RECENT DEVELOPMENTS

Reining in Big Tech

• GOOGLE ON TRIAL. Google controls 88% of the online search market and 94% of searches on smartphones, in addition to 70% of the search ad market. In a historic lawsuit brought under the Trump administration, the DOJ argues Google maintains this monopolistic dominance through anticompetitive exclusionary contracts in violation of the Sherman Act. This is the first Sherman Act monopolization case against a technology giant since Microsoft in the late 1990s and could result in a Google breakup. The trial begins September 12th and is expected to last several weeks. Follow Economic Liberties’ Lee Hepner for daily updates and read BIG for more background on the case. Separately, Google has settled a lawsuit with 36 state attorney generals, representing 21 million consumers, for anti-competitive practices with the app store product. Epic Games and the Match Group are still set to try the same allegations in a trial beginning November 6th.
• AMAZON’S DAYS IN COURT. Amazon sells 80 percent of e-books and 90 percent of all books sold online. But when an Illinois bookseller sued Amazon and five major book publishers for price-fixing, a federal judge dismissed the suit, citing a lack of evidence. Amazon’s legal woes, however, continue. After a four-year investigation, the FTC is likely going to sue the company over charges imposed on sellers in its online marketplace, after a failed “last rites” meeting in August. Once filed, this will be the agency’s fourth case against Amazon.

Building Worker Power

• HOLLYWOOD GATEKEEPERS. The Writer’s Guild of America West (WGA West) is sounding the alarm about consolidated “gatekeeper” power in Hollywood among the big three content producers, distributors, and employers: Disney, Amazon, and Netflix. Abuse of this power has led WGA and SAG-AFTRA to strike, calling for fair compensation, better working conditions, and job security, especially in the wake of AI. FTC Chair Khan recently spoke to striking members in NYC and cited potential media competition issues in a recent podcast. WGA West is urging members to submit comments to the draft merger guidelines the FTC and DOJ released in July.

Airlines

• JETBLUE/SPIRIT PRICE HIKES? JetBlue wants to buy Spirit Airlines and become the fifth-largest air carrier in the U.S. The companies have promised the deal would enhance competition and benefit consumers. Recently revealed internal company estimates, however, show that JetBlue planned to raise prices by as much as 40% on Spirit flights after the deal closes. The DOJ’s case to block the merger starts trial on October 16th in Boston.

Improving Healthcare

• BIG PHARMA PAYS UP. Teva Pharmaceuticals and other manufacturers were found guilty of conspiring to increase generic drug prices, including critical cholesterol medications. Teva will pay a $225 million criminal penalty, the largest in history for a domestic antitrust case, along with providing $50 million worth of drugs to humanitarian organizations. If the manufacturers violate the settlement’s terms, they could be banned from supplying federal healthcare programs.
• ORGAN MONOPOLY BROKEN UP. Every day, 17 Americans die waiting for organ transplants, yet 28,000 viable organs per year are wasted, costing taxpayers billions. One company, United Network for Organ Sharing, controls the entire market through a single, federal contract and has a record of mismanagement. Led by Representative Bucshon, Congress recently passed the “Securing the U.S. Organ Procurement and Transplantation Network Act,” which would include more contractors in the Organ Procurement and Transplantation Network, improving the donation delivery process. The bill awaits President Biden’s anticipated signature.
• MEDICAL DEVICE MERGER WITHDRAWS. Of the top ten medical device manufacturers, 80% have been purchased by venture capital or larger suppliers. Last year, Cooper Companies, a medical device company, sought to acquire Cook Medical Reproductive Health, a manufacturer of minimally invasive reproductive devices for $875 million in an attempt to raise its “international fertility footprint.” The FTC raised concern over how the deal would impact reproductive health markets. Last month, Cooper Companies terminated the deal following the FTC’s inquiry.
• AMGEN/HORIZON SETTLES. Amgen’s proposed acquisition of Horizon, maker of specialty “orphan” drugs including for illnesses like thyroid disease, is cleared to close. The FTC had challenged the deal, fearing Amgen would leverage its large drug portfolio to protect Horizon’s monopolies over rarer drugs. The negotiated settlement ensures Amgen cannot engage in such anticompetitive behavior through rebates it pays to PBMs and insurance companies. In a statement, Chair Khan and FTC Commissioners Bedoya and Slaughter explained how the case fits into the agency’s evolving pharmaceutical merger program.

Blocking Mergers

• UNITED HEALTH ACQUISITION SPREE CONTINUES. After decades of consolidation, UnitedHealth is now the fifth-largest publicly traded company in the U.S. and the largest employer of physicians in the country, in addition to owning PBMs, pharmacies, and providing banking services. Now, the giant is trying to buy Amedisys, a home health and hospice provider, for $3.3 billion, and the DOJ has requested additional information, preventing the deal from closing for at least another 30 days.
• KROGER/ALBERTSONS FACING STATE SCRUTINY. Kroger and Albertsons combined would control more than 70% of the grocery market in 167 cities. Many predict the $24.6 billion Kroger-Albertsons merger would decrease wages while increasing grocery prices and the number of food and pharmacy deserts. The United Food and Commercial Workers International Union, representing 1.3 million employees, opposes the merger, and now state leaders are joining them. Recently, seven state treasurers and secretaries of state wrote letters urging the FTC to block the merger, and state AGs are raising concerns and asking for public comment. Kroger and Albertsons are seeking to divest some of their stores to fend off any FTC intervention.

Lowering Prices

• A JUNK FEE RECESS. Corporations make billions in junk fees — from $102.8 billion in 2022 on flight passengers, to $140 million in profit Booz Allen made from visits to federal public land. Lawmakers are taking notice and echoing the Administration’s call to end this consumer exploitation. Various representatives held events in their districts during recess, including Rep. Tlaib and Rep. Dingell calling for an end to medical junk fees. Economic Liberties also released a model Junk Fees Prevention Act to combat junk fees throughout the economy.
• SWIPE FEE RECKONING. Businesses pay a 2-3% swipe fee to process every credit card transaction and often pass these costs on to consumers. Two companies — Visa and Mastercard — control 80% of the networks managing these transactions. The Credit Card Competition Act, championed by Senator Durbin, would make the networks more competitive by prohibiting card issuers with over $100 billion in assets from restricting merchants’ use of payment card networks. Wall Street has spent millions against the bill, while businesses of all sizes support it, including both small businesses and Walmart. The bill has broad bipartisan and bicameral support, and a vote is expected by the end of the year.

In The Name Of National Security

• JOCKEYING FOR STEEL GIANT. In recent years, the United States has struggled to produce ammunition, a key need for national defense that relies on steel production. Consolidation in the steel industry has increased the cost of steel and hurt labor. The current bids for U.S. Steel could accelerate that consolidation. Cleveland-Cliffs, one of the big four steel producers, submitted a $7.3 billion bid that US Steel rejected, despite support from the United Steel Workers union. The bids are likely to continue and will face scrutiny from Biden enforcers.

ICYMI

• TransDigm, an airplane parts maker, overcharged the Pentagon for defense products by as much as 4,436%.
• Economic Liberties released a report breaking down the SCOTUS case questioning the Consumer Financial Protection Bureau’s funding structure. Oral arguments begin October 3rd.
• Meta has started blocking news content in Canada following the passage of the Online News Act and now has started pulling content in Europe.
• Congress expressed antitrust and consumer protection concerns about the ICE/Black Knight acquisition of two mortgage data providers. FTC negotiated a consent decree that will require divestiture of certain business lines to a competitor.
• Economic Liberties joined 32 organizations in a letter to express opposition to two appropriation provisions that seek to eliminate $50 million in funding for the Department of Justice’s Antitrust Division, and a proposed House rider impacting the merger guidelines.

BRIEFINGS & EVENTS

• September 21st from 12:30-1:00 ET Economic Liberties will host a virtual briefing on the root cause of pharmaceutical drug shortages — Group Purchasing Organizations — and what Congress can do to solve the crisis. Register here.
• Economic Liberties hosted an event with DOJ AAG Jonathan Kanter and FTC Chair Lina Khan on the Draft Merger Guidelines. They both encouraged attendees, including business owners, to submit comments on the Draft Guidelines by September 18.