Once again, antitrust continues to see significant enforcement efforts and noteworthy developments in recent months. These developments involve multiple broad and developing trends across various industries and show heightened regulatory, legislative, and oversight efforts at both the state and federal levels. This article discusses these actions and their impact on the fields of telecommunications, cable, and the internet; utilities, electrical power, and energy; transportation; and oil and gas as well as certain broader pressing regulatory issues that could have extended effects across many industries.
A number of broader trends are pressing across different markets and industries. These regulatory issues may have widespread effects not confined to any specific industry, but nonetheless impact the ordinary course of business for this Section. These hot topics and trends in regulatory law have the potential to significantly alter antitrust law and have received considerable public attention.
Multiple recent suits have brought price-fixing claims based on the use of pricing algorithms. These suits span several industries that utilize both the internet and online medium in the course of normal business activities, including real estate, hotels and entertainment, and insurance. At the core of these cases is the allegation that artificial intelligence (“AI”) pricing software—which analyzes aggregated data to recommend prices—enables companies to collude when setting prices.
The Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) have weighed in on these private suits by filing joint statements of interest. These statements contend that the plaintiffs properly alleged price-fixing claims by stating that the defendants delegated pricing decisions to a common pricing algorithm. What matters, according to the DOJ and the FTC, is not whether the competitors made an express agreement, but that their parallel conduct gives rise to an inference of collusion. In July 2024, FTC Chair Lina Khan gave her views on AI price-setting tools at the Ninth Circuit Judicial Conference. She noted the pending private lawsuits, as well as the FTC’s recent investigation into companies pricing of consumers’ personal data, and expressed concern about how the use of AI algorithms may result in collusion even if “you don’t have a handshake in a back room.”
A month after FTC Chair Khan’s comments, the DOJ filed its own civil antitrust suit against RealPage, Inc. (“RealPage”) in the U.S. District Court for the Middle District of North Carolina. The complaint alleges that RealPage violated Section 1 of the Sherman Antitrust Act by unlawfully sharing information and making agreements with landlords meant to align prices, and also alleges that RealPage violated Section 2 of the Sherman Antitrust Act by maintaining a monopoly of a market for commercial revenue management software used by multifamily housing owners. This case could establish a key precedent for how the government approaches price-fixing claims involving algorithmic pricing software and the internet used in real time transactions.
In June 2024, the U.S. Supreme Court overruled the 40-year-old precedent of deferring to federal agency interpretations of ambiguous statutes under the doctrine known as “Chevron deference.” The FTC predicts that the decision in Loper Bright Enterprises v. Raimondo will not have a “significant impact” on its “efforts to protect consumers.” While the FTC has not previously relied on Chevron deference when defending its regulations, the decision in Loper Bright could affect the FTC’s recent aggressive enforcement and rulemaking efforts that go beyond the conduct previously thought to violate antitrust laws.
In April 2024, the FTC issued a final rule that would ban nearly all noncompete agreements between employers and workers. The rule was issued under the FTC’s authority to prevent unfair methods of competition. If the rule were to go into effect, it would operate retroactively to invalidate existing post-employment noncompete agreements with nonsenior executives, as well as require employers to notify employees with existing noncompete agreements that such provisions are unenforceable.
The rule, however, was recently blocked by a federal court in the Northern District of Texas. In an August 2024 opinion, the court concluded that the new rule exceeded the FTC’s statutory authority under the FTC Act’s “housekeeping rules” and that the rule was “arbitrary and capricious” under the Administrative Procedure Act. The court explained that while the FTC was given statutory authority to prevent “unfair methods of competition,” this did not provide the FTC with authority to create “substantive rules regarding unfair methods of competition.” The FTC has stated that it is “seriously considering a potential appeal.”
In May 2024, Senator Amy Klobuchar reintroduced legislation aimed at strengthening antitrust laws. The proposed bill would change the current standard to prohibit mergers under the Clayton Act. The new standard would prohibit mergers that “create an appreciable risk of materially lessening competition,” unlike the current standard which bans mergers that “substantially lessen competition.” The legislation would also shift the legal burden from the party challenging the merger to the merging companies, requiring that the merging companies prove that the transaction does not create “an appreciable risk of materially lessening competition or tend to create a monopoly or monopsony.” The bill also proposes several other changes, including a clarification that antitrust law extends to companies with monopsony power and not only monopoly power and a boost in funding for the DOJ’s antitrust division and the FTC.
In September 2024, Judge Leonie M. Brinkema of the U.S. District Court for the Eastern District of Virginia heard evidence in a bench trial between the DOJ and Google LLC (“Google”). At the core of the suit is the DOJ’s claim that Google has leveraged its size and power to seize control of digital advertising technology that uses split-second auctions to connect website publishers, advertisers, and consumers with advertising on specific websites. During the trial, the DOJ called witnesses who testified about feeling competitive pressures to use Google products and the difficulty of competing against Google given its significant access to user data and the integrated nature of its advertising technology platform. The evidentiary portion of the trial has concluded and oral arguments are set to be heard by Judge Brinkema on November 25, 2024. If the DOJ were to win in its digital advertising technology case, it could embolden the agency to pursue further enforcement efforts against technology companies.
This trial comes on the heels of a landmark August 2024 opinion issued by Judge Amit P. Mehta. That opinion held that Google acted as a monopolist in the general search engine market in violation of Section 2 of the Sherman Act. Judge Mehta concluded that Google had maintained its search engine monopoly by entering exclusive agreements with companies such as Android and Apple to ensure that its search engine was the default search engine on consumers’ devices. While the liability phase of the search engine litigation has concluded, Judge Mehta has not yet ruled on the remedy for that violation. Possible remedies include restrictions on Google contracting with third parties to be the default search engine or requiring some form of divestiture.
In July 2024, multiple Democratic senators sent a letter to the DOJ and the Federal Communications Commission concerning the merger of T-Mobile USA, Inc. (“T-Mobile”) and United States Cellular Corp. (“UScellular). The senators—who include Senators Elizabeth Warren, Amy Klobuchar, Chris Murphy, Bernie Sanders, Cory Booker, and Richard Blumenthal—stated that T-Mobile’s 2020 merger with Sprint Nextel Corp. (“Sprint) had resulted in higher costs for consumers and job losses, and that they believe that T-Mobile’s acquisition of UScellular would “exacerbate these harms.” The letter asks the DOJ to not only look into T-Mobile’s acquisition of UScellular, but to also review T-Mobile’s compliance with the final judgment related to its merger with Sprint.
T-Mobile’s merger with Sprint is also the subject of a lawsuit brought by subscribers of AT&T Inc. (“AT&T”) and Verizon Communications, Inc. (“Verizon”). The lawsuit, filed in June 2022, alleges that the merger resulted in Verizon and AT&T raising prices as they no longer had a reason to compete as vigorously for subscribers. In May 2024, the Seventh Circuit denied a petition by T-Mobile to immediately appeal the district court’s order denying its motion to dismiss the suit based on standing.
In August 2024, sports streaming service FuboTV Inc. (“Fubo”) secured a preliminary injunction blocking The Walt Disney Co. (“Walt Disney”), Fox Corporation (“Fox”), and Warner Bros. Discovery, Inc. (“Warner Bros.”)—as well as several other companies—from launching a joint sports streaming service named “Venu.” Fubo had filed the lawsuit in February 2024 alleging that the joint venture was an improper attempt at market consolidation that would cause higher prices and harm consumers. The order granting the preliminary injunction held that Fubo would likely succeed on its claims that Venu would substantially lessen competition and restrain trade in the relevant market. A trial on whether a permanent injunction should issue is currently set for October 6, 2025.
The joint venture has also drawn regulatory and congressional scrutiny. There have been reports that the DOJ might be preparing to scrutinize the joint streaming service. And in April 2024, Congressmen Jerry Nadler and Joaquin Castro sent a letter to Walt Disney, Fox, and Warner Bros. with a list of nineteen questions seeking to probe how the venture would affect competition in the sports streaming market. Those three companies had meetings with the lawmakers’ staff, but it did not satisfy the Congressmen’s concerns and a follow-up letter was sent in June 2024.
In August 2024, the U.S. Court of Appeals for the Fourth Circuit reversed the district court’s grant of summary judgment in favor of Duke Energy Corporation (“Duke Energy”). Duke Energy had sued NTE Energy’s North Carolina division in September 2018 on a breach of contract claim, and NTE Energy countersued with antitrust and other claims. In June 2022, the district court granted summary judgment on the antitrust claims after analyzing each of the allegations of Duke Energy’s unfair behaviors as separate incidents to be considered individually with a court-created “conduct test.” The parties separately settled the contract claims.
On appeal of the summary judgment order, however, the Fourth Circuit held that the district court’s approach was incorrect, explaining that “alleged anticompetitive conduct must be considered as a whole” and that the “application of such specific conduct tests would prove too rigid.” The panel also ordered that a new judge be assigned to the case. The district court judge had initially recused himself, only to be later reassigned the case. The Fourth Circuit concluded that “once a judge recuses himself from a case, he should remain recused from that case.”
Duke Energy has petitioned for rehearing en banc by the entire Fourth Circuit, arguing that allowing for the decision to remain in place would allow for the Fourth Circuit to become a “haven for antitrust claims.” The U.S. Chamber of Commerce has also filed an amicus brief in support of Duke Energy’s request for an en banc rehearing.
In May 2024, the U.S. Supreme Court declined to review a D.C. Circuit decision approving the Federal Energy Regulatory Commission’s (“FERC”) change to the nation’s largest regional grid operator’s bidding practices for electrical capacity auctions. In September 2021, FERC approved a change eliminating the default offer cap set for power companies to submit offers in PJM Interconnection’s (“PJM”) capacity auctions and replacing it with individualized “unit-specific review” calculations. Offer caps are intended to prevent electricity producers from using market power in PJM capacity auctions. The prior rule allowed producers to include the opportunity cost of assuming a capacity commitment, while the new standard requires imposition of a cap based on a producer’s net operating costs.
The Electric Power Supply Association and power producers including Constellation Energy Corp., Calpine Corp., and Vistra Energy Corp. challenged this change, arguing that FERC had failed to explain the change and that the change did not sufficiently account for the risks of making a capital commitment. The D.C. Circuit had held that FERC rationally explained its decision. The Supreme Court’s choice to not review that decision leaves in place the D.C. Circuit’s order and the change in bidding practice.
In August 2024, the federal government asked the D.C. Circuit not to consider arguments made by Chicago’s commuter rail system (“Metra”) before it dropped out of the case, which challenges Canadian Pacific Railway Ltd.’s $31 billion acquisition of Kansas City Southern Railway Co. The petitioners challenging the merger are a group of Chicago-area communities who contend that the Surface Transportation Board (“STB”) did not sufficiently analyze the public health and safety impact of the merger and that the merger, if not vacated, would increase vibration, noise, truck emissions, and hazardous material spills in the Chicago region.
The government’s motion comes after Metra settled its claims with the railways. Metra had made arguments in its opening brief that the merged railways’ operations interfered with the commuter system, causing delays and creating dangerous conditions, which the government argues are now waived because they were not made in the Chicago-area communities’ opening brief. The Illinois towns contend that Metra’s arguments should not be waived because they referenced them in their brief and because a finding of waiver would encourage parties to include duplicative materials in their briefing to hedge against potential settlements by other parties.
Whether the D.C. Circuit considers these arguments could impact whether it decides to void the merger, which was the first major railroad merger in almost two decades.
In September 2024, the Department of Transportation (“DOT”) notified four U.S. Airlines—American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines—that their respective frequent flyer rewards programs were under investigation. The DOT asked the airlines to provide records and reports concerning their rewards programs. The inquiry, according to the DOT, focuses on making sure that the programs do no subject consumers to “hidden or dynamic pricing, extra fees, and reduced competition and choice.”
In September 2024, the District Court of Massachusetts denied a request for $34 million in attorneys’ fees by airline passengers who claimed they contributed to the DOJ’s victory in a separate antitrust litigation. Passengers of JetBlue Airways Corp. and Spirit Airlines Inc. filed a complaint seeking to enjoin the airlines’ merger in November 2022. But after this private action was filed, the government filed a separate antitrust challenge, which went to trial and resulted in an injunction blocking the merger in January 2024 while the passengers’ litigation was stayed. The district court denied the request for attorneys’ fees in a short text entry, and the passengers plan to appeal.
In August 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the dismissal of Tesla Inc.’s (“Tesla”) antitrust suit accusing Louisiana car dealers and regulators of conspiring to exclude it from the sales, leasing, and warranty service market in Louisiana. Tesla alleges that Louisiana regulators and car dealerships conspired by lobbying the state legislature to enact a direct-sales ban on automakers and using their regulatory authority to reinterpret the law. In doing so, Tesla contends that they violated its due process rights and federal antitrust law. The Fifth Circuit concluded that Tesla plausibly alleged a due process violation based on the possibility that the Louisiana regulator acted with bias in favor of Louisiana car dealerships, and that the district court on remand should reconsider its dismissal of the antitrust claim.
In July 2024, House and Senate Democrats introduced a bill that would punish oil companies that collude with the Organization of the Petroleum Exporting Companies (“OPEC”) to raise prices. In support of the bill, the lawmakers pointed to the FTC’s recent complaint accusing Pioneer Natural Resources CEO Scott Sheffield of colluding with members of OPEC to artificially inflate prices, as well as reports that the FTC is investigating possible collusion between the seven major oil companies, including BP America, Shell USA, Chevron, and Occidental Petroleum. The announcement of the bill follows a May 2024 letter sent to by Congressman Frank Pallone Jr. announcing an investigation into the seven large oil companies and requesting documentation of communications between the companies describing present or future oil production.
The proposed bill requires that a company no longer be eligible for new oil or gas leases on federal lands and waters if the FTC finds a company colluded with OPEC. Furthermore, if a company is found to have colluded with OPEC, the Secretary of the Interior would be required to cancel each federal oil and gas lease and not renew or extend any oil and gas lease to the extent allowable by law.
In September 2024, a divided FTC signed off on a deal permitting the Chevron Corporation (“Chevron”) to buy the Hess Corporation (“Hess”) in a $53 billion megamerger. One condition of the deal being approved, however, is that Hess CEO John B. Hess be banned from Chevron’s board. In announcing the deal, the FTC stated that John Hess had communicated with OPEC and Saudi officials, allegedly encouraging OPEC competitors to stabilize production of oil and to draw down inventories.
A similar condition was included in Exxon Mobil Corp.’s (“Exxon”) $60 billion purchase of Pioneer Natural Resources. That deal, which was cleared by the FTC in May 2024, included a condition barring former Pioneer Natural Resources CEO Scott Sheffield from being on Exxon’s board. The FTC alleged in a complaint accompanying the agreement that Sheffield had a history of colluding with OPEC to inflate profits.
These deals indicate that mega-mergers within the oil and gas industry can succeed but that companies seeking to merge should be aware of officers with communication that might draw regulatory scrutiny.
