Developments In U.S. Antitrust Litigation ' 2023 Year In Review

• Published date: 12 February 2024
• Law Firm: Arnold & Porter
• Author: Mr Daniel B. Asimow, C. Scott Lent, Sonia Kuester Pfaffenroth, Laura Shores, Matthew Tabas and Patrick Shaw

2023 was an eventful year for antitrust litigation, with 250 new antitrust complaints filed. The U.S. District Court for the Northern District of California continued to be the most popular jurisdiction for antitrust plaintiffs, with 42 cases filed in 2023. Northern California was followed by the District of New Jersey, with 30 cases; the Northern District of Illinois, with 19 cases; and the Southern District of New York, with 16 cases.

Both the antitrust authorities and private plaintiffs were focused on aggressive enforcement and sought to apply the antitrust laws to new technologies and existing theories of harm in new ways. Indeed, plaintiffs targeted a wide range of industries with antitrust actions in 2023, from tech to real estate and from sports to pharmaceuticals. This trend is unlikely to slow down in 2024.

Continued Focus on Tech

The tech sector continued to be a target of antitrust litigation in 2023. The Federal Trade Commission's (FTC) lawsuit against Meta (formerly Facebook) and challenges by the states and Department of Justice, Antitrust Division (DOJ) to Google's conduct are ongoing. Two important developments, however, helped to shape antitrust litigation in the tech space: the FTC's lawsuit against Amazon and a focus on algorithms as a mechanism for allegedly unlawful coordination among competitors.

On September 26, 2023, the FTC and 17 state Attorneys General sued Amazon in the U.S. District Court for the Western District of Washington for its alleged anticompetitive practices. The complaint focuses on two purportedly anticompetitive strategies by Amazon to monopolize the online retail market, alleging that Amazon's conduct violated Section 2 of the Sherman Act, Section 5(a) of the FTC Act, and several state antitrust statutes.¹ First, the FTC and Attorneys General allege that Amazon artificially inflated its prices by both punishing Amazon's own marketplace sellers for offering discounts and by deterring other online retailers from undercutting Amazon's prices. For example, the complaint asserts that Amazon disadvantages discount sellers in Amazon's search results such that they become functionally invisible. Second, the complaint alleges that Amazon conditions sellers' ability to sell their products using Prime on their use of Amazon's fulfillment service. According to the plaintiffs, the cost of Amazon's fulfillment service renders it prohibitive for sellers to offer their products on other platforms. Amazon has responded to those allegations by arguing that the action will lead to higher prices and slower deliveries for customers. Amazon asserts that its "tools and education" help its retailers increase sales by trying to "match other retailers' low prices," and do not prevent its retailers from choosing to "set prices that aren't competitive."²

In addition, the complaint against Amazon also alleges that the company used a pricing algorithm, termed "Project Nessie," to set prices so that competitors would follow.³ The FTC complaint alleges that "Amazon created a secret algorithm ... to identify specific products for which it predicts other online stores will follow Amazon's price increases" which "[w]hen activated, ... raises prices for those products, and when other stores follow suit, keeps the now-higher price in place."⁴

The FTC and states' allegations related to "Project Nessie" are just one example of recent cases involving antitrust challenges to algorithmic pricing software. For example, on November 1, 2023, the Attorney General's Office for the District of Columbia filed a suit against RealPage Inc. and multiple residential property companies alleging violations of the District of Columbia's antitrust statute.⁵ The complaint alleges that these companies entered into an illegal agreement to collectively raise rents on tenants in Washington, D.C. rental units by agreeing to delegate pricing decisions to RealPage's "Revenue Management" pricing software.⁶ The complaint also alleges that defendant rental companies "agreed, in writing, to share competitively sensitive data for RealPage to feed into its rent-setting [Revenue Management] Software."⁷ The Attorney General for the District of Columbia alleges that RealPage's Revenue Management software uses data to estimate supply and demand for housing specific to particular geographic areas and unit types and then generates a suggested rental price for a given rental unit.⁸

The District of Columbia case is only the most recent antitrust case brought against RealPage and residential property companies related to the Revenue Management software. An ongoing multi-district litigation against RealPage and multiple rental property companies pending in the Middle District of Tennessee involves allegations of an illegal price-fixing conspiracy impacting student housing and multifamily housing rentals. Following consolidation of the action, the defendants moved to dismiss both the student housing complaint and the multifamily housing complaint. On December 28, 2023, the court denied the defendants' motion to dismiss the multifamily housing complaint and granted the motion to dismiss the student housing complaint.⁹ The court dismissed the student complaint for failing to plausibly allege market power and having insufficient direct evidence of anticompetitive effects.¹⁰ Despite denying defendants' motion to dismiss the multifamily housing complaint, the court concluded that they had not alleged facts sufficient to state a claim under a per se standard.¹¹ The court, however, allowed the multifamily action to proceed as a rule of reason case.

Private plaintiffs have also challenged the alleged use of pricing algorithms in the hotel industry. Four ongoing cases involve allegations that multiple hotel and casino operators in Las Vegas and Atlantic City used software from the Rainmaker Group purportedly to coordinate their hotel room pricing.¹² In one case, Gibson v. MGM Resorts International, the U.S. District Court for the District of Nevada dismissed the plaintiffs' complaint on October 24, 2023 for failure to plead sufficient details of the alleged conspiracy.¹³ The court found that plaintiffs failed to provide details as to the exact nature of the alleged agreement, which hotels were alleged to be involved, and when the agreement started.[[N:Id. at *2 ("[T]here are numerous deficiencies in Plaintiffs' Complaint under the Sherman Act pleading standards.... For example, Plaintiffs' complaint does not answer the basic questions: who, did what, to whom (or with whom) ... and when?").]] Plaintiffs filed an amended complaint on November 27, 2023.¹⁴

Outside of the real estate industry, the DOJ filed a complaint on September 28, 2023 in the U.S. District Court for the District of Minnesota against Agri Stats, a company that aggregates and disseminates information on the production, costs, and sales of processors of meats including chicken, turkey, and...