Put down the lemonade and break out the pumpkin spice: summer is coming to an end. And while you were in the pool – or maybe just answering emails poolside – the antitrust agencies showed no signs of a summer slowdown. Before we bid farewell to the warmest months of the year, join us for a look back at some of the antitrust news stories that made headlines this summer.

1. Courts say “not so fast” to FTC’s non-compete ban

The Federal Trade Commission’s (FTC) ban on non-competes has faced a major setback. On July 3, Judge Ada Brown of the United States District Court for the Northern District of Texas entered a limited preliminary injunction blocking the FTC from implementing or enforcing the ban. While the preliminary injunction was limited to the small group of plaintiffs who had brought suit to challenge the ban, Judge Brown indicated that final adjudication would occur on or before August 30.

In a follow-up ruling issued in August, Judge Brown concluded “that the FTC lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious.” The court entered an order blocking the FTC’s ban – originally set to take effect on September 4 – on a nationwide basis. The FTC is expected to appeal the decision. In the meantime, though, many states have their own restrictions on non-competes or are considering similar bans.

The takeaway: While a nationwide ban is now on hold, the legal battle is far from over – stay tuned for more development in this space.

2. EC cracks down on anti-competitive cross-border trade restrictions

The European Commission (EC) is issuing a stark warning to companies engaged in EU cross-border trade. Food producer Mondelez was fined €337.5 million following the Commission’s findings that the company entered into more than 20 anticompetitive agreements and abused its dominant position in certain national markets, in violation of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

Specifically, the EC found that Mondelez had entered into agreements that limited the territories or customers to which wholesale customers of Mondelez could resell products (and in one instance, required Mondelez’s customer to charge higher prices for exports than for domestic sales) and prevented exclusive distributors active in certain EU Member States from selling to customers located in other EU Member States. The Commission also found that Mondelez had abused its dominant position in certain national markets for the sale of chocolate tablets by refusing to supply a wholesaler in Germany to prevent them from reselling in other EU Member States with higher prices and removing certain products from the market in the Netherlands to prevent them from being imported into Belgium (where Mondelez was selling the same products at higher prices in larger quantities).

In her announcement of the decision, Executive Vice President and Commissioner for Competition Margrethe Vestager explicitly invited companies to scrutinize their contracts for compliance with EU antitrust law. The day after the decision, Vestager announced a fact-finding mission on territorial supply constraints in the EU – making clear that Commission scrutiny of cross-border trade and supply issues will continue.

The takeaway: There is no time like the present for some introspection. Companies should carefully examine their distribution contracts for any anticompetitive provisions. Remember, Article 101 applies not only to written agreements but also to informal arrangements and concerted practices. Additionally, companies should consider whether they could be considered “dominant” in any market and proceed with caution to avoid infringing Article 102.

3. Algorithmic pricing in the DOJ’s crosshairs

Last summer’s Competition Currents highlighted the antitrust agencies’ continued interest in artificial intelligence and in particular, algorithmic pricing. In late August, the Department of Justice (DOJ) filed a civil lawsuit against RealPage Inc. accusing the property management software maker of decreasing competition among landlords in apartment pricing and monopolizing the market for commercial revenue management software.

The DOJ’s suit – which was joined by the attorneys general of several states – claims that RealPage contracts with competing landlords who agree to provide nonpublic, competitively sensitive information about their apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software. This software then generates recommendations for participating landlords based on their and their rivals’ competitively sensitive information. The DOJ argues that in a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, and other lease terms.

In announcing the suit, Deputy Attorney General Lisa Monaco said, “By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices – undermining competition and fairness for consumers. Training a machine to break the law is still breaking the law.”

The takeaway: Companies utilizing algorithmic pricing or other AI-assisted tools should carefully review how those tools are applied and where they obtain their data.

4. European Commission opens probe into possible online food delivery anticompetitive agreements

The European Commission launched an investigation in July to determine whether online food-delivery companies Delivery Hero and Glovo engaged in anti-competitive practices. The two companies are among the largest companies in Europe that are active in the sector of online ordering and delivery of food, grocery and other daily consumer goods. Delivery Hero had held a minority share in Glovo since 2018 and in July 2022 acquired sole control.

The concerns raised by the European Commission focus on possible anticompetitive practices breaching Article 101 TFEU including allegations over potential geographic market allocation and exchange of commercially sensitive information, as well as no-poach agreements between the two companies, during the period when Delivery Hero held a minority stake in Glovo. If proven, the companies’ behavior could result in fines of up to 10% of their annual worldwide turnover.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Online food delivery is a fast-growing sector, where we must protect competition. This is why we are investigating whether Delivery Hero and Glovo agreed to share markets and not to poach each other’s employees. If confirmed, such conduct may amount to a breach of EU competition rules, with potential negative effects on prices and choice for consumers and on opportunities for workers.”

The takeaway: Interactions between competitors are far from unusual, from minority ownership situations to participation in trade associations. Companies should carefully review their policies around such interactions with an eye towards preventing improper information exchanges and agreements.

5. European Commission accepts commitments by Apple opening access to “tap and go” technology on iPhones

The European Commission accepted commitments offered by Apple and which address the European watchdog’s competition concerns relating to Apple's refusal to grant rivals access to a standard technology used for contactless payments with iPhones in stores (“Near-Field-Communication (NFC)” or “tap and go”). Commission opened a formal investigation of Apple Pay in June 2020 following a number of complaints. The investigation was later narrowed to focus on the use of Apple’s technology for contactless payments.

The principal conclusion of the investigation was that Apple abused its dominant position on the in-store mobile wallet market on iOS by reserving access to the “tap and go” technology only to Apple Pay and thus refusing to supply this technology to competing mobile wallet developers. Under the commitments, iPhone users will be able to choose a default wallet option, while mobile wallet developers will have access to iPhone verification functions like Face ID.

To address the Commission’s competition concerns, Apple offered a number of commitments, including to allow third-party wallet providers access to the NFC input on iOS devices free of charge, without having to use Apple Pay or Apple Wallet. Following remedy testing and feedback, the European Commission concluded that Apple’s commitments would address its competition concerns and therefore decided to make them legally binding on Apple. The commitments will remain in force for ten years and apply throughout the European Economic Area. Their implementation will be monitored by a monitoring trustee.

The takeaway: Scrutiny of once-emerging technologies now seen as “industry standard” continues across the digital sector. The investigation is also a good reminder of how the scope of an inquiry can change over time.

6. Labor in the spotlight

President Biden’s 2021 Executive Order on Promoting Competition in the American Economy highlighted labor as a key focus of his administration’s “whole of government” approach to promoting competitive markets. In numerous public statements, agency officials from both the FTC and DOJ have echoed the importance of labor considerations in their approaches to policies and enforcement (including the FTC’s attempt to ban non-competes, discussed in #1 above).

Continuing in that vein, the DOJ, FTC, Department of Labor, and National Labor Relations Board recently announced an interagency memorandum of understanding (MOU) on labor issues in merger investigations. The MOU provides for information sharing between the agencies and allows the antitrust agencies to seek technical assistance from the other agencies on labor and employment law matters in merger review, including in the resolution of labor market merger investigations.

The takeaway: Companies considering mergers and acquisitions should anticipate questions regarding potential labor impacts. While labor-related inquiries have become more common in merger reviews in the past year, the new cooperation agreement may lead to more in-depth questions or information requests.

For more on these stories and discussion on potential developments we are watching, please join our Consumer Products Antitrust industry group for a webinar on Thursday, October 17, 2024. Registration details can be found here.

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