The members of BakerHostetler’s Antitrust and Competition Team are pleased to present these additional brief updates from the conference sessions at this week’s ABA Antitrust Spring Meeting in Washington, D.C. Read our first set of conference updates here.
Session on “NIL After Alston: Wild West?”
There was a packed house in attendance for this panel, all eager to understand what is next as student-athletes chip away at the NCAA’s limitations on pay-for-play. The panel, including moderator Steve Medlock, BakerHostetler partner Ron Gaither, Sathya Gosselin, Megan Gerking and Anil Gollahalli, began by explaining how the current state of NIL law – what we’ve previously called an exemption to an exemption from antitrust law – came to be. Tracing the origin of the current NIL landscape to Judge Wilken’s rejection of any claimed blanket antitrust immunity for the NCAA in O’Bannon, through the Supreme Court’s confirmation in Alston that the rule of reason applies to challenges to NCAA’s amateurism rules, the panel confronted whether courts and state legislatures have created (perhaps inadvertently) the opportunity to pay student-athletes to play for a particular school through NIL license deals – exactly what most had hoped to avoid. The uncertainty surrounding the patchwork of state legislation resulted in the biggest laugh of the session, when Ron Gaither explained that when he is asked by clients “What is the current state of NIL law?” his half-in-jest-but-all-in-earnest response is “I don’t know.” Indeed, perhaps more questions abound than answers relating to this emerging area of the law. Where are we all headed? A Congressional exemption for the NCAA? (The panel agreed this is unlikely, though the battle between the NCAA and student-athletes – between tradition and a growing student body demanding economic fairness – would seem to be an ideal political wedge issue.) Or perhaps unionization of student-athletes and collective bargaining, which is generally outside the scope of antitrust laws? The only right answer that is no one knows, while almost everyone agrees that the current Wild West situation is unworkable in the long run.
Session on “The New, New, Wave: Competition Policy Interrupted?”
The Biden administration has described the consumer welfare standard underlying competition policy of the past decades as a “failed experiment,” and the FTC’s current approach is more akin to the agency’s “social welfare” framework of the ’70s – these observations were the point of departure for a panel discussing whether a paradigm shift is now taking place in U.S. competition policy, and if so, where it will lead and whether it will last. The panel agreed that populism, in the sense of broad public frustration with perceived shortcomings of our political and economic institutions, including big business, is creating a moment in which politicians and journalists can reinforce the efforts of enforcement agencies to change the framework of competition policy. But some panelists expressed skepticism that the populist moment will have any lasting effect on the judiciary or academic economists, leaving room for doubt that any policy shifts will survive a change in political administrations. Panelists also were divided on the prudence of enforcers bringing cases they are unlikely to win – one viewpoint characterized these as unforced errors that make it harder for the government to win stronger cases, but others expressed the view that even losing cases can alter the discourse and lead to desirable changes in private conduct. One lurking question is whether a perception of an overly aggressive populist enforcement approach will serve as fuel for the unfolding counterrevolution challenging agency authority, or even its existence, on constitutional grounds.
Session on “The PE Effect: Antitrust Scrutiny Abounds”
PE is the modern-day bogeyman for antitrust enforcement, and regulators perceive significant threats to the economy and competitive markets. PE has been growing relative to revenue earned and employment levels (claimed benefits to the economy). The panelists discussed that government agencies are trying to "reset expectations" of PE; agencies are evaluating PE acquisitions in the same manner as they would strategic acquisitions. Another reason given for enhanced scrutiny is the public interest/skepticism about the business model. The implication is that certain PE firms are alleged bad actors with no motivation except pecuniary interests, a potential moral hazard. Current administrative priorities include encouraging remedies that import a forward-looking component so that roll-ups can be assessed regardless of whether they are HSR-reportable. It seems apparent from agency public statements that the PE business model is "disfavored" in their perspective. PE clients would be well served to be disciplined with document creation if they have pursued a roll-up acquisition strategy. Finally, new HSR requirements are coming in "weeks, not months" and enforcement of past PE non-compliance is becoming an administration priority. The government might look back at previous filings or even nonreportable deals if a new filing is suspiciously thin.
Session on “Trials & Tribulations: Recent Criminal Antitrust Trials”
The DOJ is revaluating its strategy after recent trial losses. At this interesting session discussing recent criminal antitrust trials, a DOJ panelist noted the Department is looking to improve its trial practice after recent losses in criminal antitrust litigation. The panelist mentioned four specific actions the DOJ is taking to improve its trial practice: (1) establishing a culture shift to encourage its staff to start preparing for trial from the moment a criminal investigation begins; (2) looking to forge more partnerships with AUSA’s to assist with trials; (3) planning to get more creative and aggressive in its investigations, including recently hiring former FBI agents to lead some investigations; and (4) planning to hire more attorneys with significant trial experience. Also mentioned at the panel is that the DOJ is going to get even more creative with charging and prosecuting cases. A DOJ panelist noted that the Department could bring more Section 18 fraud charges alongside its Sherman Act claims in the future. There was also a discussion of a recent case where the DOJ was able to use the crime-fraud exception to compel an attorney to testify against their client. The panelist noted the DOJ is exploring whether to use this strategy in additional cases.
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