RECENT DEVELOPMENTS

Appropriations

• APPROPRIATORS ROB DOJ ANTITRUST. In 2022, bipartisan members of Congress passed the Merger Filing Fee Modernization Act, which increased fees DOJ Antitrust receives when larger companies merge. The negotiated spending package, however, included a provision that subjects fee revenue to appropriations. Sen. Klobuchar and Sen. G rassley led a letter to the bicameral appropriation chairs objecting to this funding redirect. Economic Liberties and over 20 advocacy organizations have opposed this circumvention. Sen. Klobuchar delivered floor remarks lambasting the appropriations committee, but, ultimately, the provision passed. Senator Shaheen (D-NH) has committed to working to increase DOJ Antitrust’s access to fee revenue next year.

Reining in Big Tech 

• MAKING THE CHIPS ACT WORK. The pandemic revealed the far-reaching impacts of fragile semiconductor chip supply chains. The CHIPS and Science Act passed in response appropriated $50 billion to reshore chip production in the U.S., and the first investments are starting to roll out. A new Economic Liberties report highlights how the effectiveness of these investments, particularly in the production of “leading edge” chips like smartphone processors, depends on reducing the Taiwan Semiconductor Manufacturing Company’s concentrated, 57% global market share and limiting Apple’s dominance as the world’s largest buyer of chips.
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• APPLE’S MESSAGING (MIS)CONDUCT. Apple has deployed a series of tactics to tether consumers to their products, including on the iMessage platform. An app, “Beeper Mini,” created a workaround that facilitated iMessage interoperability with Android messaging. Apple blocked the app shortly after its release. Recently, Republican FCC Commissioner Brendan Carr suggest ed the agency has authority to investigate Apple’s conduct. Economic Liberties sent a letter to the FCC urging such action. DOJ Antitrust’s rumored case against Apple could target this type of conduct blocking competitors from its platform. Apple is already starting to resist EU’s new regulations by blocking Epic Games as a developer on the App Store.

Improving Health Care

• UNITED HEALTH UNDER FIRE. UnitedHealth was early in vertically integrating to control big parts of the U.S. healthcare system, including as an insurer and pharmacy benefit manager. United now also employs or is affiliated with 90,000 physicians, roughly 10% of those in the U.S. Reportedly, DOJ is investigating UnitedHealth for potential antitrust violations stemming from this market power, in addition to the agency’s review of United’s proposed $3.3 billion acquisition of Amedisys, a home health care provider. The recent cyber attack on Change Healthcare, United’s claims processing subsidiary, which has stopped payments to millions of providers nationwide, highlights risks stemming from this concentration. 
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• DOES PE RUN HEALTHCARE? Private equity firms have acquired significant shares in many markets, which led the FTC and DOJ to include PE’s investments as a consideration in the recently revised merger guidelines. Particularly in healthcare, a single private equity firm controls at least half of specialty practices in 50 metro areas. In response, the FTC, DOJ, and HHS jointly released an RFI to collect information about PE’s investments in the healthcare space and their impacts on consolidation, patients, and workers. Comments are due May 6th. The RFI follows the FTC’s lawsuit against PE firm Welsh Carson’s anticompetitive conduct in controlling 60% of the Texas hospital anesthesia market. 
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• FTC AND HHS TAKE ON GPOs. Group Purchasing Organizations (GPOs) are middlemen that procure drugs and medical devices from manufacturers on behalf of hospitals. GPOs’ exemption from the Anti-Kickback Statute allows them to squeeze manufacturers for lower prices that often disincentivize production, driving shortages. The FTC and HHS have issued an RFI on how GPOs and wholesalers contribute to drug shortages. Comments are due by May 6. Economic Liberties previously urged the FTC and FDA to investigate GPOs.

Blocking Mergers

• FTC BLOCKS KROGER. In 2022, Kroger and Albertsons proposed a $26.4 billion merger that threatens to raise prices, harm workers, and further consolidate the food supply chain. Last month, the FTC, along with 9 bipartisan attorney generals, sued to block the deal. Led by Rep. Peltola and the Alaska delegation, dozens of bipartisan members of Congress praised the FTC’s suit. Separately, the Colorado and Washington AGs sued to block the merger in individual suits, which revealed the companies may be engaging in wage suppression. An administrative hearing is set for July 31st, and the FTC has requested an injunction to block the merger pending the resolution of its legal process. 
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• CAPITAL ONE/DISCOVER SWINGS FOR FENCES. Capital One and Discover proposed a $35.3 billion merger, which, if successful, would create the largest card issuer in the U.S. and give Capital One access to Discover’s debit and credit payment processing networks. This integration could allow the combined company to sidestep the Durbin Amendment regulation of interchange fees in the debit market. The deal drew immediate criticism from Rep. Waters (D-CA-43) and Sen. Hawley (R-MO), but banking regulators have been reluctant to block mergers. Public Citizen and Economic Liberties wrote a letter urging them and the DOJ to use their authority to block the deal.
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• STATES BREAKING MEDICARE INSURANCE MERGERS. As of 2020, four Medicare Advantage insurers covered 70% of the market. Consolidation in this market leads to higher prices for consumers and decreased quality of care. State regulators are taking note. Blue Cross Blue Shields of Louisiana and Medicare Advantage plan Elevance dropped their proposed merger for a second time after Louisiana AG Landry began investigating the deal for antitrust concerns. Similarly, CareOregon and multi-state Medicare insurer SCAN Group dropped their deal after the Oregon Health Authority found the transaction had conflicts of interest and offered no clear benefit to beneficiaries.

Lowering Prices

• INHALER COST REDUCTION. Improperly listed patents in the FDA “Orange Book” suppress competition and keep prices artificially high. But medical patent abuse is facing scrutiny. In early January, the Senate HELP Committee launched an investigation into the high price of inhalers. The FTC also challenged over 100 patents listed in the FDA’s Orange Book, including four patents held by brand name inhaler producer, Boehringer Ingelheim (BI). Now, BI has announced it will cap the out-of-pocket costs of asthma and COPD inhalers at $35 a month from its former list price of around $500. 
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• COMBATTING ALGO PRICE-FIXING.  The Sherman Act makes price fixing illegal, but would-be competitors are increasingly using data firms to collude and set prices. In the rental housing market, tenants are suing RealPage, a third party software, and landlords, for using the software to fix rental prices, and state AGs in Arizona and North Carolina have brought suits of their own. Congress is now also stepping up to combat this behavior. Sen. Wyden (D-OR) introduced the Preve nting the Algorithmic Facilitation of Rental Housing Cartels Act to stop the practice in the housing market. Sen. Klobuchar (D-MN) introduced the Preventing Algorithmic Collision Act to ban the practice in all market areas. Recently, AAG Kanter joined More Perfect Union to discuss the emergence of algorithmic price fixing. The White House has also announced the Stike Force on Unfair and Illegal Pricing co-chaired by the FTC and DOJ.  
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• CFPB LOWERS CREDIT CARD FEES. The CFPB has a statutory mandate to regulate the credit card market. Pursuant to that authority, the CFPB has now finalized a rule to curb unreasonable late fees, reducing fees from $32 to $8, saving consumers $10 billion annually. The CFPB has also released research showing that the largest credit card issuers charge consumers interest rates that exceed fed rates and are higher than those small banks impose. Director Chopra’s remarks at the recent Competition Council meeting highlighted this work and were featured on The Shade Room.

Building Worker Power

• NON-COMPETES CHECKED. Noncompete agreements trap over one-fifth of U.S. workers in jobs, lowering wages and reducing entrepreneurship. FTC has not yet finalized their proposed rule, but the National Labor Rights Board is already racking up wins to ban these agreements. General Counsel Abruzzo settled a lawsuit against Juvly Aesthetics for unfairly using non-competes and Training Repayment Agreement Programs (TRAPs,) a contractual term using debt to restrict worker mobil ity that would have left Juvly employees on the hook for up to $75,000 each.

Airlines

• BOEING UNDER PRESSURE. Boeing is part of a 90% of global plane production duopoly that has disincentivized quality manufacturing, leading to crises like the Alaska Airlines window blowout. The Federal Aviation Administration (FAA)’s six week audit of Boeing’s production and oversight procedures uncovered “multiple instances” where the company failed to comply with manufacturing quality control requirements. Boeing has 90 days to submit a plan to remedy the violations. Boeing is also considering a deal to re-acquire Spirit AeroSystems, which makes about 70% of the 737 MAX at issue in the Alaska Airlines blowout, but no formal deal has been proposed.

ICYMI

• JetBlue and Spirit Airlines officially called off their merger and suspended appeals after losing to DOJ antitrust. 
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• Walmart has announced a $2.3 billion acquisition of Vizio, a TV brand and operator of the SmartCast Operating System, to expand its advertising business. Demand Progress and Economic Liberties joined nearly 20 organizations urging antitrust enforcers to block the deal. 
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• Andrew Ferguson and Melissa Holyoak were confirmed to fill the two vacant FTC Republican commissioner seats. Democratic Commissioner Slaughter was confirmed for another 7-year term. 
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• The FTC submitted a comment on the National Institute of Standards and Technology’s Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, urging the NSIT to address “patent thickets” that weaken the utility of march-in rights.
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• Economic Liberties submitted a joint comment letter, along with 52 additional advocacy organizations, in support of the FTC’s proposed rule making on junk fees.
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• Representative DeLauro (D-CT-03) organized a letter signed by 87 additional House Dems in support of USTR Katherine Tai’s efforts to protect Congress’ role in setting domestic policy, specifically over digital competition, privacy, and artificial intelligence (AI.)
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• Amazon filed a lawsuit against the National Labor Relations Board after the NLRB accused it of retaliating against Staten Island warehouse workers. See Economic Liberties’ tracker of corporate lawsuits against agencies’ rule making and enforcement.
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• Wendy’s CEO claimed it plans to implement “surge pricing,” a form of dynamic pricing that will drive up prices during peak hours, immediately drawing criticism from Sen. Warren. 
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• The CFPB issued a circular clarifying digital comparison shopping tools that receive kickbacks to promote companies’ products could violate the Consumer Financial Protection Act.
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• The Federal Highway Administration and DOT launched an RFI to address competition concerns in the EV charger market, including their safety and technical compatibility. 
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• The Administration hosted a roundtable on lowering healthcare costs and transparency in the PBM industry, which featured remarks from Mark Cuban.

BRIEFINGS & EVENTS

• Economic Liberties is hosting an virtual event on March 20th at 2:00 PM ET to discuss the importance of private litigators’ role in antitrust enforcement. RSVP for “Private Rights of Action: How Consumers, Workers, and Businesses are Fighting Corporate Power” here. 
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• Vanderbilt Policy Accelerator is joining Economic Liberties for one of our policy talks on, “How to Fix Flying: A New Approach to Regulating the Airline Industry.” Join us for a conversation with Q&A Wednesday, March 13 at 12:30 here.