Trump’s Antitrust Enforcers Could Kill Unfinished Cases. Will They?

Federal antitrust enforcers have outstanding cases against AgriStats, Kroger and Albertsons, and Corteva and Syngenta.

U.S. District Court in Minneapolis hearing the U.S. v. Agri Stats case. Photo courtesy of iStock.

Antitrust litigation is a lengthy enterprise. A second Trump administration will take over several ongoing federal legal challenges to large mergers and domineering conduct by food and agriculture companies. New antitrust leaders can pull those cases, or more likely, let companies off the hook with a weak settlement. It’s too soon to tell if they will.

The Department of Justice (DOJ) and Federal Trade Commission (FTC) have three major active lawsuits against food and agriculture companies and could introduce at least one more before Trump takes office.

DOJ has sued AgriStats, a data-sharing company, for allegedly helping meatpackers cut production and collude to raise prices. This case could limit information exchange between competitors, which has been central to many recent price-fixing cases. In the spring, federal enforcers survived a motion to dismiss and halt discovery, which means the government is in the thick of information gathering.

The Federal Trade Commission just went to trial to block Kroger’s acquisition of rival grocer, Albertsons, a deal that would dramatically consolidate the grocery industry. The FTC has also sued pesticide makers, Corteva and Syngenta, for shutting out cheaper generics by paying distributors handsome rebates in exchange for prioritizing their branded products. This case survived a motion to dismiss in January.

The FTC also has a large food industry case in the works. The commission is investigating alcohol distributor, Southern Glazer’s, and soda makers Pepsi and Coca-Cola for violating the Robinson-Patman Act. Food makers and distributors often give their largest customers special discounts, which is prohibited by the Robinson-Patman Act, a law that has long gone unenforced. Biden’s FTC has talked about reviving the Act, but has yet to bring a case.

Of these cases, the Kroger and Albertsons suit is the most likely to conclude before Trump takes office. The FTC sought a preliminary injunction to block the deal, which a federal judge could grant any day now. If granted, Kroger and Albertsons might abandon their merger. If not, the case continues in the FTC’s internal administrative court.

The future of these cases hinges on two key appointments by the Trump administration — FTC chair and Assistant Attorney General for DOJ’s antitrust division. Depending on the administration’s priorities, this could take weeks or several months. Until then, the FTC could maintain a Democratic majority. The commission currently has three Democrats and two Republicans and even though chair Lina Khan’s term has expired, she can serve until Trump appoints a replacement.

While most Republican institutions want to see less antitrust enforcement and more corporate mergers, there is a burgeoning wing of the party that is interested in more aggressive antitrust enforcement. The leaders of Trump’s antitrust transition efforts, Gail Slater and Senator Mike Lee, reportedly have ties to both warring camps. This makes the fate of ongoing litigation “extraordinarily uncertain at this point,” says former DOJ antitrust attorney and emeritus law professor, Peter Carstensen.

New leadership can decide to reprioritize enforcement targets, bring fewer cases, or close unfinished investigations. For ongoing cases, a new administration could decide to deemphasize certain claims or legal theories in the way they litigate, without technically amending the lawsuit. Pioneering or new legal theories, such as a Robinson-Patman case, could be particularly vulnerable. Trump’s DOJ and FTC could also simply dismiss a case, but former federal enforcers say that’s less likely. The easiest way for new leadership to kill ongoing litigation with minimal public backlash is to reach a weak settlement with the companies.

“I think the remedy stage in a lot of these cases is where the new AAG or new chair of the FTC could really change the meaningfulness and the impact of the case without dismissing it or without softly downgrading any of the legal theories,” says law professor and former deputy director of the FTC’s competition bureau, John Newman. “It’s really easy to change the remedy ask to one that’s much, much narrower.”

For instance, the government nearly broke up Microsoft in the early 2000s, following an antitrust suit brought by the Clinton administration. However, the George W. Bush administration decided to settle the case in exchange for moderate behavioral remedies.

There are some guardrails to prevent outrageously weak settlements. At the FTC, any dismissal or settlement requires a majority approval from the five commissioners. For all cases, the presiding judge needs to approve the settlement. If the government says the settlement addressed their concerns, most judges will approve the proposal, but a judge could force the parties to renegotiate if the settlement does not address a core issue from the initial complaint, according to Carstensen.

Additionally, several states attorneys general are joint plaintiffs on the suits against AgriStats, Corteva, and Kroger-Albertsons. The states will need to agree to any settlement, and if the federal government dismisses the case or accepts an overly generous deal, state attorneys general could decide to carry on the case themselves. This happened during the last Trump administration, when several state attorneys general appealed an antitrust case against American Express up to the Supreme Court, an appeal the federal government did not join.

State antitrust enforcers have drastically fewer resources than the feds, so the likelihood that they take over a case alone depends on how far along it is. “It’s relatively cheap to pursue an appeal, it’s much more expensive to run a trial,” Newman says.

What We’re Reading

• President-elect Trump has named several nominees for cabinet positions. The list of rumored candidates for Secretary of Agriculture includes high profile farmer donors, past USDA officials, and members of Congress. (Ag Web)

• Voters rejected a ballot initiative to close the last slaughterhouse within Denver city limits. The plant, Superior Farms, processes roughly 20% of all lamb in the U.S. (Investigate Midwest)

• The California Air and Resources Board amended its low carbon fuel standard and maintained highly favorable “carbon negative” ratings for biogas generated from animal waste, despite criticism from environmental justice organizations that argue biogas infrastructure on large dairy farms perpetuates local air and water pollution. (Food & Water Watch)