The Significance
These issues are coming to the fore partly because of draft merger guidelines the DOJ and FTC rolled out in July that may deem more companies to have dominant market positions, a determination that carries consequences beyond M&A.
The 13 “principles” in the guidelines essentially would codify the antitrust views of FTC chair Lina Khan and DOJ antitrust chief Jonathan Kanter, both of whom believe the longstanding approach of limiting the use of antitrust law to challenging practices that raise consumer prices is inadequate.
It doesn’t help that companies already were rattled by stepped-up antitrust enforcement under the Biden administration. Antitrust attorneys say the DOJ and FTC are taking a harder line on what constitutes a violation than they have in the past 40 years.
This is partly because Khan and Kanter view the rise of the tech giants as a byproduct of past flawed thinking—excusing Amazon, for instance, from scrutiny of potentially anticompetitive practices because it sells goods at low prices. They argue courts should also consider a range of other factors, including whether business practices negatively affect labor markets in various ways, such as by depressing wages paid in certain industries.
This shift is “heightening standards for cooperation, remediation, and expectations of compliance departments,” said Jaime Raich, executive counsel of global investigations at GE.
The Information
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The Forecast
Companies need to be proactive and super-responsive to investigators to manage regulatory risks in this area of hyper-aggressive enforcement, according to participants on a recent panel at ALM Global’s General Counsel East in New York City.
“Regulatory agencies are following the lead of the administration’s policies, which are strong on regulation and strong on law enforcement,” said Eduardo Santiago-Acevedo, vice president and senior counsel of regulatory law at Prudential Financial.
Gurbir Grewal, director of the SEC’s Division of Enforcement, has been “pretty explicit … that he doesn’t view penalties as the cost of doing business. So we’re seeing a very aggressive stance in this administration, where penalties that the SEC is assessing now really aren’t tied to precedent, and they’re much larger than they’ve been in the past,” said Kelly Gibson, a Morgan, Lewis & Bockius partner.
In turn, the panelists say that all the major regulators—from the SEC and DOJ to the Financial Industry Regulatory Authority—are emphasizing the importance of self-reporting and cooperation.
