Under the Biden Administration, the FTC and DOJ have voiced a commitment to an expansive enforcement of antitrust law. The recent confirmation of Judge Ketanji Brown Jackson to assume Justice Breyer’s position on the Supreme Court raises the question of how antitrust jurisprudence might develop against that backdrop. Those questions loom particularly large given that Justice Breyer’s antitrust opinions have not reflected a predictable theoretical approach to antitrust issues facing the Court; instead, they have tended to manifest the pragmatism that guides his judicial philosophy.
As one former clerk recently wrote, one of Justice Breyer’s more frequently asked questions was “But is that practical?” Having served as Assistant U.S. Attorney General for Antitrust from 1965 to 1967, Justice Breyer came to the judiciary with antitrust enforcement experience and practical substantive training in the field. On the Court, Justice Breyer has remained committed to considering the real-world applicability of the Court’s rulings—perhaps even more than the economic evidence underlying the Court’s decisions—in the antitrust context.
Three major antitrust opinions authored by Justice Breyer reflect his insistence on setting forth pragmatic solutions to the adjudication of competition issues. Such solutions, the Justice’s opinions suggest, depend heavily on the particular circumstances of a case and require a court to scrutinize the underlying facts. In Federal Trade Commission v. Actavis, Justice Breyer showed his pragmatism in applying a sliding-scale approach to the evaluation of a “reverse payment” settlement agreement between a pharmaceutical patentee and generic competitors. In AMG Capital Management v. FTC, Justice Breyer ruled that statute-specific analysis is necessary before monetary relief can be awarded in actions under the Federal Trade Commission Act (“FTCA”) where injunctive relief is authorized. And in his dissenting opinion in Leegin Creative Leather Products, Inc. v. PSKS, Inc., Justice Breyer advocated for application of the per se standard because of the practical difficulty of applying the rule of reason in the context of minimum pricing agreements. While his opinions would call for a range of different outcomes, in each case Justice Breyer considered the facts and economics of the issues to support an approach that he considered practical in its application, such that it would provide guidance to parties making decisions, and to lower courts adjudicating claims of anticompetitive conduct.
Leegin Creative Products, Inc. V. PSKS, Inc. (2007)
In Leegin Creative Products, Inc. v. PSKS, Inc., the Court considered anew whether it is per se illegal under Section 1 of the Sherman Act for a manufacturer to agree with its distributor to set mandatory minimum prices for its products. Acknowledging its application of the rule of reason to other vertical restraints manufacturers impose on distributors, the Court overruled its 1911 decision in Dr. Miles Medical Co v. John D. Park & Sons Co. to determine that pricing agreements like the one at issue are to be judged by the “rule of reason.”
The majority in Leegin rested its opinion in large part on the economic analysis provided by experts in the case. Quoting precedent, the Court noted that “[r]esort to per se rules is confined to restraints, like those mentioned, ‘that would always or almost always tend to restrict competition and decrease output’”; accordingly, the majority looked to the experts to determine the likelihood of anticompetitive effects of the types of agreements at issue. Justice Kennedy’s opinion emphasized that “economics literature is replete with procompetitive justifications for a manufacturer’s use of resale price maintenance,” and held that “it cannot be stated with any degree of confidence” that the agreements at issue would almost always restrict competition.
In his dissent, Justice Breyer acknowledged the economic analysis highlighted by the majority opinion, and noted that such studies “can help provide answers” to questions of antitrust law. But he underscored that “law, unlike economics, is an administrative system” that depends upon how it is “applied by judges and juries in courts and by lawyers advising their clients.” Justice Breyer’s dissent focused on the difficulty of applying questions designed to “help courts separate instances where anticompetitive harms are more likely from instances where only benefits are likely to be found.” As a result, he favored a “bright-line rule” to adjudicate the “difficult” problem identified by the economists on whose analyses the majority rested.
FTC v. Actavis (2013)
Actavis required the Court to consider the for the first time the legality of reverse payment (or “pay-for-delay”) settlement agreements. As we have written before, such agreements settle pharmaceutical patent infringement cases brought under Paragraph IV of the Hatch Waxman Act, whereby a patentee sues a generic competitor for infringement. Rather than pursue the claims of patent infringement and the validity of the patent at issue, the patentee—the plaintiff—agrees to pay a monetary settlement to the generic competitor defendant (and/or agrees to provide something else of value to the defendant), despite the fact that the competitor has no money damages against the patentee. In exchange, the generic competitor agrees to delay the introduction of its product to the market for a stipulated period of time.
Writing for the majority, Justice Breyer did not conclude that such settlement agreements should be treated as per se violations of the Sherman Act. Nor did the majority affirm the 11th Circuit’s decision, which had found no antitrust liability because the patentee was operating within the patent’s exclusionary period, and allowing market entry within that period. Instead, Justice Breyer’s opinion invoked a rule of reason standard, but noted that reverse payment agreements merit greater scrutiny than other settlements because they involve the parties agreeing to the exclusion of a competitor from the market for a period of time.
A believer in the “sliding scale in appraising [the] reasonableness of restraint of trade,” Justice Breyer proceeded to outline a “rule of reason” analysis for evaluating reverse payment settlements for potential antitrust violation. While his application of the rule of reason in Actavis departs from his support for the per se standard in Leegin, Actavis in fact reflects the same concern with providing standards that parties and courts can follow. Indeed, the Actavis opinion provided the Eleventh Circuit with guidance on relevant factors for consideration, highlighting the following: the payment’s “size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification.”
Some have highlighted Actavis’s reference to “large and unjustified” payments, finding anticompetitive conduct wherever a so-called reverse payment meets that description. For example, the Fifth Circuit imposed a more bright-line rule in Impax v. FTC, holding that large, unjustified payments alone are sufficient to support a finding that the agreement was anticompetitive. Impax filed a petition for a writ of certiorari which was denied on December 14, 2021; accordingly, the Court will not revisit Actavis during Justice Breyer’s tenure.
AMG Capital Management v. FTC (2021)
AMG Capital Management v. FTC reflects another fact-dependent antitrust opinion authored by Justice Breyer for a unanimous Court in 2021. AMG Capital Management is one of Scott Tucker’s many payday loan companies that provided high-interest, short-term loans to consumers, with certain terms and conditions allegedly buried across various long, confusing agreements. The FTC sued AMG in Nevada under the FTCA, seeking more extensive relief than the typical injunctive relief available under § 13(b): full disgorgement of AMG’s profits. The district court, affirmed by the Ninth Circuit, ultimately awarded $1.27 billion in equitable relief, payable directly to the FTC.
The Supreme Court held that the FTC was not authorized to seek restitution or disgorgement under § 13(b), overturning what would have been the largest disgorgement settlement in the FTC’s history. Justice Breyer’s decision explains that, where injunctive relief is available by statute, a court cannot automatically confer monetary relief as well; rather, it must undertake a statute-specific analysis to determine whether the statute authorizes the award of monetary relief. In the case of § 13(b), the Court determined that monetary relief was not permitted and disgorgement was not the proper remedy. In so holding, Justice Breyer’s opinion rejects the FTC’s argument that prior cases and amendments reflect Congressional acquiescence to the grant of financial awards under § 13(b).
As Justice Breyer acknowledged in AMG, the FTC has already asked Congress for further remedial authority. With the appointment of Lina Khan as Chair of the FTC and President Biden’s July 2021 Executive Order on Promoting Competition, the Biden Administration has signaled it is ready to usher in an era of more aggressive antitrust enforcement.
* * *
The Senate recently confirmed President Biden’s nomination of Judge Jackson, a former clerk of Justice Breyer, to succeed him on the Court. During her recent confirmation hearings, Judge Jackson was asked about her antitrust positions, with Senator Amy Klobuchar, a proponent of more sweeping antitrust legislation, initiating the questioning. Judge Jackson appeared to agree with Senator Klobuchar’s views that judges may be reading antitrust laws too narrowly, stressing that judges should not substitute their own policy preferences when interpreting laws. She also echoed some of the Senator’s concerns, stating “antitrust laws protect competition and, as you said, therefore protect consumers and competitors and the economy as a whole.”
Given Judge Jackson’s limited record so far on antitrust issues, her influence on the Court’s competition jurisprudence—and whether her opinions will depart from Justice Breyer’s pragmatism—remains to be seen.
