RECENT DEVELOPMENTS

Building Worker Power

• NLRB’S NONCOMPETES CRACKDOWN. One in five Americans are subject to noncompete agreements, which hinder entrepreneurship and depress wages by stopping workers to switching to better jobs. In May, National Labor Relations Board (NLRB) General Counsel, Jennifer Abruzzo, issued a memorandum suggesting noncompetes were likely an unfair labor practice. The NLRB Cincinnati regional office has acted on the memo and filed a case claiming an Ohio-based spa, Juvly Aesthetics, illegally forced employees to sign non-compete contracts (in addition to TRAP agreements). The case has a hearing on November 28th, and could potentially turn GC Abruzzo’s memo into binding legal precedent. Separately, the FTC is expected to issue a final rule to ban noncompetes in 2024, but, in the interim, companies like Destination Pet are also voluntarily eliminating the clauses from their employment contracts.
• KAISER WORKERS STRIKE. 85,000 employees of Kaiser Permanente are striking for three days, the largest strike for healthcare workers in U.S. history. Kaiser, a tax-exempt, non-profit healthcare behemoth, owns 39 hospitals, mostly in California, where they control half of the private insurance market. The organization tallies $95 billion in revenue annually. But Kaiser workers, including medical assistants and pharmacists, are citing staffing shortages and low wages (known harms from hospital consolidation) as the reason for the strike. This phase of the strike will only last until October 7th, but the Coalition for Kaiser Permanente Unions says a longer strike is possible in November if they don’t reach a dea l.

Reining in Big Tech 

• U.S. V. GOOGLE KICKS OFF. Google is currently on trial in a case from the DOJ claiming it controls 90% of the internet search market in part from anticompetitive, multi-billion-dollar exclusivity contracts with companies like Apple. The first weeks have seen testimony from Microsoft’s CEO, claiming Google’s control over search is “ubiquitous.” As reported in the NY Times, the trial has been plagued by transparency issues, due to the judge’s decisions around confidentiality pursuant to rules from the Judicial Conference that Congress has the authority to change. Recent polling confirms 60% of Americans across the political spectrum believe Google has too much power.  Economic Liberties is providing regular trial updates and created a fact sheet on the case. Subscribe to Big Tech on Trial for more detailed, daily analysis.
• ​FTC V. AMAZON. The FTC and 17 state attorney generals, led by NY Attorney General Tish James, filed a lawsuit last week against Amazon for illegally protecting its monopoly of the online marketplace. The FTC alleges Amazon has used anticompetitive tactics that take as much as 50% of seller revenue, raise prices, and worsen the consumer experience. Check out FTC Chair Khan discussing the case on CNBC here. It will be some time before the case goes to trial, but heavily redacted court documents foreshadow likely transparency issues in this Big Tech case as well.

Airlines

• JETBLUE/SPIRIT TRIAL IMMINENT.  On October 16th, trial will begin in Boston for DOJ’s case to block JetBlue’s proposed acquisition of Spirit Airlines. Research suggests, and JetBlue’s own internal documents reveal, the merger would raise consumer prices by 40%. In a rare move, the Department of Transportation also publicly announced their support of DOJ’s efforts to block the merger. The trial is expected to last for several wee ks. Separately, American Airlines is appealing its loss against the DOJ in District Court over their “Northeast Alliance” with JetBlue, in which the two companies pooled revenue and reduced competition.

Improving Health Care

• PRIVATE EQUITY ROLL-UPS UNDER FIRE.  U.S. Anesthesia Partners (USAP), a corporation created by NY private equity firm, Welsh Carson, controls 43% of the Texas anesthesia provider market. The FTC is suing USAP and Welsh Carson for engaging in anticompetitive schemes, including a practice of “seria l acquisitions” or “roll-ups” of other large anesthesia providers in Texas. Even United Healthcare reports paying rates 95% above the Texas median to USAP providers as a result of their market power. This suit is the first of its kind from an antitrust regulator. Read more about serial acquisitions in this r eport from Economic Liberties.
• CLEANING UP THE ORANGE BOOK. Inhalers cost Americans upwards of $100, though only about $20 overseas, and the FDA’s Orange Book, which lists approved drugs and devices, is a big reason why. Manufacturers make insignificant product changes to maintain patent monopolies, and then list these trivial patents in the Orange Book to game FDA regulations and block generics, all to keep prices high. The FTC, supported by the Food and Drug Administration, issue d a policy statement clarifying they will investigate improper listings as being anticompetitive. The Administration’s action follows Senator Warren’s and Representative Jayapal’s letter urging the FTC to investigate Orange Book manipulation. Read my recent op-ed with Erik Peinert in The Hill and Economic Liberties’ The Costs of Pharma Cheating to learn more about this issue.
• INDEPENDENT PHARMACISTS TAKE ON CVS. Pharmacy Benefit Managers (PBMs) produce an array of harms, including blocking independent pharmacies from earning enough money to keep their businesses open. One Iowa pharmacist is leading the charge to fight back. In a class action lawsuit against CVS Health and its PBM, Caremark Rx, the pharmacy owner is claiming CVS/Caremark violated antitrust law by collecti ng unfair fees to fill and dispense prescriptions for Medicare beneficiaries. If successful, CVS would owe the class hundreds of millions, if not billions, of dollars.

Blocking Mergers

• THOUSANDS SUBMIT MERGER GUIDELINE COMMENTS. The DOJ and FTC’s proposed revision of the Merger Guidelines would require the disclosure of worker impacts and private equity investments, among other changes. Over 3,000 people, including Hollywood writers, farmers, and small businesses submitted comments. Economic Liberties wrote two comment letters. The first supports the guidelines’ cited legal precedent against unfounded criticism, and the second details the need for labor harms as consideration during merger review.
• LOUISIANA AG STOPS HEALTH INSURER MERGER. Blue Cross, Blue Shield of Louisiana (BCBSLA) is the state’s largest health insurer, serving 1.9 million policyholders, including many Medicaid recipients. Elevance, a national corporation operating Blue Cross, Blue Shield plans in 14 states with 47 million members, sought to acquire BCBSLA for $2.5 billion. Louisiana AG Landry was investigating the deal for antitrust concerns, but after the regulatory scrutiny, the companies announced they are dropping the deal.

Lowering Prices

• DOJ TARGETS MEAT PROCESSOR COLLUSION. The company Agri Stat provides reports, including sensitive information on competitor pricing, to meat processors controlling nearly 90% of chicken sales, 80% of pork sales, and 90% of turkey sales. Agri Stat encouraged participating processors to “just raise your prices” and restrict output based on the company’s pricing data. Now, the DOJ is suing Agri Stat for collusion in the District of Minnesota. The case follows other DOJ lawsuits in the agricultural sector against poultry processors for collusion and suppressing wages, both leading to multi-million dollar settlements.
• CFPB GOES TO SCOTUS. The Consumer Financial Protection Bureau (CFPB) has returned $17.5 billion to consumers. Payday lenders, led by Consumer Financial Services of Americ a (CFSA), have paid over $100 million in fines since CFPB was created. They are now suing to change CFPB’s funding to congressional appropriations. SCOTUS heard oral arguments this week, but even conservative justices seemed skeptical of the payday lenders’ case. SCOTUS is expected to issue a decision by next summer.
• RIGHT TO REPAIR ADVANCES. California passed a right-to-repair law that will give consumers and small businesses access to tools, software, and documentation to fix their own products costing more than $100 for up to seven years. The California bill follows similar legislation that passed in New York and Minnesota. In Congress, Representative Marie Gluesenkamp Perez introduced a right to repair bill that applies specifically to agricultural equipment.

In The Name Of National Security

• LAWMAKERS QUESTION DEFENSE DEAL. A recent Department of Defense report named the lack of competition in the industry as a “serious consequence for national security,” and suggested stronger merger oversight to address the crisis. Yet, the FTC approved L3Harris Technologies’ $4.7 billion purchase o f Aerojet Rocketdyne, the only large independent producer of rocket and missile engines in the U.S. Senator Warren and Representatives Garamendi and Pocan are probing the Defense Department for more information about their role in the deal’s approval and recently questioned Defense Secretary Lloyd Austin about ways to oversee the corporations after they combine.

ICYMI

• President Biden announced U.S. Trade Representative and Minister of Trade Katherine Tai will join his Competition Council.
• ​U.S. Attorney General Merrick Garland committed to returning the $50 million to the DOJ Antitrust Division if the proposed cut passes the appropriations process.
• Economic Liberties joined 70 other organizations in sending a letter to the FTC asking enforcers to block the Kroger/Albertsons merger.
• The FTC will move forward with an in-house trial challenging Microsoft’s acquisition of Activision. The deal will, however, likely still move forward.
• Senator Warren and Representative Jayapal wrote a letter to the Department of Justice expressing concerns over UnitedHealth Group’s proposed acquisition of Amedisys for $3.3 billion.

BRIEFINGS & EVENTS

• Economic Liberties hosted a round table in recognition of the Congressional Black Caucus Foundation’s annual legislative conference, check out our recap here.
• On October 19th, Economic Liberties will host a virtual briefing from 12:30-1:00 ET on how Group Purchasing Organizations (GPOs) contribute to drug shortages and harm consumers. RSVP here.