Articles Posted in Antitrust News

DOJ’s Recent Statement of Interest: An Example of America First Antitrust

July 27, 2025 | Bona Law PC

On July 11, the Department of Justice Antitrust Division filed a Statement of Interest in a private lawsuit alleging anticompetitive collusion among defendants like The Washington Post and with non-defendants like X to suppress certain views on COVID and U.S. politics. DOJ’s move generated unpleasant surprise among some in the antitrust community and beyond; but the move seems consistent with numerous statements by the Administration and its supporters, including the America First Antitrust principles recently outlined by Division head Gail Slater.

Summary of Case and Defendants’ Motion to Dismiss

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DOJ Antitrust Division 2025: The Cop is Still on the Beat

July 7, 2025 | Bona Law PC

Authors: Jack Prindle and Steve Cernak

Note: Jack Prindle is a student at the University of Virginia School of Law joining Bona Law for the summer.

The DOJ’s Antitrust Division would like to remind everyone that it will not be going anywhere. Despite expectations in some quarters of laxness surrounding the old-made-new administration, antitrust cases and investigations are carrying on unabated. One particular trend has reappeared alongside President Trump in 2025: price fixing, bid rigging, and similar crimes will be severely punished.

The core mission of the Antitrust Division has not changed with the new administration. Bad actors interfering with free-market competition can still expect to be investigated and prosecuted. Take, for example, the recent incarceration of an asphalt paving executive guilty of bid rigging in Michigan. Because he pleaded guilty in 2023, it would be tempting to chalk this up as a hangover from a more prosecution-happy administration. But he was sentenced in May and it does not appear that the DOJ or the judge went easy on him. Similarly, several of his coconspirators pleaded guilty in January of 2024, which makes it clear that the Antitrust Division has not missed a step. When it comes to these types of antitrust violations, there is no difference in enforcement between the previous Democratic administration and this Republican one.

There are some changes in form, though. The Trump administration views antitrust enforcement as consistent with its broader policy goals and so has used the broad range of tools and responsibilities available to the Antitrust Division. The perpetrators of a bid-rigging scheme in Idaho found out about this shift the hard way.

On the surface, this case mirrors the case in Michigan. Here, the conspiracy decided who would win Forest Service firefighting contracts before the bidding process. But in challenging this conspiracy, the DOJ went further this time. Besides bid rigging, these defendants were charged with conspiracy to monopolize and wire fraud. The broader charges allowed the government to pursue greater sentences for convicted individuals. They also sent a clear signal that any market participant considering anticompetitive behavior should expect a heavy punishment. DOJ Assistant Attorney General Abigail Slater and FBI Assistant Director Jose A. Perez both emphasized that these cases were sending a message to deter future anticompetitive schemes elsewhere.

The Antitrust Division has expanded its purview even further to encompass wire fraud and money laundering, even without a traditional antitrust violation. In 2019, the Antitrust Division announced the formation of the Procurement Collusion Strike Force to investigate and prosecute anticompetitive behaviors involving government contracts or the use of federal funds. While this initiative works on clear antitrust cases, like the Idaho Forest Service contracts case described above, it also coordinates with other departments to pursue cases that are less directly antitrust related. The Naval Criminal Investigative Service (NCIS), Coast Guard Investigative Service, and Department of Defense Office of Inspector General Defense Criminal Investigative Service led the way on the fuel fraud scheme linked at the start of this paragraph, for example. The breadth of the assignments given to the Antitrust Division highlight its role as a messenger of wider administration goals.

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The Latest Death of Antitrust’s Robinson-Patman Act?

May 28, 2025 | Bona Law PC

Author: Steven Cernak

Last week, the FTC voluntarily dismissed its Robinson-Patman Act case against Pepsi that it filed in January. The dismissal and the Commissioner statements accompanying it hinted that the FTC’s determination to revive Robinson-Patman will not be as strong in the Trump Administration.

Short and Recent History of the Case

This blog has detailed the basics of Robinson-Patman and the efforts of the Biden Administration FTC to revive its enforcement several times including here, here, and here. Rumors hinted that the FTC was conducting a large investigation of soft drink sales to major retailers, like Walmart and Costco. So, it was somewhat surprising when the first major Robinson-Patman action by an FTC in decades was the December 2024 case against Southern Glazer’s Wine & Spirits, LLC. The Commission vote to file the complaint was 3-2, with the two Republican Commissioners dissenting because the complaint was likely to fail on cost justification grounds and because the Commission should use its limited resources on actions more clearly anticompetitive.

In the last days of the Biden Administration, the same divided FTC filed this action against Pepsi. Here, the Republican dissents were even more heated. First, the dissents claimed that the Commission leadership forced staff to file a flawed complaint merely to obtain one more headline before Trump appointees took charge. Second, the complaint alleged violations of Robinson-Patman’s Sections 2(d) and (e), which prohibit some discrimination in promotional allowances and do not require proof of harm to competition. According to the dissents, the allegations, if anything, read more like discriminatory price differences under Section 2(a), which does require proof of harm to competition. Because the complaint and the statements discussing the allegations in detail contained so many redactions to hide confidential information of the parties involved, it was difficult to evaluate these disagreements.

Dismissal

Last week, the current Commission — now composed only of three Republican appointees — dismissed the complaint and issued two statements. Those statements echoed the earlier dissents: Of course, the Commission must enforce the Robinson-Patman Act; however, the cases it chooses to bring must have some chance of success and this deeply flawed complaint, brought solely for political reasons, was a poor use of limited resources because it was likely to fail.

Death of Robinson-Patman, Again?

So, does this dismissal mean that the much-discussed Robinson-Patman revival has died in its infancy? Not so fast, my friend. That FTC case against Southern Glazer’s survived a motion to dismiss in April. Also, all the Republican commissioners vowed to enforce Robinson-Patman Act with the right case. Such enforcement would seem consistent with the desire of those same commissioners to bring actions that will help the common man and woman.

Also, as our prior posts have discussed repeatedly, private enforcement of Robinson-Patman has never completely died out; in fact, this firm helped file a complaint that included such claims and also recently survived a motion to dismiss.

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Quick Update on Algorithmic Pricing: Yardi and the “Per Se” Standard

February 24, 2025 | Bona Law PC

Author: Luis Blanquez

In simple terms algorithmic pricing takes place when competitors make use of a software platform to share competitively sensitive information, which the pricing algorithm uses to recommend prices for all users.

Algorithmic pricing has been in the antitrust spotlight over the past few years.

The FTC has Algorithmic Price-Fixing in its Antitrust Crosshairs

New Antitrust Cases and Statements of Interests About Algorithmic Collusion

The main reason? Antitrust laws apply to algorithms implementing human agreements.

How to Show the Existence of an Agreement: Direct and Circumstantial Evidence

Remember that under US antitrust law, there are two ways to show the existence of an agreement:

Through direct evidence (sometimes this is a “smoking gun”), and;
Through circumstantial evidence: Alternatively, it’s more common to show the existence of an agreement through a combination of parallel conduct and “plus factors,” i.e., a common motive to conspire, evidence that shows that the parallel acts were against the apparent individual economic self-interest of the alleged conspirators, and/or evidence of a high level of interfirm communications.

But finding an express agreement between companies to fix prices is not super common these days. So, what happens when there is no agreement involved, and the algorithm “only” facilitates tacit collusion between the companies using it? Things get much murkier. That happens, for instance, when competitors use the software platform to share sensitive commercial information.

Agreements to Exchange Information: “Per Se” or Rule of Reason?

Section 1 of the Sherman Act prohibits every contract, combination or conspiracy that restrains trade, so long as those restraints are unreasonably restrictive of competition in a relevant market. This includes both an agreement and tacit collusion.

Restraints analyzed under the “per se” rule are those that are always (or almost always) so inherently anticompetitive and damaging to the market that they warrant condemnation without further inquiry into their effects on the market or the existence of an objective competitive justification. Business practices considered per se illegal under antitrust laws include: (a) horizontal agreements to fix prices, (b) horizontal market allocation agreements, (c) bid rigging among competitors; (d) certain horizontal group boycotts by competitors; and (e) sometimes tying arrangements.

On the other hand, a contract, combination or conspiracy that unreasonably restrains trade and does not fit into the per se category is usually analyzed under the so-called rule of reason test. This test focuses on the state of competition within a well-defined relevant agreement. It requires a full-blown analysis of (i) definition of the relevant product and geographic market, (ii) market power of the defendant(s) in the relevant market, (iii) and the existence of anticompetitive effects. The court will then shift the burden to the defendant(s) to show an objective procompetitive justification. Most antitrust claims are analyzed under this test.

Depending on the type of unlawful information exchange, it might be categorized as:

“Per se”unlawful conduct, when facilitates price fixing, bid rigging, or market allocation, so plaintiffs do not need to show actual harm to competition, or;
Unlawful conduct under the rule of reason, if the exchange of information leads to some anticompetitive effect, based on factors such as the structure of the industry involved, and the nature of the information exchanged, among others.

This is an important distinction to keep in mind if you want to understand why the District Court for the Western District of Washington in Duffy v. Yardi Systems Inc. recently denied the defendants’ motion to dismiss, while stating—for the first time involving an antitrust case on algorithmic pricing—that plaintiffs’ allegations were sufficient to allege a per se unlawful antitrust conspiracy.

New Legal Standard for Algorithmic Pricing Antitrust Cases? Maybe…

We’ve seen several government and private antitrust lawsuits on algorithmic pricing during the past years, claiming that the use of a software platform to set prices constituted an anticompetitive conspiracy under the antitrust laws.

We’ve previously discussed all these cases in detail here. In a nutshell:

In 2022 plaintiffs in Realpage, Inc. Software Antitrust Litigation sued RealPage and its landlord-customers alleging that a management software tool helped them coordinate on prices by collecting non-public information on rents and vacant units. In January 2024, the Court denied the motion to dismiss––plaintiffs were able to show that RealPage’s software uses confidential competitor information through its algorithm to spit out price recommendations based on that private competitor data.

Second, it rejected claims alleging a horizontal price-fixing conspiracy (no agreement and no absolute delegation of their price-setting to RealPage) ––which would have been “per se” illegal––but concluded that those same landlords vertically conspired with RealPage.

In 2023, plaintiffs in Gibson v. MGM Resorts International and Cornish-Adebiyi v. Caesar’s Entertainment, Inc., alleged that hotels in Las Vegas and Atlantic City used a pricing algorithm to facilitate collusion, by providing hotel and casino room pricing and occupancy information. The district courts dismissed both cases, on May 8 and September 30, 2024, respectively, based on several grounds. First, plaintiffs did not show a horizontal agreement: the hotels were not using the platforms around the same time, did not agree to be bound by such price recommendations, and did not charge the same prices. And second, plaintiffs failed to show that the pricing recommendations were based on nonpublic, competitively sensitive information.
In Duffy v. Yardi Systems, Inc. plaintiffs similarly alleged that competing landlords violated Section 1 of the Sherman Act, by unlawfully agreeing “to use Yardi’s pricing algorithms to artificially inflate” multifamily rental prices. On December 4, 2024, the court denied the motion to dismiss and allowed the case to proceed into discovery. There are two important nuances to highlight here.

First, and similarly to the RealPage case, the Court sided with plaintiffs and agreed on the existence of an antitrust conspiracy. This decision was not only based on defendants’ acceptance of Yardy’s invitation to trade sensitive information, which allow them to charge increased rents, but also on defendants’ parallel conduct (while contracting with Yardi), and “plus factors,” such as the exchange of nonpublic and competitive sensitive information, which suggested defendants acting for their mutual benefit.

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Could Elon Musk Acquire TikTok Under a Joint Operating Agreement Exception to the Antitrust Laws?

January 17, 2025 | Bona Law PC

Authors: Pat Pascarella and Aaron Gott

The idea of Elon Musk purchasing TikTok might sound like a headline ripped from a speculative business column, and maybe it is. But as antitrust lawyers, we couldn’t resist. Obviously, Mr. Musk already owns X, and any such acquisition might raise antitrust concerns.

But could you head off those concerns by structuring the deal with an exception to the antitrust laws known as a Joint Operating Agreement? While JOAs were related to the newspaper industry and are largely seen as a relic of the past, their principles could provide a framework for addressing modern concerns.

A Brief History of Joint Operating Agreements

Joint Operating Agreements emerged during the 20th century as a mechanism to save failing newspapers thereby maintaining at least some level of editorial competition. By the mid-20th century, many U.S. cities had two major newspapers, but declining revenues and readership often left one teetering on the edge of closure. To prevent monopolization of the news market, Congress enacted the Newspaper Preservation Act of 1970, which allowed competing newspapers to enter into JOAs.

Under a JOA the two newspapers would be permitted to merge their business operations, so long as they agreed to maintain separate editorial teams. The goal was to preserve journalistic diversity in cities that were about to find themselves with only one surviving paper. But JOAs required approval from the Department of Justice (DOJ) and were contingent on demonstrating that one of the newspapers was “failing.”

JOA Requirements

For a JOA to be approved, the following conditions had to be met:

Failing Firm Doctrine: One of the parties had to demonstrate that it was financially unsustainable and would likely exit the market absent the agreement.
No less anticompetitive alternative: There must not be a less anticompetitive alternative to the joint operation agreement.
Preservation of Competition: The agreement had to preserve a degree of competition, particularly in areas such as content creation or editorial independence.
DOJ Oversight: The DOJ maintained the authority to review and approve any proposed JOAs, ensuring they aligned with antitrust laws.

Applying the JOA Framework to a Musk-TikTok Deal

Elon Musk’s ownership of X likely would raise antitrust concerns about the acquisition of TikTok. But a JOA (or JOA.2) could provide a creative solution to balance these concerns with broader policy objectives, such as ensuring competition with other tech giants like Meta and Alphabet while also addressing national security issues tied to TikTok’s current Chinese ownership.

A critical hurdle, however, would be demonstrating that TikTok meets the “failing firm” criterion. While TikTok is far from failing financially, isn’t “failing” simply another term for “about to involuntarily exit the market.” Same outcome, hence same justification.

But this difference could mean a crucial difference under the JOA legal framework. As explained above, there must be no less anticompetitive alternative available. When it came to the failing newspapers, there was no alternative: failing newspapers did not have buyers lining up to buy them. But popular social media platforms do.

But there’s an answer here as well. One idiosyncrasy of the TikTok situation is that the Chinese government has taken the position that the TikTok algorithm is a Chinese national security secret. So any sale of TikTok means, as a practical matter, that it is not likely to come with a functioning algorithm. This limits the potential pool of buyers to those who either have one they can adapt or who can put one together on the fly.

This likely narrows significantly the existing pool of willing buyers to those who already have social media companies, or possibly even to those people who are known to drive their teams to accomplish skunkworks-like missions on impossible timelines.

Political and Regulatory Considerations

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Antitrust Agency Publishes Revised HSR Notification Thresholds and Filing Fees For 2025

January 15, 2025 | Bona Law PC

Authors: Steven Cernak and Luis Blanquez

On January 10, 2025, the Federal Trade Commission (FTC) issued its usual annual announcement to increase the Hart-Scott-Rodino (HSR) Act thresholds. The 2025 thresholds will take effect 30 days after publication in the Federal Register, which means February 10, 2025.

HSR requires the parties to submit certain information and documents and then wait for approval before closing a transaction. The FTC and DOJ then have 30 days to determine if they will allow the merger to proceed or seek much more detail through a “second request” for information. The parties may also ask for “Early Termination” to shorten the 30-day waiting period, although for nearly two years the agencies have suspended this option.

The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. These thresholds adjust annually to reflect changes in the U.S. gross national product.

Three thresholds determine the applicability of HSR filing requirements.

First, one of the parties to the transaction must be in commerce in the United States or otherwise affect U.S. commerce.

Second, the acquiring party must be acquiring securities, non-corporate interest, or assets of the target in excess of $126.4 million––the “size of transaction” threshold. Entities need not file notifications when the value of the voting securities and assets is below this threshold.

Third, if the transaction exceeds $126.4 million but does not exceed $505.8 million–the “size of the parties” threshold–– then at least one party involved in the transaction must have annual net sales or total assets of at least $252.9 million, and the other party must have annual net sales or total assets of at least $25.3 million.

Transactions valued at more than $505.8 million are reportable regardless of the size of the parties, unless an HSR Act exemption applies.

The FTC’s notice also implemented a new filing fee structure from the new legislation. The new structure will be in place starting with filings made on or after February 10, 2025. Below are the new fee thresholds:

2025

Size of the Transaction                        Merger Fee

$126.4 million – $179.4 million             $30,000

$179.4 million – $555.5 million        $105,000

$555.5 million – $1.111 billion           $265,000

$1.111 billion – $2.222 billion                   $425,000

$2.222 billion – $5.555 billion                   $850,000

$5.555 billion or more                                  $2,390,000

As a result of the new legislation, those fees will also adjust annually, based on changes to the consumer price index.

The FTC further published revised thresholds relating to Section 8 of the Clayton Act. Section 8 prohibits interlocking directorates in which one “person” serves simultaneously as an officer or director of competing corporations, subject to certain exceptions. Now, Section 8 of the Clayton Act applies when each of the competing corporations has capital, surplus, and undivided profits aggregating more than $51,380,000 and each corporation’s competitive sales are at least $5,138,000 again with certain exceptions.

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The Third Circuit Rejects a Fraud Exception to the Noerr-Pennington Exemption from Antitrust Liability

December 17, 2024 | Bona Law PC

Author: Ruth Glaeser

The Third Circuit Court of Appeals held that Merck is exempt from antitrust claims under the Noerr-Pennington doctrine in a lawsuit accusing it of deceiving the government about the effectiveness of its mumps vaccine to prevent competition.

Background from the Third Circuit’s Opinion

Merck was the sole licensed manufacturer of mumps vaccines in the United States for over fifty-five years, until 2022. The vaccine was FDA-approved and included an FDA-approved label that outlined its shelf life, minimum-potency requirements, and effectiveness. Merck had an ongoing duty to ensure that the drug label was accurate.

In the late 1990s, the FDA expressed concern that Merck’s mumps vaccine did not provide immunity near the end of its purported 24-month shelf life. At the FDA’s suggestion, Merck overfilled the vaccine doses to try to make the doses potent through the end of the shelf-life period.

But this did not resolve the issue, and Merck did not share that information with the FDA. Merck feared that disclosing this information would lead the FDA to require a change in the vaccine’s label. And a label change was particularly problematic for Merck because it competed with GlaxoSmithKline (“GSK”), which sold a similar vaccine in Europe. Merck thought that GSK’s vaccine would soon enter the U.S. market and a label change on Merck’s vaccine would make it easier for GSK to demonstrate that its vaccine was not inferior to Merck’s.

So, to preserve its market dominance, Merck misrepresented the vaccine’s potency and effectiveness at the end of its shelf life. To support this, Merck ran a clinical trial and claimed that it could reduce the potency of the vaccine without impairing the existing drug-label claims about immunity. But the appellees in this case said the study did not reliably capture information about the drug’s immune response in the human body. Nonetheless, the FDA continued to approve Merck’s mumps vaccine label and Merck continued to make unsupported claims about the self-life and immunity of its mumps vaccine on the drug label.

GSK eventually demonstrated that its vaccine was competitive with Merck’s. And the FDA approved GSK’s application to sell its vaccine in 2022.

The Noerr-Pennington Doctrine

The Noerr-Pennington doctrine provides limited exemption from antitrust liability for actions intended to influence governmental decision-making in all three branches of government. This doctrine protects the First Amendment right to petition the government, including the courts.

It is, however, subject to a caveat—the “sham exception.” For Noerr-Pennington to apply, the challenged action must be a legitimate government petition rather than conduct intended to interfere with a competitor. Generally, the court will look to see if the anticompetitive conduct arises from the process of the government petitioning rather than the outcome. If the anticompetitive conduct arises from the process, rather than the outcome, of petitioning the government—like baseless litigation bankrupting a competitor due to legal fees—then the sham exception is more likely to apply. But if the anticompetitive conduct is merely the outcome or result of legitimate government petitioning, then the Noerr-Pennington doctrine protects the conduct.

The Court’s Analysis

The Third Circuit engaged in this process v. outcome analysis. The crux of Appellees’ antitrust injury was that Merck’s actions delayed the launch of GSK’s competing vaccine in the United States for over a decade by maintaining deceptive statements on the vaccine label. They argued that it was the misleading statements on the label that prevented GSK from entering the market because GSK was unable to match Merck’s alleged effectiveness.

But the Court explained that the allegedly false or misleading claims on the drug label were the result of Merck’s successful petition to the FDA rather than part of the process. The Court said that Merck faced a dilemma when it was approached by the FDA: Merck could either (1) reveal that its vaccine might be mislabeled, leading to potential relabeling by the FDA; or (2) persuade the FDA that overfilling the doses fixed the problem (despite not actually doing so) and the request that the label remain unchanged. Merck did the latter, and the FDA did not order Merck to change the label or take further action against Merck after learning the truth.

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Understanding Antitrust Scrutiny: Lessons from United States v. American Airlines and JetBlue

December 16, 2024 | Bona Law PC

Author: Sabri Siraj

In a landmark decision, the U.S. Court of Appeals for the First Circuit upheld a district court ruling to permanently enjoin the Northeast Alliance (NEA) between American Airlines and JetBlue Airways. This case offers key insights into the relationship between joint ventures and antitrust and the standards of review for evaluating competitive harm.

Airline Case Summary

Defendants presented NEA as a collaborative effort between American Airlines and JetBlue to streamline services, enhance route options, and compete more effectively in the Northeast region of the U.S. Specifically, the arrangement allowed the two carriers to coordinate schedules, pool revenue, and integrate operations in select markets. The airlines argued that the NEA would create efficiencies that would benefit consumers through improved services and better connectivity. But the Department of Justice (DOJ) and several state attorneys general challenged the agreement, asserting that it undermined competition, raised ticket prices, and reduced consumer choice.

The district court’s findings supported the DOJ and the States, concluding that the NEA’s anticompetitive effects far outweighed any claimed benefits. The court held that the alliance reduced output in critical markets and failed to generate meaningful procompetitive benefits that could not be achieved through less restrictive means. On appeal, American Airlines argued that the NEA deserved lenient antitrust scrutiny because it is a joint venture. The First Circuit, however, rejected that defense, emphasizing that the legality of such arrangements hinge on their substance and actual effects rather than their label.

Antitrust Issues and Decision

This case serves as a critical examination of the standards applied to joint ventures under antitrust law. Joint ventures, when properly structured, can foster innovation, enhance efficiencies, and deliver consumer benefits by pooling resources and expertise. But these benefits do not exempt joint ventures from antitrust scrutiny. The First Circuit’s ruling focused on three key principles:

First, the court emphasized the importance of substance over form. It rejected American Airlines’ argument that the NEA’s classification as a joint venture warranted less rigorous analysis. As the court noted, “One could describe price fixing as a joint venture,” highlighting that the label itself does not insulate an arrangement from scrutiny. The court’s inquiry focused instead on the practical implications of the NEA, particularly its impact on competition and consumer welfare.

Second, the court applied the rule-of-reason framework to evaluate the NEA’s competitive effects. This standard requires a detailed analysis of the agreement’s purpose, its potential procompetitive justifications, and its actual anticompetitive effects. Here, the NEA failed to demonstrate sufficient procompetitive benefits to offset its negative impact on competition. The court agreed with the district court’s finding that the alliance reduced output and increased prices in key markets, with no evidence of justifying efficiencies.

Finally, the decision reinforced longstanding antitrust principles requiring genuine economic integration in joint ventures. The court found that the NEA lacked the necessary integration of resources and operations to qualify as a legitimate joint venture. Instead, it functioned as a mechanism to coordinate behavior between two major competitors, effectively reducing competition without delivering substantial consumer benefits.

The Broader Implications of the Ruling

The First Circuit’s decision has significant implications for businesses and legal practitioners navigating antitrust issues. For companies considering joint ventures or similar collaborations, the ruling serves as a reminder that such arrangements must be carefully structured to withstand legal scrutiny. A legitimate joint venture should integrate resources and create new or improved products or services that enhance market competition. Agreements that merely coordinate behavior between or among competitors without achieving these objectives are unlikely to survive antitrust challenges.

Additionally, the case underscores that businesses should proactively address potential antitrust risks during the joint venture’s planning and formation. This includes consulting with antitrust counsel, conducting thorough market analyses, and ensuring that any restrictions are ancillary to the venture’s objectives and proportional to achieving its goals. Companies should also document the procompetitive benefits of their agreements, providing clear evidence to support their claims if challenged.

Insights for Practitioners

The NEA case highlights why antitrust attorneys tailor legal advice to the specific facts and context of each arrangement. Joint ventures remain a common strategic tool for businesses seeking to innovate or expand their market presence. But, as this case illustrates, not all joint ventures are created equal. To withstand antitrust scrutiny, an arrangement must demonstrate genuine economic integration and clear consumer benefits.

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Unpacking the Implications of the FTC’s Antitrust Case Against Amazon for Online Marketplace Competition

October 22, 2024 | Bona Law PC

Author: Sabri Siraj

The Federal Trade Commission has survived a motion to dismiss in a high-stakes lawsuit against Amazon, igniting critical discussions about competition in the online marketplace. As a dominant player in global e-commerce, Amazon’s practices have long affected both consumers and competitors. Will this case change those practices or otherwise have implications for online marketplaces?

Important Note

Bona Law is currently representing Zulily in a similar lawsuit against Amazon in federal district court. You can read the complaint here.

About the Case

The FTC’s lawsuit, filed in Washington State federal court, stems from allegations that Amazon engages in anticompetitive practices that inhibit competition and violate the Sherman Act, the FTC Act, and consumer protection laws. The FTC alleges Amazon pricing practices harm competition by limiting consumer choices, and that Amazon engages in coercive tactics that disadvantage third-party sellers, creates barriers for new entrants, overcharges sellers, and makes it more expensive for sellers to offer their products on other platforms. Numerous states have joined the FTC’s lawsuit.

Amazon denies the allegations and asserts that its practices benefit consumers and competition. The court dismissed some state law claims but has otherwise allowed the lawsuit to proceed, with trial scheduled for October 2026.

Will the Case Affect Amazon’s Competitors?

For Amazon’s existing competitors, the FTC’s actions could provide both opportunities and challenges. If the lawsuit successfully restricts Amazon’s anti-competitive practices, it may level the playing field for other marketplaces like Walmart, eBay, and Shopify. These companies have often struggled to compete with Amazon’s extensive resources, alleged anticompetitive conduct, and customer loyalty programs. A more dynamic marketplace could enable them to attract more sellers and consumers, driving innovation and diversity in e-commerce offerings.

Moreover, if Amazon’s pricing strategies are curtailed, consumers could benefit through lower prices and improved service from competitors. This could encourage a competitive environment where companies strive to enhance their offerings, benefiting consumers.

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Mergers & Acquisitions, AI and Antitrust: The New Creative Ways for Big Tech to Enter the AI Market and Avoid HSR Rules

July 21, 2024 | Bona Law PC

Author: Luis Blanquez

Two of the main pillars from the Biden Administration Antitrust Policy in 2023 have been an aggressive merger enforcement agenda and its crusade against Big Tech and vertical integration.

On the merger side, the Department of Justice (DOJ) and Federal Trade Commission (FTC) have published new Merger Guidelines (see also here) and proposed new changes to Hart-Scott-Rodino Act (HSR) notification requirements (see also here.) In addition, both antitrust agencies have challenged more mergers in 2022 and 2023 than ever before. In a letter from November 2023 responding to questions from Rep. Tom Tiffany, R-Wis., FTC Chair Lina Khan stressed the fact that:

“a complete assessment of the FTC’s success in stopping harmful mergers reveals that of the 38 mergers challenged during my tenure as Chair, 19 were abandoned, another 14 were settled with divestitures, and two are pending a final outcome.”

This includes key acquisitions such as the Nvidia/Arm Ltd or Meta/Within, among many others. And the FTC is showing no signs of slowing down this aggressive approach. Another recent example of a merger challenge by the DOJ is the Live Nation/Ticketmaster’s complaint.

But despite the FTC’s Chair confidence and the recent new challenge by the DOJ, this hasn’t been an easy path for the antitrust enforcers. Courts in the US have pushed back several of the agencies’ extreme challenges and new theories, such as in the Microsoft/Activision, (see also here, here, and here.)

On the Big Tech front things do not look much better. Both agencies have filed major illegal monopolization cases, sometimes together with State AGs, against Apple (Smartphones), Google (Google Search and Google Ad Technology), Amazon (Online Retail), and Meta (Instagram/WhatsApp––see also here––, and Within acquisitions.)

In other words, if you work in Big Tech, forget about acquiring an AI startup, unless you want to go through a long and hostile review process. This is having a serious impact on the most disruptive and growing industry we’ve seen in years.

The “Magnificent Seven” Tech Companies

The ascendency of Apple, Microsoft, Nvidia, Tesla, Meta, Alphabet and Amazon, the so-called “Magnificent Seven” tech stocks––is indicative of “a fundamental shift”, primarily propelled by advancements in AI. Currently, the top seven tech stocks have not only accounted for about half of the gains in the entire S&P 500, but also contributed to over a quarter of the index’s total market capitalization. These companies are not merely riding the wave of current technologies but actively shaping the future of AI. They collectively gather most of the market cap in the industry.

But until we see a shift on the current enforcers’ antitrust policy against acquisitions involving Big Tech, it doesn’t matter how well these companies perform. Why? Because as a startup in the tech industry (and really in any industry), your main goal is to either try to eventually go public through an IPO––if you become big enough––, or rather look for one of the Big Tech companies to acquire you. But with the antitrust agencies’ current appetite to block such transactions, Venture Capital companies and investors in the AI industry are thinking twice before risking their money on a startup, unless they specifically know that company is going public. Otherwise, the risk that VCs and investors see to get the deal blocked by either the FTC or DOJ is just too high, regardless of the potential these startups might have. And let’s be honest, the number of companies that make it to that level is already extremely low.

First, this is clear evidence of how such an aggressive and disproportionate approach to acquisitions involving Big Tech is currently hindering innovation in the most relevant and disruptive industry we’ve seen in years. But this is a topic for another article.

Second, what I want to discuss in this article is how because of such an extreme approach from the Biden Administration, Big Tech are starting to develop new and creative strategies to get involved in the AI industry, without having to acquire any startups and face the antitrust agencies. At least not until now, because this has already raised some eyebrows at both the DOJ and FTC.

Microsoft/Inflection

The first of these deals involves Microsoft and Inflection.

Backed by Microsoft, Nvidia and billionaires Reid Hoffman, Bill Gates and Eric Schmidt; ex-DeepMind leader Mustafa Suleyman––now Google’s main AI lab, and Reid Hoffman, who co-founded LinkedIn, started Inflection in 2022, claiming to have the world’s best AI hardware setup.

Inflection thesis was based on AI systems that can engage in open-ended dialogue, answer questions and assist with a variety of tasks. Named Pi for “personal intelligence,” Inflection’s first release helped users talk through questions or problems over back-and-forth dialog it then remembers, seemingly getting to know its user over time. While it can give fact-based answers, it’s more personal and “human” than any other chatbot.

In March of this year, Microsoft announced the payment of $650 million to inflection. $620 million for non-exclusive licensing fees for the technology (meaning Inflection is free to license it elsewhere) and $30 million for Inflection to agree not to sue over Microsoft’s poaching, which includes co-founders Mustafa Suleyman and Karén Simonyan. Suleyman will run Microsoft’s newly formed consumer AI unit, called Microsoft AI–– a new division at Microsoft that will bring together their consumer AI efforts, as well as Copilot, Bing and Edge––, whereas Simonyan is joining the company as a chief scientist in the same new group. Inflection will host Inflection-2.5 on Microsoft Azure. It will be also pivoting away from building the personalized AI chatbot Pi to become an AI studio helping other companies work with large language model AI.

So here is where it gets interesting. Microsoft didn’t formally need to make an offer to acquire Inflection. In other words, technically Inflection remains an independent company. But the antitrust agencies seem to disagree and have started asking themselves the following questions.

First, if the key people, money and technology have all left the company to go to Microsoft, what’s really left in Inflection to still be considered as a competitor in the market?

Second, could this qualify as a change in control according to 16 C.F.R. §801.1(b)? What about a file-able acquisition of just “assets”––a term currently undefined by the HSR statute and regulations?

And third, does this move create a “reverse acqui-hire” transaction, a practice which is becoming very popular in the AI industry? The so-called “acqui-hires,” are transactions in which one company acquires another with the main purpose to absorb key talent. But what’s going on in the AI industry is not quite the same. Big Tech are acquiring key employees––such as Suleyman and Simonyan with their core teams in this case––, while licensing technology, leaving the targeted company still functioning independently––so no HSR filing requirement is apparently triggered. This is not the first time we’ve seen this scenario in the AI industry. Last month, Amazon poached Adept’s CEO and key employees, while getting a license to Adept’s AI systems and datasets.

But the antitrust enforcers have started to ask themselves whether Inflection and Adept are still real competitors in the AI market. The FTC has already sent subpoenas to both parties in the Microsoft/Inflection transaction, asking for information about a potential gun-jumping scenario: whether the $650 million deal may qualify as an informal acquisition requiring previous government approval. In the case of Amazon/Adept, the FTC has also decided to start an investigation and asked for more information.

OpenAI, Nvidia and Microsoft

The FTC and DOJ are finalizing an agreement to split duties to investigate potential antitrust violations of Microsoft, OpenAI, and Nvidia.

According to Politico, the DOJ will lead the Nvidia investigation, and its leading position in supplying the high-end semiconductors underpinning AI computing, while the FTC is set to probe whether Microsoft, and its partner OpenAI, have unfair advantages with the rapidly evolving technology, particularly around the technology used for large language models. At issue is the so-called AI stack, which includes high-performance semiconductors, massive cloud computing resources, data for training large language models, the software needed to integrate those components and consumer-facing applications like ChatGPT.

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