Antitrust Litigation ExpertsIntroduction:

In September of 2017, Makan Delrahim became the top official in the antitrust division of the U.S. Department of Justice (DOJ), and his role as deputy assistant attorney general has generated a great deal of discussion in the antitrust community as to what direction his leadership might take. See, e.g., Dee Bansal, et al., “10 Antitrust Developments And Trends To Watch In 2018,” Law 360, Jan. 24, 2018, at https://www.cooley.com/~/media/cooley/pdf/reprints/2018/2018-01-29-10-antitrust-developments-and-trends-to-watch-in-2018.ashx?la=en (last visited Sep. 19, 2018). Many legal analysts predicted that Delrahim, a Trump nominee, would “follow a less interventionist…approach to antitrust enforcement,” although the DOJ has taken an aggressive stance and made notable attempts to block certain mergers on antitrust grounds, such as with AT&T and Time Warner, which was the administration’s “first major antitrust trial.”  Id.

Attorneys and experts have hypothesized about the DOJ’s approach to antitrust lawsuits, and Delrahim has even recently discussed the approach the agency would pursue under his leadership. See Makan Delrahim, “Assistant Attorney General Makan Delrahim Delivers Remarks at the Antitrust Division’s Second Roundtable on Competition and Deregulation,” U.S. DOJ News, Apr. 26, 2018, at https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-antitrust-divisions-second (last visited Sep. 19, 2018). This article discusses what the legal community may encounter with the DOJ and antitrust cases as well as how expert witnesses will be integral participants to address recent policy changes.

Discussion:

Delrahim and his colleague Joseph Simons, who serves as director of the Bureau of Competition (BOC) at the Federal Trade Commission (FTC), have emphasized the need for “taking an economic-focused approach to analyzing antitrust issues.” Dee Bansal, et al., supra. In determining what kind of remedies to pursue in cases where the federal government believes an antitrust violation has occurred, Delrahim has expressed his preference for “structural relief.” See id.; See Makan Delrahim, supra. In Delrahim’s view, previous judges and government officials provided legal remedies that “were based on mistaken economic theories.” Id. To wit, he has argued that prior decisions regarding mergers that violated antitrust laws were shortsighted, and such efforts to penalize anticompetitive behavior actually eliminated the kind of competition and fair playing fields that the government sought to encourage. See id. In addition, Delrahim claims that government actors should approach antitrust matters from the perspective of a “law enforcement agency, not a regulatory one.” Id.

There are several takeaways from Delrahim’s statements and the recent leadership from the DOJ and related agencies. First, attorneys who handle antitrust litigation should understand the economic expertise that will be expected for a certain party to prevail or a specific remedy to be ordered. To this end, expert witnesses with strong economic backgrounds, who can assess how past judgments or government approaches have empirically impacted competition, will prove invaluable to all parties. Litigators will not only need to determine whether the DOJ would consider certain actions to be anticompetitive but also consider what specific form of relief would best achieve the goal of restoring competition and fairness in corporate decisions.

Those involved in antitrust law must have a solid understanding of what Delrahim’s intent is when he iterates the focus on structural relief under his leadership. As a major law firm with an antitrust practice explains, “Structural remedies contrast with ‘conduct’ or ‘behavioral’ remedies, which also are intended to preserve competition, but through requirements that the merged firm commits to take certain business actions or refrain from certain business conduct going forward.” Jones Day Publications, “Federal Antitrust Enforcers Taking More Regulatory, but More Flexible, Approach to Merger Remedies,” Jun. 2010, at https://www.jonesday.com/federal_antitrust_enforcers/ (last visited Sep. 19, 2018). Delrahim expounded on this view by suggesting that instead of seeking to destroy an anticompetitive merger, the DOJ will consider consent decrees, divestiture, and settlements where an offending party can “bring [its] conduct or transaction to conform to the law.” Makan Delrahim, supra.

A consent decree typically avoids an admission of liability and involves a party found to be in violation of antitrust laws making certain concessions and divestitures under the DOJ’s guidance and oversight. See, e.g., Kathryn M. Fenton, et al., “DOJ Toughens Antitrust Consent Decree Enforcement,” Lexology, Feb. 9, 2018, at https://www.lexology.com/library/detail.aspx?g=867cbdcb-07ef-41d5-b3a0-900caaa02deb (last visited Sep. 19, 2018). There are two important components of the DOJ’s recent changes to the way in which consent decrees function. See, e.g., id.

One takeaway from antitrust commentators is that the DOJ has lowered the evidentiary standard required to “prove civil contempt for violation of a consent decree from clear and convincing evidence to a preponderance of the evidence.” Id. This, coupled with other changes in the DOJ’s language concerning consent decrees, gives the Department additional “leverage over parties who have settled merger and non-merger civil antitrust investigations.” Id. The lower evidentiary threshold and increased latitude are given to the DOJ to enforce divestitures and other conditions of consent decrees are important. Attorneys for parties to these decrees should consult antitrust experts to understand the implications of such settlements.

A second factor to consider regarding the Department’s new practice is that parties who do opt to settle an antitrust violation via a consent decree should be aware that “there will be less flexibility in negotiating compliance details and greater potential risks associated with any order violations.” Id. This inflexibility and the potential consequences that could result from a breach of a consent decree are important considerations for the parties involved and their attorneys. To best determine how to maintain compliance with a consent decree and to avoid a civil contempt action, attorneys in the field should consult experts who can generate ideas that comport with DOJ edicts but attempt to place the parties in the best economic position possible.

Conclusion:

When Makan Delrahim and Joseph Simons were appointed, some analysts believed the appointees would favor a laissez-faire approach to antitrust law. See, e.g., Dee Bansal, et al., supra. In fact, Delrahim recently participated in a question and answer session where he stated that “[j]ust, because somebody is big, does not mean they have violated the laws. Nor should we condemn them because they have succeeded.” David McLaughlin, quoting Makan Delrahim, “Trump antitrust chief says ‘big is not bad’ as Justice Department examines tech companies,” Seattle Times, Sep. 6, 2018. Delrahim has expertise in evaluating the cumulative effects of policies on competition and has been reviewing a number of “legacy” consent decrees to determine their relevance in modern times. See Makan Delrahim, supra. He has also taken approaches that were not predicted by many, and his revisions of how the DOJ will approach antitrust violations and consent decrees, in particular, suggest a strict stance in certain respects. Regardless of the situation, antitrust practitioners should familiarize themselves with the changes Delrahim has made in approaches to potential violations. To help parties understand the new courses of action and adapt to an era of rigorous economic analysis, structural relief, and consent decrees with tough provisions, attorneys should retain experts in the field. Such witnesses can provide invaluable services and help companies adhere to policy changes while making business decisions that generate material success.