News & Insights

Labor Market Impacts in Focus with FTC's Challenge of the Kroger/Albertsons Merger

On February 26, 2024, the FTC moved to block the $24.6 billion merger of grocery store giants the Kroger Company and Albertsons Companies, suing in the U.S. District Court of Oregon.
This suit, described by the FTC as the "largest supermarket merger in U.S. history" followed 16 months of investigation and the rejection by the FTC of a divestiture package proposed by the parties as inadequate.
Besides proceeding on a standard horizontal competition theory, focused on the loss of direct competition by the merging parties in a market defined as "traditional" supermarket chains, this suit also - for the first time in an FTC merger case - separately attacked the merger for its labor market impacts.
The labor aspect of the suit, taking up a sizable portion of the overall complaint, defined a labor market of union grocery store labor within localized areas whose bounds were set by collective bargaining agreements.
Whatever the outcome of this suit, the emphasis put on labor market effects - along with the FTC's zeroing in on such effects in Second Requests and its proposed revisions to the HSR Form to capture labor information - signal that this new front in merger litigation is likely to be a regular feature of antitrust suits in the coming years.

On December 18, 2023, the DOJ and FTC jointly published their final revisions to the Merger Guidelines, just short of five months from their July 19, 2023 publication in draft.
The finalized Guidelines are a continuing signal of the antitrust regulators' willingness to push the boundaries of antitrust enforcement and to lean in the direction of aggressive policing of commercial activity without providing any clear roadmap for companies on how to comply with the law.
The aggressive stance of the Guidelines, and the challenges for companies to understand - in advance - where the lines will be drawn, were signaled in recent days in various ways including through the DOJ's withdrawal (without replacement) of various healthcare related policy statements.
Although the final version modified some language from the draft that had drawn criticism, especially around the arguing for procompetitive efficiencies, and in dropping an explicit 50% foreclosure share as a key marker in evaluating vertical mergers, the Guidelines are largely unchanged from and remain an aggressive and expansionist effort by the DOJ/FTC to reset the frame for evaluating potentially anticompetitive mergers.

SecondSight Law advised Anthropic in its multi-billion dollar collaboration and AI shaping investment by Amazon, announced on September 25, 2023.
The up to $4 billion investment and strategic collaboration brings together innovative technology and expertise in safer generative artificial intelligence (AI), with an eye to accelerating the development of Anthropic’s future foundation models and make them widely accessible to AWS customers.

The Federal Trade Commission has brought, on September 21, 2023, an administrative complaint that provides the first clear cut example of its intention to target "roll up" strategies by private equity firms.
The focus of the complaint was the "roll up" of a series of anesthesia practices in Texas by U.S. Anesthesia Partners, Inc. ("USAP") - promoted by its private equity investor Welsh, Carlson, Anderson & Stow - and alleged by the FTC to have given USAP a monopoly position in the affected Texas markets.
Although the need to analyze and challenge "roll up" acquisitions has been a prominent new theme for the FTC - including in Congressional testimony by FTC Chair Lina Khan as well as in Section 5 of the recently announced DOJ/FTC Draft Merger Guidelines, the new challenge is more an illustration of the FTC's aggressive effort to find a suitable roll-up transaction to challenge rather than itself breaking any new ground in establishing novel theories of harm associated with these kinds of transactions.

The Federal Trade Commission has published, for public comment, the most significant changes to the Hart-Scott-Rodino Form in over 50 years. Read the proposed changes, announced on June 29, 2023, here.
SecondSight Law has commented on the proposal, with recommendations to reduce its burdens on filers. You can read the firm's comments here, as well as published in the Federal Register.

Francis Fryscak, the founder of SecondSight Law, presented on an ABA Panel to discuss the impact of the HSR Form proposals, and possible improvements, on September 21, 2023. Details on that panel discussion are linked here, and a replay link of the panel is available here.

On January 5, 2023, the FTC announced that it was proposing a new rule to broadly invalidate the use of noncompete clauses.
This major move is in line with the FTC's dramatically expanded view of what kinds of conduct it can prohibit under Section 5 of the FTC Act, far beyond recent official views that it would - with limited exceptions - cover activities already unlawful under the other major federal antitrust statutes. The policy shift prompted a dissent from then Commissioner Christine Wilson, who complained that the change would give the FTC "the authority summarily to condemn essentially any business conduct it finds distasteful."

SecondSight Law does not believe that the proposed rule will be meaningfully narrowed by the FTC when they issue their final rule.