought by Trendsettah.301 Trendsettah its control over the Golden Globes to or a new market entrant usurping Uber’s brought suit alleging antitrust violations monopolize interviews with celebrities market share.”293 The court held these and breach of contract arising from and other “hot” industry participants.307 claims sufficient to allege market power disputes over a supply agreement.302 and “provide[] a plausible means for Trendsettah was awarded $44 million on The court held that Flaa’s geographic Uber to recoup its losses from alleged its monopolization claims in a jury trial. allegations did not explain how the .”294 Motions for The district court overturned the award, entertainment news industry could be summary judgment are due in July 2021. but the Ninth Circuit reinstated it.303 In local when such news is created and 2019, Swisher filed for relief based on consumed nationally.308 Moreover, the Miscellaneous newly unsealed evidence showing that court held that Flaa failed to “identify the founder and CEO of Trendsettah the relevant type, source, or medium of Keurig Settles Class Action. In falsified financial records to evade entertainment news,” and explain how September 2020, Keurig struck a $31 import taxes on cigarillos, presented such news is—or is not—interchangeable million deal with a putative class these records to Swisher and the court, with other news forms.309 The court left of consumers alleging violations and used them as a basis for its damages open a 14-day window for Flaa to file an of Sections 1 and 2 of the Sherman calculations.304 The court found that amended complaint.310 Act.295 The plaintiffs accuse Keurig this conduct “distorted Trendsettah’s of monopolizing the market for refill costs, prices, demand and profitability,” Antitrust Litigation in the coffee cups compatible with Keurig and thus undermined any basis “to Pharmaceutical Industry coffee makers by blocking competition show that there was any injury, or the from alternative manufacturers.296 They extent of damages caused by Swisher’s The most significant developments alleged, among other things, that Keurig conduct.” The court therefore dismissed in the pharmaceutical sector have filed sham lawsuits against potential Trendsettah’s request to reinstate the been in the law of so-called “pay-for- competitors, threatened companies who jury verdict. delay” or “reverse payment” patent did business with its competitors, and litigation settlements. Plaintiffs have redesigned its coffee makers to make Monopolization in the Movie Awards continued to challenge settlement them incompatible with competitors’ Industry? In November 2020, the U.S. agreements between brand and generic cups.297 District Court for the Central District pharmaceutical companies, arguing of California tentatively dismissed that unique forms of non-monetary In 2019, the U.S. District Court for monopolization claims brought by value flowing from brand to generic the Southern District of New York Norwegian entertainment writer companies should be considered dismissed the plaintiffs’ claims under Kjersti Flaa against the Hollywood unlawful “non-cash” reverse payments federal antitrust law, citing the general Foreign Press Association (HFPA), the under Actavis. bar against recovery by indirect organization that puts on the annual purchasers.298 However, the court Golden Globes awards ceremony.305 Glumetza Antitrust Litigation. Here, allowed certain of the plaintiffs’ claims Flaa brought her action against the a group of class action litigants has under state antitrust laws to proceed.299 HFPA after being repeatedly denied argued that a brand and generic Keurig and the plaintiff class ultimately membership in the organization.306 company’s settlement agreement is reached a $31 million settlement that According to Flaa’s complaint, the unlawful because it allegedly contains includes a no-reversion provision, HFPA monopolizes the market for a “no authorized generic” (no-AG) whereby any portion of the settlement “foreign reporting of entertainment agreement.311 A no-AG agreement is one not claimed by class members will be news emanating from Southern in which the brand company agrees not distributed to a nonprofit consumer California” by, among other things, to compete by abstaining from selling protection organization.300 allocating foreign entertainment news its own generic version of the drug for markets amongst its members, requiring a specified period of time. The plaintiffs Swisher Finally Prevails in Cigarillo applicants to agree not to compete have also alleged that the settlement Spat. After six years of litigation, with existing members, refusing to agreement contains a “Most Favored tobacco company Swisher defeated admit applicants who might compete Entry” (MFE) clause,312 in which a federal and state monopolization claims with existing members, and leveraging brand and generic effectively block

25 Wilson Sonsini 2020 Antitrust Year in Review

competition by leveraging statutory “exploited advantages” in the system, result, the court remanded the case for exclusivity and conditional patent “existing antitrust doctrine does not additional fact finding as to whether licensing language to delay additional prohibit it” from doing so.315 The court Sanofi acted in “good faith” when it generic entry. On March 5, the court also held that AbbVie’s agreements listed the patents. rejected a motion to dismiss, finding providing different early entry dates that the complaint plausibly alleged an for the United States and Europe were Class Certification antitrust violation based on the non- not unlawful reverse payments because cash no-AG and MFE clauses.313 The case they “did not have the hallmarks of an Class certification remains a key stage is set to go to trial in October 2021. unjustified and otherwise inexplicable in antitrust class action litigation, payment because the package either as the scope of the certified class has Staley v. Gilead Sciences, Inc. Similarly, increased competition or preserved significant implications for defendants’ in this litigation, a group of activists an anticompetitive status quo.”316 The exposure. Key developments this year associated with the influential HIV plaintiffs are briefing the case for appeal concerned the much-debated issue advocacy group ACT UP sued Gilead to the Seventh Circuit. of whether the presence of uninjured Sciences, Bristol Myers Squibb (BMS), class members constitutes a bar to class and Janssen for allegedly monopolizing Orange Book Fraud. The First Circuit certification and to what extent plaintiffs the market for HIV treatments using reversed a district court’s decision can rely on averages to establish combination antiretroviral therapies to dismiss a suit against Sanofi for classwide injury. (cART). Like the plaintiffs inGlumetza , a fraudulent Orange Book listing.317 the Staley plaintiffs’ challenge to the The Orange Book (officially known Uninjured Plaintiffs as a Bar to Class defendants’ no-AG and MFE clauses as “Approved Drug Products with Certification survived a motion to dismiss. In addition Therapeutic Equivalence Evaluations”) to their reverse-payment claims, the collects drug products and their After the 2018 Asacol decision,319 courts Staley plaintiffs alleged an overarching associated patents and regulatory around the country have grappled with conspiracy among the three defendant applications. To violate Section 2 whether to certify classes that may have drug manufacturers, as well as two through an Orange Book listing, a unharmed class members. This year, separate bilateral conspiracies between monopolist must have acquired or district courts in the Second, Ninth, and Gilead and each of its co-defendants. maintained its power using the listing, Tenth Circuits certified classes despite The court dismissed the overarching and the listing must be an “improper the likely presence of such uninjured conspiracy claim, citing a failure to means” of doing so. class members. allege how BMS benefited from a Gilead-Janssen conspiracy and how Purchasers of Lantus, Sanofi’s EpiPen. In February 2020, the U.S. Janssen benefited from a Gilead-BMS proprietary insulin product, allege that District Court for the District of Kansas conspiracy.314 Discovery is ongoing as to the company’s listing was improper certified two classes of purchasers the surviving no-AG, MFE, and bilateral because the listed patent, which claims and reimbursement providers of the 320 conspiracy claims. Trial is tentatively set only a drive mechanism used in an emergency allergy treatment EpiPen. for February 2022. insulin injection pen, does not claim The defendants opposed certification, a “drug” within the meaning of the arguing, inter alia, that the plaintiffs’ Patent Thickets. Purchasers of the relevant statute. Although the court proposed class definitions contained blockbuster product Humira have agreed that the patent did not qualify for too many uninjured class members and pursued a novel “patent thicket” Orange Book placement, it nevertheless that the proposal to have such uninjured antitrust theory, claiming that sided with the plaintiffs, reasoning class members removed at the claims AbbVie intentionally amassed invalid, that it could not yet determine whether administration stage would violate unenforceable, or noninfringed patents the listing was an “improper means” their due process rights as recognized to unlawfully maintain its monopoly because the record did not “contain any in Asacol. However, the court predicted on the drug. The district court rejected evidence about custom and practice that the Tenth Circuit “wouldn’t follow” 321 the plaintiffs’ argument that litigations in the industry, or what if any legal Asacol, but rather the Seventh Circuit arising from AbbVie’s patents were opinions Sanofi sought and obtained precedent holding that “a class is too shams, stating that while AbbVie before submitting the patent.”318 As a broad to permit certification only if it

26 Wilson Sonsini 2020 Antitrust Year in Review

includes a great number of members on the market throughout the entire that many class members likely were not who could not have been harmed by class period. The court did not injured at all. The district court rejected the defendant’s conduct (as opposed discuss Asacol or specifically focus on this argument and certified the class, but to a great number who ultimately are whether uninjured class members bar the Third Circuit reversed, holding that shown to have suffered no harm).”322 The certification, but it did find that the the district court abused its discretion plaintiffs claimed that the percentage plaintiffs’ expert could simply remove by assuming, without rigorous analysis, of uninjured members was less than 5 any uninjured class members from his that average price increases were percent of individual consumers and less damages model at later stages of the sufficient to show that the plaintiffs than 0.001 percent of third-party payors, case, such as summary judgment or trial. could establish antitrust injury by figures that the court concluded were common proof at trial.328 “small enough that they don’t preclude Use of Averaging class certification.”323 The Third Circuit held that the There was also significant activity acceptability of averages as common Restasis. In May 2020, the U.S. District this year on the question of whether proof in this case depends on various Court for the Eastern District of New plaintiffs can rely on averages to detailed issues of fact that will require York granted certification to a class of demonstrate classwide antitrust injury. careful and thorough analysis. These end-payors estimated to include 30,000 In Lamictal, the Third Circuit reversed issues include: (1) whether the market is to 40,000 health plans and over one a district court’s class certification characterized by individual negotiations; million consumers who purchased decision, finding that the court failed to (2) whether Teva preemptively lowered Allergan’s dry-eye treatment, Restasis.324 engage in the analytical rigor required its pricing in response to GSK’s branded Relying on Asacol, Allergan opposed under the law in analyzing plaintiffs’ discount strategy, which was to offer certification on the grounds that the proffer as to average price increases discounts to pharmacies that continued proposed class included uninjured across the proposed class. Several district selling Lamictal instead of lamotrigine; buyers and that the plaintiffs’ proposal courts followed the Third Circuit’s lead and (3) whether and to what extent to exclude such members during the and declined certification on similar GSK, absent the settlement agreement, claims administration stage would grounds, suggesting a trend toward a would or could have both pursued the violate their due process rights. The more exacting standard for certification. discounted brand strategy and launched district court found in favor of the Yet, two other recent court decisions an alternative generic version.329 plaintiffs, and explicitly “disagree[d] granted certification despite the with the First Circuit’s conclusion plaintiffs’ use of averages or aggregate Niaspan. In June 2020, the U.S. District in Asacol that defendant has a impact estimates. Court for the Eastern District of constitutional right to remove [uninjured Pennsylvania denied certification to a class members] at the liability stage of Lamictal. In April 2020, the Third Circuit class of end-payors of Niaspan, a drug trial.”325 vacated and remanded a decision by the used to treat lipid disorders.330 The U.S. District Court for the District of defendants opposed certification on the Glumetza. In August 2020, the U.S. New Jersey that certified a class of direct grounds that the plaintiffs’ evidence District Court for the Northern purchasers of GlaxoSmithKline’s (GSK’s) of classwide injury relied on averages. District of California certified a class anti-epilepsy drug, Lamictal, and Teva’s Citing the Third Circuit’s Lamictal of direct purchasers of branded and generic version, lamotrigine.327 GSK decision, the district court denied generic versions of the diabetes drug and Teva challenged the certification certification because the plaintiffs’ use of Glumetza.326 The defendants opposed as to Teva purchasers, claiming that averages in this case hid “several groups certification on the ground that the injury was not capable of common proof of uninjured class members who cannot question of whether the class would because the support for certification be easily identified.”331 include uninjured class members was for those plaintiffs impermissibly relied dependent on various assumptions on average price increases. In a market Aluminum. In July 2020, the U.S. District made by the plaintiffs, including the characterized by individual negotiations, Court for the Southern District of New assumption that a generic version of GSK and Teva argued, the use of York similarly denied certification to the drug at issue would have remained averages could not account for the fact a class of direct aluminum purchasers

27 Wilson Sonsini 2020 Antitrust Year in Review

who alleged that aluminum traders precise damages suffered by each could 46.2 million people, alleging that they and warehouses conspired to increase differ.Lamictal was decided while the had suffered damages over a period of prices.332 Relying on Lamictal, the appeal was pending, and Indivior filed 16 years as a result of being overcharged district court denied certification and a letter stating that the case supported when purchasing from merchants that found that the plaintiffs failed to show its arguments. The plaintiffs countered accepted Mastercard.342 classwide injury because their model that in Lamictal, the issue was whether relied on average price increases, which averages could hide uninsured class In July 2017, the CAT rejected Merricks’ masked potential uninjured plaintiffs, members. By contrast, Indivior did not proposed methodology for calculating given factors such as varying contractual dispute the fact that its price increases an aggregate of individual claims and pricing arrangements among buyers.333 impacted all class members.338 The Third estimate of individual damages.343 Circuit rejected Invidior’s argument, Applying the Canadian “sufficiently Zetia. Breaking from Lamictal, an finding that “[a]lthough allocating the credible and plausible test,”344 the CAT August 2020 decision by the U.S. damages among class members may refused to certify the claim due to the District Court for the Eastern District of be necessary after judgment, ‘such insufficient amount of data available Virginia granted certification to a class individual questions do not ordinarily and the inability to estimate individual of direct purchasers of the cholesterol preclude the use of the class action damages. The CAT found that accepting drug Zetia alleging that Merck and device.’”339 the collective claim would have Glenmark conspired to delay the entry breached the fundamental principle of of a generic version of the drug.334 The Civil Litigation in the UK compensatory damages, which requires defendants relied on Lamictal to oppose compensation for the exact amount of certification, but the district court Under the Consumer Rights Act 2015, damages suffered by the claimant. held that it is “common practice to use lead claimants in UK civil antitrust averages to determine whether class actions are entitled to file suits on behalf Merricks lodged an appeal with the members suffered a common antitrust of proposed classes.340 All the members Court of Appeal of England and injury in cases such as this one, even if of these classes resident in the UK are Wales, which sent the claim back to the damages calculation, which occurs included in the scope of the proceedings, the CAT for reconsideration in 2019.345 later in the proceedings, will require provided that they do not opt out (non- Mastercard appealed to the UK Supreme a more individualized inquiry.”335 UK residents are permitted to opt in). It Court against the Court of Appeal’s The court stated that where Lamictal is the duty of the Competition Appeal judgment, arguing that even if the CAT “involved evidence of ‘nuance[s]’ in that Tribunal (CAT) to assess whether (1) had applied a less stringent test, the market that were ignored by the district the action of the lead claimant as a claim still should be rejected based on judge,” the market structure in this representative is justified, (2) all the insufficient evidence that merchants case was “fundamentally different” and claims raise similar or related issues, passed on the higher MIFs to final amenable to the use of averages.336 and (3) they are suitable for collective consumers.346 According to Merricks, proceedings. requiring such burdensome justification Suboxone. In July 2020, the Third and demonstrations would undermine Circuit upheld a decision by the U.S. In this context, Walter Merricks v. the purpose of the Consumer Rights Act District Court for the Eastern District of Mastercard is one of the most significant 2015. Pennsylvania that granted certification and complex cases in the UK’s legal to a class of direct purchasers of the drug history. In 2007, the European In a landmark ruling, passed down on Suboxone, a prescription drug used to Commission (EC) issued a prohibition December 11, 2020, the UK Supreme treat opioid addiction.337 The defendant, decision finding that Mastercard’s Court dismissed Mastercard’s appeal Indivior, argued that the plaintiffs multilateral interchanges fees (MIFs) for and Merricks’ proposed collective claim failed to provide common evidence of cross-border payment card transactions was referred back to the CAT for a new injury or damages because the plaintiffs’ were anticompetitive under EU assessment of whether the claim should model, which relied in part on aggregate .341 Relying on the EC’s be certified as suitable for trial.347 The damage estimates, failed to measure decision, Walter Merricks, a consumer Supreme Court said that the CAT made how each class member was specifically rights champion, filed a £14 billion several errors in refusing to certify the harmed, despite acknowledging that the ($18.6 million) class action on behalf of claim. Most significantly, the Supreme

28 Wilson Sonsini 2020 Antitrust Year in Review

Court held that the CAT should not the loss may be very difficult, CAT for mass claims over competition law have treated the question of whether had ignored the well-entrenched civil infringements in the UK. Going forward, the claim was suitable for aggregate procedure principle that it is obliged we are likely to see more parallel cases in damages as a “hurdle” to surmount, to allow the claim to go to trial if the the United States and the UK, and cross- but rather as “one of a number of claimant has a “realistically arguable border coordination on competition relevant considerations.” The Court claim to have suffered some loss from issues will be more important than ever. further held that, by refusing to certify a breach of duty.” The highly awaited the claim merely because quantifying ruling clarifies aspects of the framework

Conclusion

Antitrust continued to make waves in CMA, and still increasing attention on regular Wilson Sonsini attorney or any 2020. Notwithstanding the challenges major technology firms promise new member of the firm’s antitrust practice. of the COVID-19 pandemic, high-profile and evolving challenges in the year actions in technology sectors shared ahead. Finally, we would like to acknowledge headlines with vigorous pursuit of more and thank the attorneys and staff of traditional enforcement agendas. We Wilson Sonsini will continue to keep Wilson Sonsini’s antitrust practice expect that antitrust will continue to be the firm’s clients and colleagues updated and marketing department for their a high priority around the world, with on the latest developments, particularly contributions to this report. government actions, private litigation, as we expect our antitrust attorneys and cartel enforcement remaining active. to continue to play a significant role In addition, a new administration in in matters of importance throughout the United States, a newly independent the year. We invite you to contact your

Endnotes

To view the complete listing of endnotes for this report, please visit https://www.wsgr.com/email/Antitrust-Report/2020/Antitrust-Report-2020-Endnotes.pdf.

29 Wilson Sonsini 2020 Antitrust Year in Review

About Wilson Sonsini’s Antitrust Practice

Wilson Sonsini’s antitrust attorneys and competition practice for high-tech agencies, antitrust litigation, and are uniquely positioned to assist clients matters in the world,” while Chambers issues involving intellectual property, with a wide range of issues, from day- USA characterized them as “a dominant consumer protection, and privacy. We to-day counseling and compliance to firm for matters involving the hi-tech advise clients on a full range of issues, crucial bet-the-company matters. Our sphere, acting for many of the most including pricing, distribution, vertical accomplished team is consistently prominent technology firms,” with a restrictions, standard-setting activities, recognized among the leading antitrust “deep and diverse bench of outstanding joint ventures, and patent pooling. practices worldwide by such sources as practitioners.” Working with Fortune 100 global Global Competition Review, Chambers, enterprises as well as venture-backed and Law360. In 2020, Global Competition Based in New York City, Washington, start-up companies, our attorneys Review ranked Wilson Sonsini No. 13 on D.C., San Francisco, Silicon Valley, and have expertise in virtually every its “Global Elite” list, which consists of Brussels, our highly regarded antitrust significant industry sector, including the top 25 firms practicing competition attorneys advise clients with respect technology, media, healthcare, services, law internationally. GCR has also hailed to , criminal transportation, and manufacturing. the group as “perhaps the best antitrust and civil investigations by government

30 Wilson Sonsini 2020 Antitrust Year in Review

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