A glance at headlines regarding competition law could easily give the impression that U.S. antitrust agencies have embarked on a record number of merger challenges in recent years. But the numbers tell a different story: in the first two years of the current Administration, the rate of merger-related federal enforcement actions has actually decreased. While
On January 5, 2023, the Federal Trade Commission (“FTC”) issued a groundbreaking proposed rule that would, if finalized:
- prohibit most employers from entering into non-compete clauses with workers, including employees and individual independent contractors;
- prohibit such employers from maintaining non-compete clauses with workers or representing to a worker that the worker is subject to a non-compete clause; and
- require employers to rescind any existing non-compete clause with workers by the compliance date of the rule and notify the affected workers that their non-compete clause is no longer in effect.
The FTC’s notice of proposed rulemaking explains that the FTC considered possible limitations on the rule—such as excluding senior executives or highly paid employees from the ban—but it ultimately proposed a categorical ban on non-competes. The only exception is for non-competes related to the sale of a business. However, even this exception is unusually narrow: it would only apply to selling business owners who own at least 25% percent of the business being sold. (The proposal also would not apply to most non-profits, certain financial institutions, common carriers, and others who are also outside the scope of FTC regulation.)
As discussed in Covington’s January 5 client alert, the FTC explained that it issued the proposed rule due to its belief that non-competes reduce wages, stifle innovation and business, and are exploitative and unnecessary. …
On September 29, 2022, the U.S. House of Representatives passed a package of three antitrust bills (H.R. 3843) by a vote of 242-184. The package includes: (1) the Merger Filing Fee Modernization Act; (2) the Foreign Merger Subsidy Disclosure Act; and (3) the State Antitrust Enforcement Venue Act.…
When its Anti-Monopoly Law (“AML”) went into effect in August 2008, China immediately became a significant antitrust enforcer on the world stage. On June 24, 2022, the National People’s Congress, China’s top legislature, passed the Amendment to the Anti-Monopoly Law of the PRC (the “Amendment”), the first significant changes to the AML in nearly fourteen years. The Amendment, which was signed into law by President Xi Jinping and published on June 24, will become effective on August 1. It marks a major milestone in antitrust enforcement in China.
The more significant aspects of the Amendment include:
- significantly enhanced penalties for AML violations, including the introduction of fines for individuals;
- the introduction of a discretionary “stop-the-clock” mechanism for merger reviews;
- the codification of a burden-shifting framework created by China’s courts that gives companies the opportunity to defend resale price maintenance agreements; and
- new safe harbor and burden of proof provisions for matters involving vertical agreements.
Consistent with trends in other jurisdictions around the world, the Amendment also features a special focus on key economic sectors such as the digital economy.
Following the publication of the Amendment, the State Administration for Market Regulation (“SAMR”), China’s lead antitrust enforcement authority, released six sets of draft implementing regulations for public comment. These cover subjects such as merger control and notification thresholds, anti-competitive agreements, abuse of a dominant market position, and the abuse of intellectual property rights to exclude or restrict competition. SAMR is accepting comments on these regulations until July 27, 2022.
How Covington Can Help
Covington’s global antitrust and competition practice guides clients through the often-complex web of antitrust and competition laws around the world to help them secure their most important business objectives. Our team, which includes many attorneys who have served in senior leadership roles at government enforcement agencies and in in-house positions, has decades of collective experience advising clients regarding their global antitrust and competition concerns. If you have any questions concerning the material discussed in this client alert, please contact any of the following members of our Antitrust/Competition practice: Jim O’Connell, James Marshall, and Alexander Wang.
This communication is intended to bring relevant developments to the attention of Covington & Burling LLP’s clients and other interested colleagues. It is not intended as legal advice. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein. Please send an email to email@example.com if you do not wish to receive future emails or electronic alerts.…
On 22 March 2022, the European Court of Justice (“ECJ”) issued two separate preliminary rulings – Bpost and Nordzucker – which clarify how the protection against double jeopardy (“non bis in idem principle”) should be applied in instances where an identical competition law infringement is sanctioned in parallel investigations, either by different regulatory authorities of the same EU Member State or by multiple national competition authorities (“NCAs”) from different EU Member States.
The key takeaways from the two judgments are as follows:
- the non bis in idem principle applies to competition law due to the criminal aspect embedded in the relevant administrative penalties;
- the non bis in idem principle only applies if the facts are identical – a mere reference to a fact in a decision is not sufficient to demonstrate that an authority has ruled on that element;
- different national authorities can impose fines for an identical infringement if the legislation on which they rely pursues complementary objectives;
- the non bis in idem principle also applies to situations where an NCA has granted leniency to a company such that only a declaratory finding infringement (without fine) can be made.
In Enel, a judgment of 12 May 2022 (C-377/20), the Court of Justice of the European Union (“CJEU”) complemented the framework for analysing exclusionary abuses developed in earlier case-law, notably where it applies to a context of market liberalisation:
- Abuse: The concept of “abuse” relates to conduct that departs from “competition on the merits”. Conduct that an equally efficient competitor can replicate is generally not abusive (“equally efficient competitor test”).
- Anti-competitive effects: While it is not necessary to demonstrate actual anti-competitive effects or the company’s intention to carry out an exclusionary strategy, such factors are relevant in assessing whether the conduct is abusive or not.
- Harm: Conduct that harms consumers indirectly as a result of its effect on the structure of the market is per se abusive; it is not required to demonstrate an actual or potential direct harm to consumers.
- Objective justification: The prohibition set out in Article 102 TFEU does not prohibit conduct that is objectively justified and proportionate, or where the behaviour is counterbalanced or outweighed by pro-consumer efficiency-benefits.
The judgment largely endorses the opinion of Advocate General Rantos (see our blog post), but adds some important nuance.…
When the UK left the EU on 31 December 2020, the Competition and Markets Authority (“CMA”) gained new powers, functions and responsibilities previously exclusively reserved to the European Commission (the “Commission”).
This blog explores how the CMA has tackled its increased workload in the first year post-Brexit, under the shadow of the global pandemic, and the extent to which the CMA’s practice has diverged from EU law.…
Tuesday, January 18th, the Federal Trade Commission (“FTC”) and the U.S. Justice Department’s Antitrust Division (“DOJ”) launched a joint public inquiry regarding the agencies’ horizontal and vertical merger guidelines. As part of this inquiry, the agencies are soliciting public comment via a Request for Information (“RFI”) on a wide range of topics that could lead to significant changes in the merger guidelines and increased scrutiny of a broad array of transactions. The agencies’ inquiry will address numerous themes of the merger guidelines including those highlighted below.
Continue Reading FTC, DOJ Announce Process to Revamp Merger Guidelines
On 6 October 2021, a preliminary ruling of the Court of Justice of the European Union (“CJEU”) in Sumal confirmed that follow-on damages actions can be brought against subsidiaries of companies found to have infringed EU competition law. This note briefly analyzes the judgment and the implications thereof.
Continue Reading The CJEU’s Sumal Judgment: Parental Liability is “Going Down”
On 20 July 2021, the UK Government’s Department for Digital, Culture, Media & Sport (“DCMS”) and Department for Business, Energy & Industrial Strategy (“BEIS”) published proposals for a new regulatory regime for digital markets alongside accompanying consultation documents (the “Consultation”). The Consultation seeks views from interested parties and closes on 1 October 2021.
Continue Reading New UK Digital Competition Regulation Regime Consultation Closes on 1 October 2021