Developments In US Antitrust Litigation'2021 Year In Review

• Published date: 31 January 2022
• Subject Matter: nti-trust/Competition Law, Antitrust, EU Competition
• Law Firm: Arnold & Porter
• Author: Mr Daniel B. Asimow, C. Scott Lent, Sonia Kuester Pfaffenroth, Laura Shores, Matthew Tabas and Travis W. Clark

INTRODUCTION

The pace of antitrust case filings showed little sign of slowing in 2021. According to Westlaw Analytics, 340 antitrust cases were filed in federal district courts in 2021. While this was roughly a 20% decline from 2020, when federal courts saw the most antitrust cases filed (426) in a given year since 2007, 2021 was still the third highest antitrust filing year during that fourteen-year span. And the Northern District of California continued to be the most active antitrust court with nearly 25% of all federal antitrust cases filed in 2021. The Northern District of California has been the most active antitrust court every year since 2009.

HIGHLIGHTS FROM 2021

Tech Cases Highlight Potential Challenges in Pleading Relevant Markets & Market Power

Facebook. The FTC and several state attorneys general filed lawsuits against Facebook in December 2020, alleging unlawful maintenance of a monopoly, including through the acquisitions of Instagram and WhatsApp and the imposition of certain platform policies that allegedly prevented potential competitors from integrating with Facebook's functionality.¹

In June 2021, a court in the District Court for the District of Columbia dismissed the states' case, ruling that the doctrine of laches, while it did not apply to federal agency plaintiffs, barred the states from challenging Facebook's acquisitions from 2012 and 2014. The court found that "the States' long delays were unreasonable and unjustified as a matter of law." ² The states have appealed the dismissal, arguing that laches does not apply when a sovereign state pursues an action in the public interest.³

The same court dismissed the FTC's complaint without prejudice in June 2021, finding that the FTC had failed to sufficiently allege that Facebook had market power in the market for Personal Social Networking (PSN) services-which the complaint had defined as the market for "online services that enable and are used by people to maintain personal relationships and share experiences with friends family and other personal connections in a shared social space."⁴ Judge James E. Boasberg noted the burden of pleading market power in "an unusual, nonintuitive product market,"⁵ and criticized the FTC's reliance on conclusory allegations that Facebook has "somewhere over 60% share" of the PSN services market, "the confines of which are only somewhat fleshed out and the players within which remain almost entirely unspecified."⁶

The court also analyzed the FTC's refusal to deal theory, concluding that Facebook's general policy of refusing to provide competitors access to its application programming interfaces (APIs) did not itself violate Section 2 of the Sherman Act. Even if specific instances of Facebook revoking a competitor's API permissions (after previously providing access) might violate Section 2, the FTC lacked statutory authority under Section 13(b) of the FTC Act to seek an injunction because it failed to allege that a Section 2 violation "is ongoing or about to occur"-as the last alleged instance of refusal occurred in 2013.⁷

The FTC amended its complaint in August 2021, and Facebook again moved to dismiss. On January 11, 2022, Judge Boasberg largely denied Facebook's motion to dismiss, finding that the FTC sufficiently alleged that Facebook maintained a monopoly in the PSN services market through its acquisitions of Instagram and WhatsApp. The court found that the FTC had "add[ed] substantial new allegations about the contours of Facebook's market share . . . includ[ing] allegations regarding Facebook's market share of daily average users (DAUs) and monthly average users (MAUs) of PSN services in the United States, as well as its share of users' average time spent on PSN services."⁸ Satisfied that "the FTC [did] its homework this time around" to support its market power allegations, the court continued its Section 2 analysis, concluding that the FTC "sufficiently alleged that Facebook acquired Instagram and WhatsApp in order to neutralize actual and likely future competitors."⁹ Importantly, the court held that the HSR review process provides no insulation from future challenges.¹⁰ However, the court narrowed the scope of the FTC's case, reaffirming its previous holding that the FTC lacked the statutory authority to seek an injunction addressing Facebook's platform-related conduct that last occurred in 2013. The court did not dismiss the FTC's claim, but noted it would be sliced out at summary judgment and that the FTC would not be permitted to seek discovery of Facebook's platform policies.

Epic v. Apple. Private antitrust challenges to major technology platforms also made headlines in 2021. Epic Games' challenge to Apple Inc.'s App Store policies went to trial in 2021. A court in the Northern District of California issued a lengthy decision in September 2021.¹¹ Noting that, "[s]uccess is not illegal," the court held that the plaintiff "failed in its burden to demonstrate Apple is an illegal monopolist" because the trial record ultimately reflected a market share of only 55% in digital mobile gaming transactions, and reflected no evidence of barriers to entry, reductions in output, or decreasing innovation.¹² With this holding, the court sided with Apple on the federal and state antitrust allegations. However, the court found for plaintiffs under the California unfair competition law and enjoined Apple from enforcing its prohibition on in-app payments that bypass the App Store and Apple's commission rate.¹³ Both Apple and Epic have appealed the decision,¹⁴ and in late November 2021 Apple won a bid to stay the district court's injunction pending appeal.¹⁵

Sports Cases Continue to Generate Significant Attention

NCAA v. Alston. On June 21, 2021, the Supreme Court unanimously held that the NCAA's cap on educational benefits to athletes (e.g., funds for school supplies and postgraduate scholarships) violated Section 1 of the Sherman Act.¹⁶ In so doing the Court upheld in its entirety a detailed injunction entered by Judge Claudia Wilken of the District Court for the Northern District of California that applied the rule of reason and upheld certain NCAA restrictions relating to athletic scholarships while striking down others.

After outlining the different degrees of scrutiny that may apply in Section 1 cases, the Court concluded that the "rule of reason in its usual form" should apply.¹⁷ It then provided important commentary on the application of the rule, including rejecting the idea that businesses must use the least restrictive means to achieve procompetitive benefits.¹⁸ Importantly, the Court did not accept NCAA's purported justification that the preservation of amateurism itself (i.e., the agreement not to compete in compensation provided to student athletes) was important to the NCAA's ability to offer a unique product that is valued by consumers who desire an alternative to professional sports. By rejecting that argument, the Court rejected the concept that a defendant, by attempting to define its product as one involving less competition, could avoid the application of the antitrust laws.¹⁹

Justice Kavanaugh wrote separately to express his view that many other NCAA compensation rules might also not survive antitrust scrutiny, stating that the NCAA's business model "would be flatly illegal in almost any other industry in America."²⁰ The NCAA is in the process of revising many of its rules. Student athletes are now free to license their names and images, as well as in some circumstances to receive income from sponsors.²¹ It appears likely that some restrictions on student-athlete compensation will now become a conference-level issue rather than a NCAA-level issue and that different conferences (which individually lack market power) will adopt different approaches, offering a wider range of options both for consumers of college sports and student-athletes.

City of Oakland v. Oakland Raiders. On December 2, 2021 the Ninth Circuit affirmed the district court's dismissal of the City of Oakland's antitrust claims against the Raiders and the NFL regarding the relocation of the Raiders from Oakland to Las Vegas.²²

Under the NFL's Constitution, the relocation of a member club and/or admission of a new club requires the approval of 75% of the members. The City of Oakland claimed that the NFL enjoyed...