Introduction

On June 28, the Supreme Court handed down its decision in Loper Bright Enterprises v. Raimondo, overruling Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. In its 1984 Chevron decision, the Court held that where an agency is tasked with enforcing a statute and the statute is ambiguous, with more than one reasonable interpretation, a court reviewing the agency’s action must defer to the agency’s reasonable interpretation of the statute. Chevron had become a bedrock of administrative law.

Although the implications of the recent Loper Bright decision are potentially far reaching, with some possibly important exceptions, they are likely limited in the antitrust enforcement context. Courts have generally not applied Chevron deference to the antitrust agencies’ interpretations of substantive antitrust statutes, such as the Sherman Act and the Clayton Act, which have typically been reflected in enforcement guidelines and policy statements rather than in rules or regulations.

Courts have, however, applied Chevron deference to the Federal Trade Commission’s (FTC) statutory interpretations of the Hart-Scott-Rodino Act (HSR Act), which covers merger reporting obligations. Moreover, the FTC has sometimes argued for Chevron deference in response to challenges to its enforcement under Section 5 of the FTC Act, which prohibits unfair methods of competition and unfair and deceptive acts.

Until this year, the FTC had not promulgated substantive regulations proscribing conduct under the “unfair method of competition” prong of Section 5. The FTC recently promulgated a rule banning most non-competes. On July 3, a Texas district court in Ryan LLC v. Federal Trade Commission preliminarily enjoined the non-compete rule from going into effect as applied only to the plaintiffs in that case. The FTC has also proposed sweeping changes to the HSR notification form and may soon issue a final new form.

We briefly explain the Supreme Court’s decisions in Chevron and Loper Bright before discussing how the Loper Bright decision is most likely to affect federal antitrust agency agendas. We also discuss the Ryan LLC decision in light of Loper Bright.

Background

a) Chevron Deference

In Chevron, the Supreme Court found that where Congress gives an administrative agency authority to enforce a statute, it implicitly delegates to that agency authority to interpret ambiguous terms in that statute.¹ Chevron went on to hold that courts should therefore defer to the agency’s interpretation because the agency is more knowledgeable than a court about the subject matter that the statute covers.² Under Chevron, courts engaged in a two-step analysis, asking first, whether the statute was ambiguous and susceptible to multiple reasonable interpretations, and second, whether the agency’s interpretation—as embodied in final rules or administrative adjudications—was a reasonable interpretation of the statute’s ambiguous language. Ultimately, the agency’s interpretation would stand so long as the reviewing court found that it was reasonable, even if the reviewing court would have reached a different interpretation.

b) Loper Bright Decision

The Court in Loper Bright overruled Chevron and concluded that courts must interpret statutes de novo, and agency interpretations are not entitled to deference. The Court found that even where a statute is “ambiguous,” there is a single “best reading” of the statute that courts, not agencies, are responsible for determining.³ Although the Court acknowledged that agencies have experience that can be relevant to interpreting statutes that they enforce, it went on to find that agencies’ statutory constructions are entitled to “respect” only, not deference.⁴ Where Congress expressly authorizes an agency to interpret the terms in a statute (as it has occasionally done, including in the HSR Act), Loper Bright holds that courts must still “independently interpret the statute” and “fix[] the boundaries of the delegated authority.”⁵ How courts will approach express delegations of authority after Loper Bright remains an open question.

Implications for Antitrust Enforcement

Loper Bright is likely to have only limited implications for antitrust enforcement, although there may be some important exceptions. In most instances, Loper Bright will not change courts’ practices from the Chevron era. In the almost four decades that Chevron was the law, courts did not give formal deference to the antitrust agencies’ interpretation of the antitrust statutes. For example, federal courts have stated that the FTC and Department of Justice (DOJ) merger guidelines, which articulate the federal antitrust agencies’ merger enforcement views, are at most persuasive authority and are not binding on the courts.⁶ And, two years after Chevron, the Supreme Court stated that what constitutes an “unfair method of competition” under Section 5 of the FTC Act is “for the courts to resolve,” and courts are to accord the FTC’s interpretation of that phrase only “some deference.”⁷

That said, there are a handful of areas where courts have applied Chevron deference to FTC actions:

• The HSR Act—which contains provisions requiring notification to the FTC in advance of a merger—includes a provision providing that the FTC may “define the terms used” in the act.⁸ Courts have deferred under Chevron to an FTC rule that defined, for example, what constitutes an “asset” for purposes of the act. ⁹
• Courts have also suggested, largely in dicta, that Chevron deference may apply to the FTC’s interpretations related to its own authority under Section 5 of the FTC Act.¹⁰

The FTC is facing, or is likely to face, in two areas near-term challenges to interpretations of statutes it administers: a rule banning most non-compete clauses in employment agreements enacted under Section 5 and sweeping proposed changes to the HSR Act reporting form.

a) Non-Compete Final Rule

Indeed, last Wednesday, a court in the Northern District of Texas granted plaintiffs’ motion to preliminarily enjoin the non-compete rule from going into effect.¹¹ While the FTC did not argue for Chevron deference, the district court cited Loper Bright for the proposition that a court interpreting a statute must give effect to legislative intent.¹² The district court ultimately held that “the text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition[.]”¹³ The court also found that the non-compete rule should be preliminarily enjoined on another basis: the rule likely is arbitrary and capricious under the Administrative Procedure Act, given that it is “unreasonably overbroad” and lacks “reasonable explanation.”¹⁴

The district court limited preliminary relief to only plaintiff Ryan LLC and plaintiff-intervenors US Chamber of Commerce, Business Roundtable, Texas Association of Business, and Longview Chamber of Commerce,¹⁵ in part due to concerns about whether the associational plaintiffs had satisfied the requirements for broader injunctive relief on behalf of their members.¹⁶ The court is currently set to rule on the merits on or before August 30, 2024, less than a week before the non-compete rule is scheduled to go into effect. And the Eastern District of Pennsylvania is currently scheduled to issue a decision by July 23, 2024, on a separate motion to preliminarily enjoin the non-compete rule.¹⁷ While the recent decisions in Loper Bright and Ryan cast doubt on whether the FTC’s non-compete rule will take effect on September 4, in the absence of a nationwide injunction it remains prudent for employers to start (or continue) preparing for the law to take effect as planned (e.g., drafting non-compete notices, modifying overbroad NDAs and other provisions).

b) HSR Act Proposed Rule

The FTC’s proposed rule under the HSR Act relies, in part, on its rulemaking authority under the act and the express delegation of authority to it to define the terms in the act.¹⁸ The FTC has previously relied on Chevron deference to support its HSR rules, as noted above. How courts will approach the express delegation of authority to the FTC after Loper Bright remains an open question, but courts will likely be less willing to defer to the FTC on questions of statutory interpretation.

Conclusion

While the direct effects of Loper Bright on enforcement of the core antitrust laws are likely to be limited, the decision illustrates the Supreme Court majority’s strong disfavor of perceived overreach by the administrative state. It remains to be seen if and how the Court will address various challenges related to antitrust enforcement authority, including the ongoing litigations over the FTC’s non-compete rule. WilmerHale will continue to closely monitor developments in this area and will provide further updates and insights.

Footnotes

1. Chevron, U.S.A., Inc. v. Nat. Resources Defense Council, Inc., 467 U.S. 837, 843–44 (1984).

2. Id. at 844–85.

3. Loper Bright Enters. v. Raimondo, Slip Op. at 23.

4. Loper Bright Enters. v. Raimondo, Slip Op. at 21, 25.

5. Loper Bright Enters. v. Raimondo, Slip Op. at 17–18, 35.

6. E.g., United States v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 2017) (“[T]he court is not bound by, and owes no particular deference to, the [Merger] Guidelines, [but] this court considers them a helpful tool, in view of the many years of thoughtful analysis they represent, for analyzing proposed mergers.”).

7. FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 454 (1986).

8. 15 U.S.C. § 18a(d)(2)(A).

9. Pharmaceutical Research & Manufacturers of America v. FTC, 790 F.3d 198 (D.C. Cir. 2015).

10. LabMD, Inc. v. FTC, 678 F. App’x 816, 820 (11th Cir. 2016) (“We recognize that the FTC’s interpretation of § [5](n) is entitled to Chevron deference, if it is reasonable.”); see also FTC v. IFC Credit Corp., 543 F. Supp. 2d 925 (N.D. Ill. 2008) (citing Chevron and deferring to the FTC’s interpretation under Section 5(n) that the term “consumer” includes businesses that purchase a good).

11. Ryan LLC v. Fed. Trade Comm’n, Slip Op. at 1–2.

12. Ryan LLC v. FTC, Slip Op. at 13.

13. Ryan LLC v. FTC, Slip Op. at 1.

14. Ryan LLC v. FTC, Slip Op. at 21.

15. The district court declined to extend injunctive relief to members of plaintiff-intervenors. Ryan LLC v. FTC, Slip Op. at 31.

16. Ryan LLC v. FTC, Slip Op. at 31.

17. ATS Tree Servs., LLC v. FTC, Dkt. No. 15, May 21, 2024.

18. Proposed Rule (June 29, 2023), https://www.federalregister.gov/documents/2023/06/29/2023-13511/premerger-notification-reporting-and-waiting-period-requirements.