Q&A: Readiness and Response Amid a Rise in State-Level Antitrust Enforcement

Andrew, Heather, can you summarize some of the antitrust enforcement activity that you’ve observed among state attorneys general?

Szwez: More than five states, including California, New York and Washington, have enacted new statutory tools such as additional premerger notification requirements or algorithmic pricing bans since the start of the current federal administration’s oversight. Separately, more than 20 states have introduced new or expanded legislation addressing non-compete agreements, premerger notification and other controls. Additional conduct categories, such as no-poach, horizontal coordination and monopolization, have appeared as distinct focus areas in state attorneys general actions. Activity has been mixed between single-state legislation, multi-state cases and various states joining existing federal actions.

Wilson: What’s especially notable for organizations doing business active states like New York and California, and across the U.S., is that the activity and focus of various states spans industries and is sometimes very nuanced. For example, in Wisconsin, there’s been movement to more stringent antitrust enforcement as it relates to local agriculture and dairy production, Vermont has taken action in the life sciences sector, and multiple states have joined together in antitrust enforcement in real estate. 

How do these types of actions at the state level impact organizations differently than federal enforcement?

Wilson: In some instances, states have implemented requirements more onerous than federal statutes. Generally, though, activity between states and the federal government is similar; but the challenge comes in tracking and managing a wide range of requirements and enforcement priorities across dozens of unique jurisdictions and balancing those with whatever is happening at the federal level. From a public affairs perspective, that can be a significant amount of ground to cover. The complexity of each jurisdiction is unique and must be uniquely targeted when creating a stakeholder engagement strategy. Likewise, the time, cost and resources of replicating those efforts in each state where needed can present a significant burden, even for large organizations. 

Szwez: On the discovery side, when an organization is actively responding to investigations or litigation under state laws, the burden is similarly heavy. Discovery obligations are notoriously onerous and time intensive in antitrust matters. Including the right documents and meeting deadlines are critical. While that’s primarily been experienced in at the federal level during a merger clearance review or antitrust investigation, actions initiated by state attorneys general can be very rigorous. And, if discovery is required in multiple jurisdictions at once, fulfilling those obligations could become incredibly difficult and costly. 

What steps can companies take to prepare or reduce exposure?

Wilson: As legislation is developing, targeted, specific stakeholder engagement, early on is key. Organizations need to determine who among their own constituencies cares about the issue at hand and who needs to be educated on it. How an organization approaches the issue will differ depending on the regulation or bill’s impact on their particular ecosystem, as well as their institutional risk level. Some combination of stakeholder engagement and education will be needed. Whether or not this includes a higher level of external communications through the media or other channels (social media, advertising) depends on a variety of internal and political factors. 

Szwez: The volume, diverse types and increasing complexity of data that may come under scrutiny in a merger filing, antitrust review or other related inquiry can create significant challenges for organizations when an issue arises. Teams can proactively map their data sources and conduct early assessment of their position to support readiness for more substantial review in the event of an information request from a state or in state-led litigation. Additionally, organizations should be prepared to engage in dialogue with the authorities about the parameters of a document request, including the technical specifications, timelines and the burden of fulfilling the request.

On the public affairs front, is there anything organizations need to do downstream, after stakeholder engagement has concluded and a new bill is in place, or if they have experienced an enforcement action? 

Wilson: With any campaign we always recommend monitoring – both in terms of tracking the issue legislatively and in the media and social media. Clients need to ensure they have a good finger on the pulse of both sentiment and what is actually moving out there. Depending on the issue, additional — and more targeted — research can be helpful to gauge customer and other stakeholders’ sentiments more precisely depending on the organization’s specific role and impact.

Similarly on the investigatory side, what can companies do to in the aftermath of a litigation or investigation to improve their readiness for future issues?

Szwez: Ideally, they will have already assessed their compliance obligations across new state statutes or among states that are particularly active in pursuing cases. If not, that’s an important step to evaluate and ultimately reduce risk. With an understanding of the compliance requirements and likely areas of enforcement activity, organizations can reduce their future e-discovery burden through improved information governance. This includes establishing an understanding of where critical information is stored and implementing defensible retention and deletion policies to balance appropriate preservation against over-retention. 

Some states have intensified their activity in response to the federal political landscape. If federal enforcement trends shift again, what can companies expect at the state level? 

Wilson: There’s always a push and pull between federal and state systems. But no matter the enforcement environment, having a flexible and proactive public affairs strategy is essential for most highly regulated organizations. Communications and public affairs strategies need to be nimble and can be adapted as the environment shifts so that organizations aren’t caught flat-footed.

Szwez: Regulatory and policy trends are variable due to many external factors, which creates somewhat of a moving target for large organizations. What has stayed consistent, though, are the burdens surrounding document collection, review and production. This is why sound information governance is so important. Taking crucial information governance steps — such as determining where critical information is stored and establishing defensible retention and deletion policies to balance appropriate preservation against over-retention — can significantly reduce the burden of complex, time sensitive and concurrent discovery and investigation exercises. 

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The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.