Several state attorneys general recently signaled their interest in pursuing broader and more effective enforcement antitrust actions by urging the federal government to pass legislation that would strengthen current federal antitrust laws and solidify the states’ authority to enforce them.
In late September 2021, a group of 32 state attorneys general sent a letter to both chambers of Congress expressing their support for six bills first approved by the House Judiciary Committee in June. Co-led by Attorneys General Phil Wiser (CO), Douglas Peterson (NE), Letitia James (NY), and Herbert H. Slatery III (TN), the bipartisan coalition’s letter noted several existing impediments to the states’ efforts to protect consumers, including rapid changes in technology, decreased competition in important sectors, and judicial skepticism toward robust enforcement.
Legislation Targets the Technology Sector
As technology companies continue to tighten their grip on a fast-moving technological landscape, state attorneys general are interested in fulfilling their mandate to protect the consumers within their jurisdiction. Federal antitrust laws could be a particularly apt tool, but the existing laws are, by many measures, no longer appropriate for modern markets. Given these challenges, the state attorneys general called on federal legislators to clarify and update federal laws to ensure that the laws — and the regulators — remain in step with modern developments.
The bills currently before Congress would prohibit large technology companies from acquiring competitive threats, preferencing their own products or services, or discriminating against similarly situated business users. In addition, the proposed bills would eliminate certain procedures that can limit the states’ ability to pursue actions again perceived wrongdoers. If some or all of these measures pass, expect the state attorneys general to ramp up their efforts to target perceived anticompetitive behavior through increased investigation and enforcement.
AGs Press for More Authority at the State Level
Beyond supporting the currently proposed federal legislation, the state attorneys general suggested that Congress consider additional measures, including provisions they assert will ensure that competition and innovation are not stifled and that they claim will provide additional ammunition against supposedly unlawful or irresponsible mergers and business practices.
Although the states have the authority to pursue actions under both federal and state antitrust statutes, they have historically taken a back seat to the federal government when it comes to investigating and enforcing potential violations. States have increasingly faced headwinds when bringing actions against perceived antitrust violations, particularly in federal court. For example, antitrust actions brought by state enforcers are regularly consolidated by the Judicial Panel on Multidistrict Litigation (JPML) and reassigned to one federal judicial district, limiting the states’ ability to remain in their chosen courts and delaying the proceedings.
If passed, one of the bills currently before the Senate (the State Antitrust Enforcement Venue Act of 2021) would modify the federal procedural rules to limit defendants’ ability to transfer actions brought by the state attorneys general under federal antitrust law into a single, multidistrict litigation. But, according to the letter, that revision on its own may not be enough. In addition to the procedural revision, the state attorneys general requested that federal lawmakers acknowledge in any legislation to be passed that the states “stand on equal footing” with the federal government when investigating and challenging potential antitrust violations.
In short, while the states arguably already have the legislative authority to engage in antitrust enforcement, they believe that their role can and should be expanded, as federal regulators take a step back and as state regulators increase their presence in the regulatory landscape.
AGs Release Statements Encouraging Support for State-Level Antitrust Tools
The attorneys general leading the bipartisan coalition were quick to express their support for the bills and to highlight strengthened antitrust tools, which they say will help in their ongoing efforts to balance consumer protection with technological innovation.
New York Attorney General James asserted in a statement that now is the right time to take action. “Our antitrust laws must be modernized to catch up with the 21st century economy we are all living in,” said James. “For decades, our antitrust laws have promoted innovation and allowed some of the most influential and innovative companies in the world to thrive in the United States. But as our economy has changed, our laws have remained stagnant, putting a halt to this healthy competition. … Competition yields innovation, competitive pricing, higher quality, and consumer choice, and that is exactly what we are fighting to protect.”
Attorney General Slatery expressed similar motivation for his efforts in urging Congress to take action. “As the chief legal officers of our states, attorneys general often lead the way in antitrust enforcement, and federal laws are essential tools for that work,” said Slatery. “We call on Congress to prioritize protecting competition and innovation and we welcome the opportunity to discuss and improve the proposed laws.”
In addition to Attorneys General James and Slatery, the other coalition co-leaders are no strangers to the issue. In March 2021, both Colorado Attorney General Weiser and Nebraska Attorney General Peterson spoke before the U.S. House of Representatives Subcommittee on Antitrust, Commercial, and Administrative Law in favor of increased state-level antitrust enforcement power.
Legislative Push Signals Expanded State AG Antitrust Activity
The direct and well-publicized outreach to Congress is yet another indication that state attorneys general are poised to expand the use of their authority following the success of recent enforcement initiatives (e.g., in the area of opioid litigation). State attorneys general see themselves as playing an important role in the antitrust playing field: They can intervene to prevent perceived anticompetitive behavior if federal regulators choose not to engage, increase pressure on federal regulators to act, or assist in gathering evidence for antitrust investigations. Many state attorney general offices have departments devoted to antitrust actions, with those units (1) accepting responsibility for investigating any activity that appears to violate the laws, (2) taking legal action seeking to enjoin alleged anticompetitive practices, and (3) seeking damages or criminal penalties against parties that they deem to have violated antitrust laws.
While the states have historically pursued or considered antitrust enforcement within the pharmaceutical, telecommunication, health care, and meatpacking industries, recent efforts against large technological firms have stalled or been dismissed. With updated federal laws in place, state attorneys general will have enhanced tools to pursue companies for perceived violations of antitrust principles.
We will continue to track the progress of this package of legislation in Congress and monitor potential enforcement actions against any technology company that could be subject to state enforcement under current or revised laws.
For additional perspective and analysis on how this legislation would affect antitrust laws – including the risks it poses to companies – please see this article by our colleague, Barbara Sicalides, and her antitrust team.