On February 26, 2019, the Federal Trade Commission’s (FTC) Bureau of Competition announced the launch of a new “Technology Task Force.” The Task Force will monitor competition in U.S. tech markets, investigate any potential anti-competitive conduct in those markets, and bring enforcement actions when it deems necessary.
In the announcement, FTC Chairman Joseph Simons said, “[t]he role of technology in the economy and in our lives grows more important every day . . . . [we must] closely examine technology markets to ensure consumers benefit from free and fair competition.” The Task Force will have the FTC’s full arsenal of enforcement tools, including the ability to unwind consummated transactions, and will be staffed with attorneys who have unique expertise in these ecosystems, including markets for online advertising, social networking, mobile operating systems, apps, and other platforms.
In its announcement, the FTC cited to the success of its 2002 Merger Litigation Task Force, which examined a number of hospital mergers and spurred a string of subsequent merger litigation victories. This nod to its past successes signals that the FTC is determined to bring and win cases involving tech markets as a result of the newly formed Task Force.
What does this mean?
- Through the Task Force, the FTC will take a closer look not only at proposed transactions but also consummated deals in tech markets. Companies should be aware that the FTC will consider unwinding transactions closed long ago if they identify anti-competitive harm.
- Second, acquisitions of young or nascent competitors will be of interest. Indeed, previous statements by Chairman Simons have indicated that while it may be harder for antitrust enforcers to prove the anti-competitive effects when a promising startup is acquired by a larger entity, the potential harm to competition can still be significant. As a result, acquisitions of small, innovative companies, that just a few years ago could have flown below the radar, are likely to receive additional scrutiny.
- The Task Force will also examine potentially anti-competitive conduct – including the sharing of competitively sensitive information and no hire or “no poach” agreements – in tech markets. This affects industry in two ways: first, to the extent such conduct is negatively affecting a company, consideration should be given to informing the government of the conduct. And second, all companies should have antitrust compliance policies in place and ensure their employees are following them.
The Goodwin Antitrust+Competition Team is well-equipped to advise on all of these issues. Please contact any of us if you have any questions.