Under the Biden administration, antitrust enforcement in the U.S. has risen to a level not seen in at least 40 years. The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) are now opening more investigations, bringing more cases, and using more aggressive theories than in recent memory.
Substantial updates and revisions to key competition enforcement policies have accompanied the increased enforcement. Compliance and in-house professionals at companies of all shapes and sizes attempting to keep pace with these changes should consider four key points as they update their compliance policies in response to these changes:
Key points
Antitrust enforcement continues in the labor markets
In 2016, DOJ and FTC released its Antitrust Guidance for Human Resources Professionals in which the agencies announced, for the first time, that DOJ would criminally prosecute no-poach and wage-fixing agreements not sufficiently tied to separate legitimate collaborations.[8] DOJ filed its first wage-fixing case in December 2020 and has since filed six more wage-fixing and no-poach cases.[9] In April 2022, DOJ obtained its first conviction in a labor-related case when a defendant in United States v. Jindal was found guilty of obstructing the underlying FTC investigation (the defendant and his codefendant were acquitted on the antitrust charges).[10] Despite this conviction, DOJ has had difficulty obtaining convictions in the other criminal labor market cases that have gone to trial. All have resulted in acquittals.
Notwithstanding these trial losses in the no-poach cases, DOJ has consistently defeated pretrial motions to dismiss, affirming the underlying legal theory that these cases can be prosecuted criminally under the antitrust laws. Indeed, Kanter and other senior officials have said repeatedly that they intend to continue bringing these cases where the evidence supports it. In a 2023 speech at the American Bar Association Annual Antitrust Spring Meeting, Kanter said that criminal labor cases are “righteous cases, and we will continue, when the facts and the law support it, to bring those cases.”[11]
In addition to no-poach enforcement, and consistent with guidance in the 2021 executive order, FTC proposed a rule in January 2023 that would ban employer–employee noncompete agreements across the country, with only a few limited exceptions.[12] This proposed rule remains pending; it is anticipated to become final in 2024.
Given DOJ and FTC’s continued commitment to enforcing the competition laws in labor markets, companies should enhance their compliance to avoid engaging in conduct that could be prosecuted as a criminal violation and continue to monitor developments related to noncompete agreements. In addition to updated policies, these enhancements should include ensuring that the right company personnel are educated on these issues, including, for example, human resource professionals who deal with hiring.
Antitrust enforcement of information sharing, AI, and algorithms
In February 2023, DOJ withdrew three antitrust policy statements related to information sharing, which means that there are no longer “safe harbors” for competitor companies to share competitively sensitive information.[13] Principal Deputy Assistant Attorney General Doha Mekki said the division is particularly concerned about the use of “data aggregation, machine learning, and pricing algorithms” that may lead to “tacit or express collusion.”[14] To anticipate future trends and challenges, DOJ has hired data scientists, computer scientists, and economists to identify anticompetitive conduct in new technologies. DOJ has also announced an artificial intelligence (AI) initiative called “Project Gretzky,” which will allow DOJ to use “its own algorithms to identify patterns that indicate criminal agreements, such as bid-rigging in public procurement or price-fixing in online markets.”[15] In view of the current focus on these issues, companies should update their antitrust compliance policies and programs to educate employees on the ways in which sharing competitively sensitive information, including via AI tools, can create antitrust risks. Companies should also consider their own efforts to monitor and control their developing AI and machine learning technologies.
Antitrust enforcement in public procurement
DOJ is also focused on preventing and detecting collusive conduct in public procurement. In November 2019, DOJ’s Antitrust Division formed the Procurement Collusion Strike Force (PCSF)—an interagency law enforcement effort that deters, detects, investigates, and prosecutes antitrust crimes, such as bid-rigging, price-fixing, and other collusive schemes that undermine competition in government procurement at all levels of government.[16] The PCSF is a partnership among the Antitrust Division, multiple U.S. attorneys’ offices, the Federal Bureau of Investigation, and the inspectors general for multiple federal agencies.[17] In the past four years, the PCSF has trained more than 30,000 government employees, opened more than 100 investigations, prosecuted over 60 companies and individuals, obtained more than 45 guilty pleas and convictions, and secured more than $60 million in criminal fines and restitution.[18]
Last September, the PCSF announced it had uncovered a number of collusive schemes targeting U.S. defense spending, set-aside programs, and infrastructure contracts. Noting the trillions of dollars the federal government expects to distribute in government contracts, the PCSF also announced that it is collaborating with law enforcement agencies domestically and internationally to conduct proactive investigations in key sectors of the American economy.[20] To do so, the PCSF stated it is deploying more aggressive tools, such as wiretaps, undercover agents, data analysis, and human source development.[21] The PCSF also warned “heavily regulated industries” and “companies that are heavily dependent upon government contracts” that criminal penalties in the government contracts space will not be limited to debarment, but will likely mirror the extraordinary penalties imposed by DOJ in the generic drug industry, which included, for the first time, mandatory business-line divestitures.[22] The PCSF is on high alert for potential misconduct in government contracting. In this current regulatory environment, government contractors should establish an effective and tailored compliance program.
New merger guidelines and M&A risk
In July 2023, DOJ and FTC issued draft merger guidelines that are expected to replace the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines.[23] The draft guidelines—which are expected to be finalized in early 2024—place a greater emphasis on targeting mergers that may increase the likelihood of coordinated interactions among competitors by closely scrutinizing transactions involving companies with a history of collusion or anticompetitive information sharing. The new guidelines also place a greater emphasis on the impact of mergers on labor markets. This focus on both coordinated effects and labor markets increases deal risk for companies with insufficient compliance measures in place to address the no-poach agreements discussed earlier. Last fall, DOJ also announced a M&A safe harbor policy for acquiring companies.[24] Under this policy, companies that self-disclose misconduct found in the acquired company within six months of the closing can qualify for a declination. Antitrust compliance is important for companies to consider when pursuing M&A transactions. By timely self-disclosing criminal misconduct discovered during the M&A process, acquiring companies can avoid costly and disruptive enforcement actions.
Best practices and considerations for establishing an effective compliance program
In 2019, DOJ published guidance to antitrust prosecutors on how to evaluate corporate compliance programs. This document—which tracks other, similar guidance issued by DOJ components prosecuting other violations (e.g., Foreign Corrupt Practices Act violations)—is an essential tool for creating or enhancing a compliance program to prevent and detect antitrust violations.[25] In the detailed guidance document, DOJ does not endorse a strict, formulaic approach to assessing the effectiveness of antitrust compliance programs. Instead, it takes a practical approach, framed by three basic questions: “1) Does the company’s compliance program address and prohibit criminal antitrust violations? 2) Did the antitrust compliance program detect and facilitate prompt reporting of the violation? 3) To what extent was a company’s senior management involved in the violation?”[26] These questions are designed to help prosecutors determine whether a compliance program “is merely a ‘paper program’ or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner.”[27] From there, the guidance goes through nine factors that guide the evaluation that DOJ prosecutors will conduct.
DOJ’s emphasis on compliance—consistent with recent guidance issued by the deputy attorney general[28] —makes it more critical than ever for companies to have in place an active and effective compliance program that demonstrates a clear and unambiguous commitment to antitrust compliance. The benefits of an effective antitrust compliance policy are clear: prevention, early detection to minimize harm, and timely self-disclosure to mitigate subsequent legal risk. As compliance and in-house professionals continue to update their policies, it is imperative to do so in the context of an administration with the resources and determination to aggressively enforce antitrust laws.
*Richard Powers is a Partner at Fried, Frank, Harris, Shriver & Jacobson LLP in New York, New York, USA, Daniel Tracer is Head of Financial Regulation at Neuberger Berman in New York, New York, USA, and Renee Turner is an Associate at Fried, Frank, Harris, Shriver & Jacobson LLP in New York, New York, USA.
1 United States v. Bertelsmann SE & Co. KGaA, 646 F. Supp. 3d 1 (D. D.C. 2022), https://www.justice.gov/atr/case/us-v-bertelsmann-se-co-kgaa-et-al.
2 Complaint, United States v. Google LLC, 1:20-cv-03010-APM (D. D.C. Oct. 20, 2020), https://www.justice.gov/opa/press-release/file/1328941/download; Complaint, United States, et al. v. Google, 1:23-cv-00108-LMB-JFA (E.D. Va. Jan. 24, 2023), https://www.justice.gov/opa/press-release/file/1563746/download.
3 Complaint, United States v. Cargill Meat Solutions Corp., 1:22-cv-01821-SAG (D. Md. July 25, 2022).
4 Exec. Order No. 14036, 86 Fed. Reg. 36,987 (July 9, 2021), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
5 Exec. Order No. 14036, 86 Fed. Reg. 36,987 (July 9, 2021).
6 Consolidated Appropriations Act, Pub. L. 117-328, 136 Stat. 4459 (2023), https://www.congress.gov/bill/117th-congress/house-bill/2617/text.
7 U.S. Department of Justice, Office of Public Affairs, “Assistant Attorney General Jonathan Kanter Delivers Opening Remarks at 2022 Spring Enforcers Summit,” speech, April 4, 2022, Washington, DC, https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-opening-remarks-2022-spring-enforcers.
8 U.S. Department of Justice, Antitrust Division, and Federal Trade Commission, Antitrust Guidance for Human Resources Professionals, October 2016, 4, https://www.justice.gov/atr/file/903511/download.
9 United States v. Jindal, No. 4:20-cr-00358-ALM-KPJ (E.D. Tex. Dec. 9, 2020); United States v. Surgical Care Affiliates LLC, No. 3:21-cr-00011-L (N.D. Tex. Jan. 5, 2021); United States v. Hee, No. 2:21-cr-00098-RFB-BNW (D. Nev. March 30, 2021); United States v. DaVita Inc., No. 1:21-cr-00229-RBJ (D. Colo. July 14, 2021); United States v. Manahe, No. 2:22-cr-00013-JAW (D. Me. Jan. 27, 2022); United States v. Patel, No. 3:21-cr-00220-VAB (D. Conn. Dec. 2, 2022); United States v. Lopez, No. 2:23-cr -00055-CDS-DJA-1 (D. Nev. March 15, 2023).
10 U.S. Department of Justice, Office of Public Affairs, “Former Health Care Staffing Executive Convicted of Obstructing FTC Investigation into Wage-Fixing Allegations,” news release, April 14, 2022, https://www.justice.gov/opa/pr/former-health-care-staffing-executive-convicted-obstructing-ftc-investigation-wage-fixing.
11 U.S. Department of Justice, Office of Public Affairs, “Assistant Attorney General for the Antitrust Division Jonathan Kanter Speaks on the ‘Enforcers Roundtable’ panel at the ABA Annual Antitrust Spring Meeting,” YouTube video, 1:52:32, March 31, 2023, https://www.justice.gov/opa/video/assistant-attorney-general-antitrust-division-jonathan-kanter-speaks-enforcers-roundtable.
12 Federal Trade Commission, “FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition,” news release, January 5, 2023, https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition.
13 U.S. Department of Justice, Office of Public Affairs, “Justice Department Withdraws Outdated Enforcement Policy Statements,” news release, February 3, 2023, https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements.
14 U.S. Department of Justice, Office of Public Affairs, “Principal Deputy Assistant Attorney General Doha Mekki of the Antitrust Division Delivers Remarks at GCR Live: Law Leaders Global 2023,” speech, February 2, 2023, Miami, FL, https://www.justice.gov/opa/speech/principal-deputy-assistant-attorney-general-doha-mekki-antitrust-division-delivers-0.
15 David A. Higbee, Djordje Petkoski, and Memmi Rasmussen, “US DOJ tests new approaches to boost cartel enforcement revival efforts,” Global Competition Review, August 25, 2023, https://globalcompetitionreview.com/review/the-antitrust-review-of-the-americas/2024/article/us-doj-tests-new-approaches-boost-cartel-enforcement-revival-efforts.
16 U.S. Department of Justice, Office of Public Affairs, “Justice Department Announces Procurement Collusion Strike Force: a Coordinated National Response to Combat Antitrust Crimes and Related Schemes in Government Procurement, Grant and Program Funding,” news release, November 5, 2019, https://www.justice.gov/opa/pr/justice-department-announces-procurement-collusion-strike-force-coordinated-national-response.
17 U.S. Department of Justice, “Justice Department Announces Procurement Collusion Strike Force.”
18 U.S. Department of Justice, Office of Public Affairs, “Director of the Justice Department’s Procurement Collusion Strike Force Daniel Glad Delivers Remarks to the Seventh Annual White-Collar Criminal Forum at the University of Richmond Law School,” speech, September 14, 2023, Richmond, VA, https://www.justice.gov/opa/speech/director-justice-departments-procurement-collusion-strike-force-daniel-glad-delivers.
19 U.S. Department of Justice, Office of Public Affairs, “Military Contractors Convicted for $7 Million Procurement Fraud Scheme,” news release, March 29, 2023, https://www.justice.gov/opa/pr/military-contractors-convicted-7-million-procurement-fraud-scheme; U.S. Department of Justice, Office of Public Affairs, “Construction Company Owner Sentenced to 78 Months in Prison and Ordered to Pay Nearly $1 Million in Restitution for Rigging Bids and Bribing a Public Official,” news release, April 17, 2023, https://www.justice.gov/opa/pr/construction-company-owner-sentenced-78-months-prison-and-ordered-pay-nearly-1-million; U.S. Department of Justice, Office of Public Affairs, “Executive Pleads Guilty to Criminal Attempted Monopolization,” news release, October 31, 2022, https://www.justice.gov/opa/pr/executive-pleads-guilty-criminal-attempted-monopolization; U.S. Department of Justice, Office of Public Affairs, “Former Engineering Executive Sentenced for Rigging Bids and Defrauding North Carolina Department of Transportation,” news release, September 8, 2022, https://www.justice.gov/opa/pr/former-engineering-executive-sentenced-rigging-bids-and-defrauding-north-carolina-department.
20 U.S. Department of Justice, Office of Public Affairs, “Director of the Justice Department’s Procurement Collusion Strike Force Daniel Glad Delivers Remarks to the Seventh Annual White-Collar Criminal Forum.”
21 U.S. Department of Justice, Office of Public Affairs, “Director of the Justice Department’s Procurement Collusion Strike Force Daniel Glad Delivers Remarks to the Seventh Annual White-Collar Criminal Forum.”
22 U.S. Department of Justice, Office of Public Affairs, “Major Generic Drug Companies to Pay Over Quarter of a Billion Dollars to Resolve Price-Fixing Charges and Divest Key Drug at the Center of Their Conspiracy,” news release, August 21, 2023, https://www.justice.gov/opa/pr/major-generic-drug-companies-pay-over-quarter-billion-dollars-resolve-price-fixing-charges.
23 U.S. Department of Justice and the Federal Trade Commission, Merger Guidelines, draft for public comment purposes, 2023, https://www.justice.gov/d9/2023-07/2023-draft-merger-guidelines_0.pdf.
24 U.S. Department of Justice, Office of Public Affairs, “Deputy Attorney General Lisa O. Monaco Announces New Safe Harbor Policy for Voluntary Self-Disclosures Made in Connection with Mergers and Acquisitions,” speech, October 4, 2023, Washington, DC, https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-announces-new-safe-harbor-policy-voluntary-self.
25 U.S. Department of Justice, Antitrust Division, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations, July 2019, https://www.justice.gov/atr/page/file/1182001/download.
26 U.S. Department of Justice, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations, 3.
27 U.S. Department of Justice, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations, 4.
28 U.S. Department of Justice, Office of the Deputy Attorney General, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group,” memorandum, September 15, 2022, https://www.justice.gov/opa/speech/file/1535301/download.
