The members of BakerHostetler’s Antitrust and Competition Team are pleased to present these brief updates from the conference sessions on Day 2 at this week’s ABA Antitrust Spring Meeting in Washington, D.C.
Not Your Parents' HSR Regime
This panel discussion concerned all facets of the premerger notification regime, including state premerger laws. The highlight of the panel was its thorough analysis of the new HSR form, unveiled earlier this year.
The changes to the form are extensive. We have previously written about these changes here: https://www.bakerlaw.com/insights/ftc-unveils-sweeping-modifications-to-hsr-merger-notification-form/.
The new form requires substantial additional information and documents. The FTC estimates the rules will cause an average of approximately 70 additional hours of attorney time per filing. The panelists reported that this has been an underestimate to date. They have noticed transacting parties building in additional lead time and purchase agreements including longer duration post-signing deadlines to file. Ambiguities and subjectivity in numerous areas of the final rule are also causing heartburn for transacting parties.
The Future of Healthcare Mergers
Healthcare remains an industry of heightened importance in antitrust. Following the withdrawal of the healthcare-specific merger guidelines, the only active guidance from the government that remains is the 2023 Merger Guidelines. The enforcers on this panel were enthusiastic about the 2023 merger guidelines and the withdrawal of healthcare-specific guidelines. They viewed the prior industry-specific guidelines as outdated and insufficient to identify anticompetitive transactions. Now the 2023 guidelines provide a common set of rules for both transacting parties and the enforcers.
The enforcers on the panel also stressed that local factors, including geography and other market idiosyncrasies, can matter in healthcare mergers. And at the state level, competition concerns can be addressed in conjunction with other state regulatory reviews required in advance of closing.
Looking ahead, while the enforcers certainly care about price effects, quality of care is also a paramount issue in healthcare transactions. Proving that the transaction increases quality of care is, and likely will remain, very difficult for transacting parties. Cross-market mergers – where dominance in one market can be leveraged in another – are also likely to be an enforcement priority in the future.
Back to the Future? Antitrust Under the New Administration
At a panel discussing antitrust enforcement under the new administration, panelists speculated that the FTC and the DOJ could be more interested in settlements when challenging mergers. Although the panelists noted that the future remains unclear, they speculated that the new administration may seek more divestitures and other settlements, as compared to the last administration which more frequently sought to block mergers. The panelists also noted that the reduction in staff at the FTC and DOJ could impair the agency’s ability to pursue cases, which might make settlements a more attractive option for the agencies. However, the Attorney General for the State of Colorado, the only state enforcer on the panel, stressed that states would continue to pursue robust antitrust enforcement.
Revenge of the Refusal to Deal?
Antitrust practitioners, professors and regulatory experts gathered for this panel to discuss the refusal to deal and its viability as a ground for antitrust liability. The refusal to deal – the decision of one competitor not to deal with another in conducting its business – has long been recognized as a right of competitors to deal with the parties of their choosing. As the panelists opined, the refusal to deal makes plain that spite is not an antitrust violation.
The panelists recounted the extensive legislative history of the nation’s antitrust laws, particularly the Sherman Act, which contains negative proscriptions but notably does not compel competitors to take action that would benefit their counterparts. But while the refusal to deal is a seemingly well-protected right of competitors, there are some cases where a refusal to deal might open the door to liability, such as in the U.S. Supreme Court’s decision in Aspen Skiing. Such cases, however, have been described by the Supreme Court as demarking the “outer bounds of Sherman Act liability.”
Pursuant to a strong history of case law recognizing the refusal to deal, defendants often vigorously seek to characterize allegedly monopolistic conduct as a simple refusal to deal in their cases, while plaintiffs argue that the conduct at issue is something more. For example, the issue has arisen in some of the “Big Tech” cases, where plaintiffs have argued that defendant companies’ actions amount to “conditional dealing.” But despite these fights over “semantics,” as one panelist phrased it, courts have reaffirmed the core principles regarding refusal to deal by refusing themselves to depart from well-settled precedent.
The future of the law surrounding refusals to deal could change. New York is currently considering a bill that would forbid the “abuse of dominance,” aimed at companies that wrongfully use their market position to their advantage to the detriment of competitors. Under the bill, a refusal to deal is expressly included as an abuse of dominance. California is considering similar legislation, as the California Law Commission recently suggested that the legislature pass laws prohibiting abuse of dominance. As state legislation continues to develop, it is worth keeping an eye on refusals to deal and their potential to give rise to antitrust scrutiny.
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