Despite the high-profile legal battle between the United States and Silicon Valley, U.S. antitrust litigation has declined since the pandemic.
According to the U.S. Administrative Office of Courts, civil antitrust lawsuits accusing monopolistic mergers and business practices decreased by 42% from March 2020 to March 2023, dropping from 626 to 361.
That number dwindled despite a broader push by the Biden administration during this period to limit the concentration of power in major industries, including Big Tech.
The administration alleges antitrust violations by tech giants Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT), while reviewing a lawsuit brought by the Trump administration against Alphabet (GOOG, GOOGL). . It also seeks to prevent mergers that could eliminate competition in other industries.
The number of antitrust lawsuits filed by the government in the 12 months ending March 2023 fell to nine, down from 28 in 2020.
The number of individual lawsuits filed by companies alleging unfair competition within their industry was 352, a 42% decrease from 2020.
The lawsuit may have come up again last year. Government figures for the 12 months to March 2024 are not yet available.
A separate analysis from legal analytics firm Lex Machina shows a 19% increase for all of 2023. But even Lex Machina said the numbers show an overall decline in antitrust filings over the past decade.
“Since 2015, the trend has been quite markedly downward,” said Ron Porter, a data expert at the company.
“That's a very real trend.”
“There's no easy answer.”
Why is it declining overall? There are various theories of legal observers.
“It's a good question, but there's no easy answer,” said Lawrence White, an economist at New York University.
Perhaps a stronger enforcement environment is suppressing anti-competitive behavior, or perhaps governments are choosing to pursue larger goals instead of reducing caseloads to save costs and personnel. I don't know.
Federal Trade Commission Chair Lina Khan told Jon Stewart on The Daily Show last week that her staff can sometimes be “outnumbered” by 10 to 1 when dealing with large companies. , he said.
“We are playing to our strengths” by being “strategic” and “entrepreneurial,” she said.
Other theories to explain the decline in antitrust lawsuits include companies increasingly believing that courts will not accept their claims, or fearing that the financial risks of filing antitrust lawsuits are too high. There is something that is being done.
Some antitrust experts have argued that federal law in a series of cases, including a 2004 Supreme Court case that rejected claims that Bell Atlantic and its successors to the former AT&T engaged in anticompetitive conduct. Some believe that court rulings are responsible for this decline.
Stricter requirements that other courts have applied over the years have also increased the burden on private plaintiffs, particularly class action plaintiffs, according to a 2020 report by attorneys at law firm Simpson Thatcher.
As a result, the report says, the frequency of litigation has decreased and litigation has become larger and more complex.
“This has to be a really meritorious case with a high potential for significant rewards,” said Randy Stutz, president of the American Antitrust Institute, which advocates for stronger federal antitrust enforcement. said.
He suspects the high hurdles are preventing credible cases from being brought forward.
“The value proposition is changing,” he added.
Daniel Crane, a professor at the University of Michigan School of Law, wrote in a 2010 paper that corporate plaintiffs provide “deregulated” checks and balances that can potentially be overlooked or underprosecuted by government regulators. He said the decline in private litigation could be a concern for federal antitrust regulators because of the potential for
Federal antitrust regulators such as the FTC and the Department of Justice are “increasingly relying on private action to serve as a deterrent,” Stutz said.
White, a member of the American Antitrust Association's advisory board, disagrees that the decline in litigation can be easily attributed to a single cause, such as poor enforcement.
“I'm very sympathetic to a lot of AAI's work, otherwise I wouldn't be on the AAI board,” White said. “But if we wring our hands and blame every time the number of cases decreases and think that means law enforcement is declining, results will not last.”
Mr. White said there was no question that the U.S. court ruling had made it harder to bring antitrust lawsuits. However, he added that determining the exact cause of the drop in cases is complicated by tougher government penalties for antitrust violations.
“The fines are high,” he said. “And people go to jail for price fixing.”
“The system is rigged”
The calculus for pursuing antitrust litigation is even more difficult for companies that rely on dominant companies in their supply and distribution chains. Such companies may avoid antagonizing important partners in antitrust litigation, Stutz said.
To bring an antitrust lawsuit against Amazon as an individual plaintiff, you would have to hire a “leading antitrust lawyer” and a “leading antitrust economist,” so you would have to “bring these claims individually.” “Size doesn't matter,” says economist Hal Singer. , managing director of Econ One, told lawmakers on Capitol Hill during an antitrust hearing in February 2021.
“The system is therefore effectively rigged to exempt Amazon from antitrust scrutiny, at least by individual whistleblowers.”
But some big-name companies decided to take on that risk over the past year.
Recent corporate-led lawsuits include complaints by pharmaceutical giant Regeneron (REGN) against rival Novartis (NVS). Publishers Helena World Chronicle and Gannett (GCI) are taking on Google. and a pharmacy group challenging the actions of Cigna's pharmacy benefits management organization, Express Scripts (CI).
Results for companies were mixed. Popular video game developer Epic Games has been in the spotlight for two antitrust lawsuits against Apple and Google over their respective app stores. Epic won against Google, but Apple won. Most of the cases were defeated.
A private company successfully attempted a merger. The lawsuit, brought by door manufacturer Steves & Sons, ended its partnership with door and frame manufacturer Jeld Wen (JELD) and competitor CMI.
Another series of antitrust cases has changed the real estate industry. Home sellers across the country alleged that the National Association of Realtors and its member agency, Keller Williams & HomeServices of America, illegally required sellers to pay buyer representation fees.
A federal jury in Missouri returned a $1.78 billion verdict in favor of the seller in one case, but that amount could be reduced by as much as three times depending on the presiding judge's discretion.
Another case was also dismissed. U.S. Wholesale failed to allege that rival Living Essentials offered Costco unfairly favorable prices, discounts, or reimbursements for its 5-hour energy sales. But the lawsuit left the door open for U.S. Wholesale to bring the claims again.
Alexis Keenan is a legal reporter at Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
For the latest stock market news and in-depth analysis of price-moving events, click here.
Read the latest financial and business news from Yahoo Finance
