RECENT DEVELOPMENTS

Reining In Big Tech

• OMNIBUS ANTI-MONOPOLY MILESTONES. The highly anticipated omnibus deal includes legislation that will significantly strengthen antitrust law for the first time since 1976. Specifically, it includes a slightly modified version of the Merger Filing Fees Modernization Act, which will give federal antitrust enforcers more resources and allow state AGs to stay in their home venues, even for already pending litigations. Apple, Amazon, Facebook, and Google spent extraordinary sums to keep antitrust reform bills out, and though they succeeded with the Open App Markets Act and the American Innovation Online and Choice Act, both could be reconsidered in the new term.
• FTC V. META-WITHIN TRIAL BEGINS. In July 2022, the FTC filed suit against Meta’s pending acquisition of virtual reality developer Within, arguing it would threaten future innovation in the AR/VR market. This is Chair Khan’s FTC’s first challenge to a big tech merger. Last week, the trial to block the deal kicked off. Economic Liberties’ Legal Counsel Lee Hepner has been in the courtroom and posting updates on Twitter. Keep track of other upcoming Big Tech lawsuits here. 
• DC TARGETS AMAZON WAGE THEFT. DC Attorney General Karl Racine has filed suit against Amazon for stealing tips from delivery drivers. AG Racine’s suit targets Amazon’s Flex service, which changed its driver payment model in 2016 to decrease driver compensation from tips, increasing its profits and market power. The FTC also previously took action against Amazon for these unlawful actions.

Blocking Anticompetitive Mergers

• MICROSOFT’S CHARMS FALL SHORT. Despite a “charm offensive” from Brad Smith and an army of lobbyists, the Federal Trade Commission voted 3-1 to block Microsoft’s $68B acquisition of Activision Blizzard. Microsoft is the third largest game developer globally. Combining with Activision Blizzard, one of the world’s largest video game publishers, would vertically integrate the industry, allowing a small group of firms to control content, data, and advertising.
• KROGER-ALBERTSONS FACES ONGOING SCRUTINY. Kroger and Albertsons’s proposed merger has faced multiple lawsuits, specifically around Albertsons’ $4 billion special dividend to shareholders. The DC AG failed to stop it, but a temporary restraining order in Washington remains in place until the state supreme court rules. The FTC also recently requested more information about the merger, and UFCW locals across the country are calling on regulators to block the deal to protect their livelihoods.

Building Worker Power

• POULTRY FARMERS AS EMPLOYEES? The poultry industry’s consolidation has allowed a few firms to dominate and impose unfair contracts on poultry growers. Now, growers in South Carolina are suing Pilgrim’s Pride to be classified as employees instead of independent contractors. A federal court recently affirmed an arbitrator’s decision allowing them to proceed as a class, which moves Pilgrim one step closer to changing their relationship with growers, and, thus, their business model. 

Improving Health Care 

• CALL TO INVESTIGATE GPOs. Group purchasing organizations (GPOs) negotiate procurement contracts for hospitals, nursing homes, and other providers. GPOs have used their market leverage and an exemption from theAnti-Kickback Statute to force manufacturers to pay to play and locked their members in “sole-sourced” contracts. 60 Minutes recently reported how these anti-competitive tactics have created shortages of critical drugs like pediatric chemotherapy medication. Last month, several physician groups and Economic Liberties sent a letter to the FTC, urging the agency to launch an investigation into GPOs’ weakening of the health care system.
• WEAPONIZING PATENTS TO RAISE COSTS.  The outdated patent system gives manufacturers monopolies over certain drugs, which they use to raise prices and prevent millions of Americans from getting the medication they need. In fact, in the largest healthcare deal of the year, U.S. biotechnology company Amgen seeks to purchase anti-inflammatory drugmaker Horizon Therapeutics likely because their monopoly patents over other drugs are expiring. Sen. Elizabeth Warren and Rep. Pramila Jayapal are demanding answers from the U.S. Patent and Trademark Office about what they are doing to stop these practices, consistent with President Biden’s competition order. 
• HOSPITAL M&A SPREE. Health care mergers raise patient costs and hurt competition, but proposed transactions persist. In a Midwest deal MN AG Keith Ellison is reviewing, South Dakota’s Sanford and Minnesota’s Fairview are in talks to merge into a $14 billion, 58-hospital system. In Louisiana, AG Jeff Landry has until February 16th to challenge LCMC Health’s proposed acquisition of three HCA-owned Tulane University hospitals, which unionized nurses are opposing. Non-profit hospitals in New Jersey are also proposing to merge, and Reps. Jayapal & Spartz have introduced legislation to expand FTC’s authority to include non-profit hospitals. 
• DOJ AND HHS JOIN FORCES. Building on the Executive Order on Promoting Competition in the American Economy’s directive, DOJ Antitrust and Office of the Inspector General of the Department of Health and Human Services recently announced a partnership to enhance enforcement efforts to keep health care markets competitive. 

DOJ Investigations

• USED CAR CARTEL IN DOJ CROSSHAIRS. DOJ Antitrust is pursuing a criminal monopolization case against a group with ties to the Gulf Cartel, a drug trafficking organization, for price-fixing, extortion and money laundering involving used car shipping to Mexico. AAG Kanter has revived criminal monopolization authority after decades of lax enforcement.
• LANDLORD PRICE GOUGING. Housing rental prices continue to rise. While some attribute increases to a tight housing market and rising interest rates, a report from ProPublica showed that real estate software firm RealPage uses an algorithm to “help landlords push the highest possible rents on tenants.” Senators Klobuchar, Booker, and Durbin called on DOJ Antitrust to investigate this price gouging. While DOJ Antitrust has not publicly confirmed, several outlets are reporting the division has launched an investigation.

In the Name of National Security

• DEFENSE CONTRACTOR CONTINUES ACQUISITION SPREE. L3Harris, America’s sixth largest defense contractor, is on a buying spree. On December 18, CEO Chris Kubasik, announced their intention to buy Aerojet, the last remaining independent solid fuel rocket maker whose acquisition by Lockheed Martin was blocked by the FTC over defense industrial base concerns earlier this year. Kubasik’s announcement came on the heels of his tour hyping L3Harris’s potential $2 billion acquisition of Viasat’s military communications unit as a “huge win for the warfighter.” When describing that potential acquisition, Kubasik, who recently oversaw $7.5 billion in share buybacks in lieu of investments that would actually benefit the warfighter, noted that we already knew it was a success because both company’s stock prices had gone up. The Pentagon released a report earlier this year that defense consolidation is actually a problem for national security because competition delivers benefits for “cost,schedule, quality, performance, innovation, and industrial capacity.”

ICYMI…

• The FTC is fining Epic Games $520 million — the largest fine in the agency’s history — for violating the Children’s Online Privacy Protection Act (COPPA) and tricking players into making unintentional purchases.
• FTC Chair Lina Khan and DOJ’s Assistant Attorney General of Antitrust Jonathan Kanter joined the Wall Street Journal CEO Council and The Federalist Society, respectively, for frank discussions on their approaches to antitrust enforcement. 
• Yesterday, CFPB Director Rohit Chopra announced a $3.7 billion fine against Wells Fargo for legal violations across several of its largest product lines. Last week, Director Chopra also testified before the House Committee on Financial Services and the Senate Banking Committee to discuss the agency’s semi-annual report. Chopra explained how Big Tech firms are skirting the law, why the agency has cracked down on junk fees, and more.
• In the wake of Sam Bankman-Fried’s FTX fraudulent meltdown, Economic Liberties released a new analysis that sets the record straight on how SEC Chair Gary Gensler’s leadership protected the economy and everyday investorsfrom sustaining even more harm.
• And Swifties seek their day in court over the ongoing Ticketmaster debacle.