Supply chain disruption, rising inflation and a tight employment market have led to an uptick in antitrust scrutiny by both Republican and Democratic AGs. Working alone, in multistates, or in coordination with federal agencies, state AGs are increasingly investigating whether companies are engaged in illegal collusion to capture and maintain market dominance and taking enforcement action to punish this and other anticompetitive behaviors. In Episode 8 of State AG Pulse, Milton Marquis, Jerry Kilgore and Ann-Marie Luciano discuss practical steps companies can take to limit risk and address regulators’ concerns should they find themselves (or anticipate becoming) the target of an antitrust action.
(00:47): Jerry Kilgore introduces himself and his colleagues and asks Milton, who previously worked for several state AG offices and at DOJ on antitrust issues, to talk about why antitrust law is so important now in the state attorney general world.
(02:25): Milton notes that state antitrust enforcement is not new, but has become more prominent as attorneys general have devoted additional resources to it. The most significant catalyst was the enactment of the Hart-Scott-Rodino Antitrust Improvement Act, AKA the Nash Act, which mandates that transactions of a particular size be notified to the two governing federal agencies.
(05:12): Milton goes on to note that 49 states and the District of Columbia and territories have antitrust laws that parallel or go beyond federal law. These statutes provide attorneys general with the ability to receive civil penalties, restitution and damages. He explains that in large antitrust cases the states often work together and have formed the National Association of Attorneys General Antitrust Task Force to facilitate coordination.
(06:43): Ann-Marie Luciano goes on to outline other areas, in addition to reviewing mergers, where AGs have been active including investigating price fixing and no-poach agreements/noncompete clauses.
(08:27): Milton points to the airline industry, where the states are working hand-in-hand with the Justice Department to block mergers or other arrangements due to the impacts on consumers who travel to and from their local markets.
(11:03): Jerry asks about novel antitrust theories that apply to the technology sector or the AI sector.
(11:23): Milton responds that antitrust law is not like the tax code in that it comprises broad principles about restraint of trade and monopolies which courts apply to the economy as it is at that time. Because of this, it must continually evolve to adapt to new technologies.
(12:08): Ann-Marie makes the point that supply chain issues and consumer complaints about price hikes have elicited a bipartisan reaction. Democrat AGs continue to be very active on labor and wage issues, while Republicans have honed in on issues related to ESG-based investing and potential collusion between competitors over carbon emissions or other climate change related matters.
(14:44): Milton weighs in with several takeaways for businesses. The first is that state AGs have independent authority and should be on companies’ antitrust radars alongside the FTC and the DOJ. The second is that state AGs are most interested in potentially anticompetitive conduct that directly impacts consumers in their states. Milton emphasizes that markets should be defined in a way that makes sense for a particular product or service. Local markets don’t exist in the technology sector. Grocery stores, on the other hand, operate in highly localized markets which AGs are going to care about.
(17:40): Another industry where there has been bipartisan cooperation between state AGs and the federal government (US DOJ and USDA) is agriculture which transcends so-called “farm states”. Ann-Marie notes that AG actions in the ag sector have focused not just on consolidation and market concentration, but also alleged price-fixing and collusion.
(18:46): Jerry asks how companies can find out if they’re under investigation.
(19:03): Milton makes the point that from a defense standpoint it’s better to find out sooner rather than later. State AGs tend to be more transparent than federal agencies and are more likely to notify a company that they have concerns before subpoenas are issued, giving companies the ability to tell their side of the story.
(19:41): Antitrust investigations are document intensive, given the need for the authorities to review communications for evidence of coordination or communication between the target and its competitors. States are also interested in local impact and will ask for additional detail to establish this.
(21:20): Jerry asks about the likely duration of an investigation. Milton hedges that it depends on the issues. A full understanding of the facts, as well as good relationships with individuals in state AG offices, are critical to managing document requests and timeline.
(23:27): Milton mentions healthcare as another industry of concern for AGs, due to its significance to the US economy and the amount of industry consolidation that has been taking place, resulting in price increases or service reductions in local markets.
(26:21): Jerry asks whether antitrust cases are more likely to be brought in federal court.
(26:28): Milton responds that the previous thinking was indeed that there was more expertise in the federal judiciary on antitrust issues, but that that is no longer the case, as state courts have become more familiar with the issues. He points out that there is also the benefit in your own state court of developing your own state law.
(27:21): Jerry and Milton debate whether federal or state court is a better venue from a client perspective, with Jerry suggesting that federal court would be preferred. Milton concurs, from a defense point-of-view, on the grounds that summary judgment standards are more pro-defense in federal court.
To listen to the full podcast, click here [https://www.stateagreport.com/podcast/the-broad-sweep-of-state-ags-antitrust-authority/]. To listen to a particular section, open the recording and use the time stamps provided above to navigate to the desired part.