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The Trustbuster Who Has Apple and Google in His Sights

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Shortly after Jonathan Kanter took over the Justice Department’s antitrust division in November 2021, the agency secured an additional $50 million to investigate monopolies, bust criminal cartels and block mergers.To celebrate, Mr. Kanter bought a prop of a giant check, placed it outside his office and wrote on the check’s memo line: “Break ’Em Up.”Mr. Kanter, 50, has pushed that philosophy ever since, becoming a lead architect of the most significant effort in decades to fight the concentration of power in corporate America. On Thursday, he took his biggest swing when the Justice Department filed an antitrust lawsuit against Apple. In the 88-page lawsuit, the government argued that Apple had violated antitrust laws with practices intended to keep customers reliant on its iPhones and less likely to switch to competing devices.That lawsuit joins two Justice Department antitrust cases against Google that argue the company illegally shored up monopolies. Mr. Kanter’s staff has also challenged numerous corporate mergers, including suing to stop JetBlue Airways from buying Spirit Airlines.“We want to help real people by making sure that our antitrust laws work for workers, work for consumers, work for entrepreneurs and work to protect our democratic values,” Mr. Kanter said in a January interview. He declined to comment on the Google cases and other active litigation.At a news conference about the Apple lawsuit on Thursday, Mr. Kanter compared the action to past Justice Department challenges to Standard Oil, AT&T and Microsoft. The suit is aimed at protecting “the market for the innovations that we can’t yet perceive,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Trump’s Justice Dept. Derailed an Investigation of a Major Company

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    The industrial giant Caterpillar hired William Barr and other lawyers to defuse a federal criminal investigation of alleged tax dodges.In December 2018, a team of federal law enforcement agents flew to Amsterdam to interview a witness in a yearslong criminal investigation into Caterpillar, which had avoided billions of dollars of income taxes by shifting profits to a Swiss subsidiary.A few hours before the interview was set to begin, the agents were startled to hear that the Justice Department was telling them to cancel the long-planned meeting.The interview was never rescheduled, and the investigation would limp along for another few years before culminating, in late 2022, with a victory for Caterpillar. The Internal Revenue Service told the giant industrial company to pay less than a quarter of the back taxes the government once claimed that Caterpillar owed and did not impose any penalties. The criminal investigation was closed without charges being filed — and even without agents having the chance to review records seized from the company.Caterpillar appears to have defused the investigation at least in part by deploying a type of raw legal power that rarely becomes publicly visible. This account is based on interviews with people familiar with the investigation, regulatory filings and internal Justice Department emails provided to Senate investigators and reviewed by The New York Times.In the months leading up to the canceled interview in the Netherlands, Caterpillar had enlisted a small group of well-connected lawyers to plead the company’s case. Chief among those was William P. Barr, who had served as attorney general in the George H.W. Bush administration.Richard Zuckerman, the Justice Department’s top tax official, stopped an investigation into Caterpillar after meeting with its lawyers.Jerry ZolynskyWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    The Upshot of Microsoft’s Activision Deal: Big Tech Can Get Even Bigger

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    President Biden’s top antitrust officials have used novel arguments over the past few years to stop tech giants and other large companies from making deals, a strategy that has had mixed success.But on Friday, when Microsoft closed its blockbuster $69 billion acquisition of the video game publisher Activision Blizzard after beating back a federal government challenge, the message sent by the merger’s completion was incontrovertible: Big Tech can still get bigger.“Big Tech companies will certainly be reading the tea leaves,” said Daniel Crane, a law professor at the University of Michigan. “Smart money says merge now while the merging is good.”Microsoft’s purchase of Activision was the latest deal to move forward after a string of failed challenges to mergers by the Federal Trade Commission and the Justice Department, which are also confronting the big tech companies through lawsuits arguing they broke antimonopoly laws. Leaders at the two agencies had tried to block at least 10 other deals over the past two years, promising to dislodge longstanding ideas from antitrust law that they said had protected behemoths like Microsoft, Google and Amazon.But their efforts ran headlong into skeptical courts, largely leaving those core assumptions untouched. In the case of Microsoft’s Activision deal, the idea that the F.T.C. questioned was a “vertical” transaction, which refers to mergers between firms that are not primarily direct competitors. Regulators have rarely sued to block such deals, figuring that they generally do not create monopolies.Yet “vertical” deals have been especially common in the tech industry, where companies like Meta, Apple and Amazon have sought to grow and protect their empires by spreading into new business lines.In 2017, for instance, Amazon bought the high-end grocery chain Whole Foods for $13.4 billion. In 2012, Meta acquired the photo-sharing app Instagram for $1 billion and then shelled out nearly $19 billion for the messaging service WhatsApp in 2014. Of the 24 deals worth more than $1 billion completed by the tech giants from 2013 to mid-August of this year, 20 were vertical transactions, according to data provided by Dealogic.The sealing of the Microsoft-Activision deal has buttressed the notion that vertical deals generally are not anticompetitive and can still go through relatively unscathed.“There continues to be the presumption that vertical integration can be a healthy phenomena,” said William Kovacic, a former chair of the F.T.C. The F.T.C. is proceeding with its challenge to the Microsoft-Activision deal even as it has closed, said Victoria Graham, a spokeswoman for the agency, who added that the acquisition was a “threat to competition.” The Justice Department declined to comment. The White House did not immediately have a comment.The idea that vertical transactions were less likely to harm competition than combinations of direct rivals has been ingrained since the late 1970s. In the ensuing decades, the Justice Department and F.T.C. took no challenges to vertical deals to court, instead reaching settlements that allowed companies to proceed with their deals if they changed practices or divested parts of their business.Then, in 2017, the Justice Department sued to block the $85.4 billion merger between the phone giant AT&T and the media company Time Warner, in the agency’s first attempt to stop a vertical deal in decades. A judge ruled against the challenge in 2018, saying he did not see enough evidence of anticompetitive harms from the union of companies in different industries.Mr. Biden’s top antitrust officials — Lina Khan, the F.T.C. chair, and Jonathan Kanter, the top antitrust official at the Justice Department — have been even more aggressive in challenging vertical mergers since they were appointed in 2021.That year, the F.T.C. sued to stop the chip maker Nvidia from buying Arm, which licenses chip technology, and the companies abandoned the deal. In January 2022, the F.T.C. announced it would block Lockheed Martin’s $4.4 billion acquisition of Aerojet Rocketdyne Holdings, a missile propulsion systems maker. The companies dropped their merger.But judges rejected many of their efforts for lack of evidence and denied Ms. Khan and Mr. Kanter a courtroom win that would have set new precedent. In 2022, after the D.O.J. sued to block UnitedHealth Group’s acquisition of Change Healthcare, a judge ruled against the agency.Lina Khan, the chair of the Federal Trade Commission, challenged Microsoft’s deal for Activision last year. Tom Brenner for The New York TimesThe F.T.C.’s move to block Microsoft’s purchase of Activision last year was a bold effort by Ms. Khan, given that the two companies do not primarily compete with one another. The agency argued that Microsoft, which makes the Xbox gaming console, could harm consumers and competition by withholding Activision’s games from rival consoles and would also use the deal to dominate the young market for game streaming.To show that would not be the case, Microsoft offered to make one of Activision’s major game franchises, Call of Duty, available to other consoles for 10 years. The company also reached a settlement with the European Union, promising to make Activision titles available to competitors in the nascent market for game streaming, which allowed the deal to go through.In July, a federal judge ultimately ruled that the F.T.C. didn’t provide enough evidence that Microsoft intended to forestall competition through the deal and that the software giant’s concession eliminated competition concerns.The agencies are “facing judges who have said 40 years of economics show that vertical mergers are good,” said Nancy Rose, a professor of applied economics at M.I.T. with an expertise in antitrust, who is among a group of scholars who say vertical deals can be harmful to competition. She said the agencies should not back down from challenging vertical mergers, but that regulators would need to be careful to choose cases they can prove with an abundance of evidence.Ms. Khan and Mr. Kanter have said they are willing to take risks and lose lawsuits to expand the boundaries of the law and spark action in Congress to change antitrust rules. Ms. Khan has noted that the F.T.C. has successfully stopped more than a dozen mergers.Mr. Kanter has said that challenges to mergers from the Justice Department and the F.T.C. have deterred problematic deals.“There are fewer problematic mergers that are coming to us in the first place,” he said in a speech at the American Economic Liberties Project, a left-leaning think tank, in August.Still, bigger companies that have the resources to fight back will probably feel more confident challenging regulators after the Microsoft-Activision deal, antitrust lawyers said. The aggressive posture by regulators has simply become the cost of doing business, said Ryan Shores, who led tech antitrust investigations at the D.O.J. during the Trump administration and is now a partner at the law firm Cleary Gottlieb.“A lot of companies have come to the realization that if they have a deal they want to get through, they have to be prepared to litigate,” he said. More

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    U.S. Blasts Google Over Paying $10 Billion a Year to Cut Out Search Rivals

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    The Justice Department and 38 states and territories on Tuesday laid out how Google had systematically wielded its power in online search to cow competitors, as the internet giant fiercely parried back, in the opening of the most consequential trial over tech power in the modern internet era.In a packed courtroom at the E. Barrett Prettyman U.S. Courthouse in Washington, the Justice Department and states painted a picture of how Google had used its deep pockets and dominant position, paying $10 billion a year to Apple and others to be the default search provider on smartphones. Google viewed those agreements as a “powerful strategic weapon” to cut out rivals and entrench its search engine, the government said.“This feedback loop, this wheel, has been turning for more than 12 years,” said Kenneth Dintzer, the Justice Department’s lead courtroom lawyer. “And it always turns to Google’s advantage.”Google denied that it had illegally used agreements to exclude its search competitors and said it had simply provided a superior product, adding that people can easily switch which search engine they use. The company also said that internet search extends more broadly than its general search engine and pointed to the many ways that people now find information online, such as Amazon for shopping, TikTok for entertainment and Expedia for travel.“Users today have more search options and more ways to access information online than ever before,” said John E. Schmidtlein, the lawyer who opened for Google.The back-and-forth came in the federal government’s first monopoly trial since it tried to break up Microsoft more than two decades ago. This case — U.S. et al. v. Google — is set to have profound implications not only for the internet behemoth but for a generation of other large tech companies that have come to influence how people shop, communicate, entertain themselves and work.Over the next 10 weeks, the government and Google will present arguments and question dozens of witnesses, digging into how the company came to power and whether it broke the law to maintain and magnify its dominance. The final ruling, by Judge Amit P. Mehta of the U.S. District Court of the District of Columbia, could shift the balance of power in the tech industry, which is embroiled in a race over artificial intelligence that could transform and disrupt people’s lives.A government victory could set limits on Google and change its business practices, sending a humbling message to the other tech giants. If Google wins, it could act as a referendum on increasingly aggressive government regulators, raise questions about the efficacy of century-old antitrust laws and further embolden Silicon Valley.“It is a test of whether our current antitrust laws — the Sherman Act, written in 1890 — can adapt to markets that are susceptible to monopolization in the 21st century,” said Bill Baer, a former top antitrust official at the Justice Department, adding that Google was “indisputably powerful.”The case is part of a sweeping effort by the Biden administration and states to rein in the biggest tech companies. The Justice Department has filed a second lawsuit against Google over its advertising technology, which could go to trial as early as next year. The Federal Trade Commission is separately moving toward a trial in an antitrust lawsuit against Meta. Investigations remain open in efforts that could lead to antitrust lawsuits against Amazon and Apple.The Justice Department filed the case accusing Google of illegally maintaining its dominance in search in October 2020. Months later, a group of attorneys general from 35 states, Puerto Rico, Guam and the District of Columbia filed their own lawsuit arguing that Google had abused its monopoly over search. Judge Mehta is considering both lawsuits during the trial.The case centers on the agreements that Google reached with browser developers, smartphone manufacturers and wireless carriers to use Google as the default search engine on their products. Since the lawsuit was filed, more than five million documents and depositions of more than 150 witnesses have been submitted to the court. Last month, Judge Mehta narrowed the scope of the trial, while allowing the core claims of monopoly abuse in search to remain.The trial unfolded on Tuesday in Courtroom 10 at Washington’s federal courthouse, a complex minutes from Capitol Hill. It drew a large crowd, with some people standing in line to enter as early as 4:30 a.m. Officials from the Google rivals Yelp and Microsoft also attended, as did dozens of attorneys and staff from the Justice Department, states and Google after years of work on the case.Judge Mehta began the proceedings punctually. In the government’s opening statement, Mr. Dintzer focused on the search agreements Google had struck with Apple and others. He referenced internal company documents that described how Google would not share revenue with Apple without “default placement” on its devices and how it worked to ensure that Apple couldn’t redirect searches to its Siri assistant.“Your honor, this is a monopolist flexing,” Mr. Dintzer said.In blunt language, Mr. Dintzer also argued that Google had tried to hide documents from antitrust enforcers by including lawyers on conversations and marking them as subject to attorney-client privilege. He showed a message from Sundar Pichai, Google’s chief executive, asking for the chat history to be turned off in one conversation.“They turned history off, your honor, so they could rewrite it here in this courtroom,” Mr. Dintzer said.William Cavanaugh, a lawyer for the states, echoed Mr. Dintzer’s concerns about Google’s agreements to become the default search engines on smartphones. He added that Google had limited a product used to place ads on other search engines to hurt Microsoft, which makes the Bing search engine.In response, Mr. Schmidtlein, Google’s lawyer, argued that the company’s default agreements with browser makers don’t lock up the market the way that the Justice Department said. Browser makers such as Apple and Mozilla both promote other search engines, he said, and it was easy for users to switch their default search engine.Using a slide show, Mr. Schmidtlein demonstrated the number of taps or clicks required to change the default on popular smartphones. People who wished to switch their search engine but did not know how could search Google for instructions or watch a video tutorial on YouTube, which Google owns, he said.The government’s evidence was coming from “snippets and out-of-context” emails, he said.The lawyers also sparred over whether Google was as dominant as the government claimed. The Justice Department and the states said Google competes primarily with broad search engines that act as a single place to look for multiple types of information. But Mr. Schmidtlein said Google’s universe of competitors was wider, including online retailers like Amazon, food delivery apps like DoorDash and travel booking sites like Expedia.In the afternoon, the Justice Department called Hal Varian, Google’s chief economist, as its first witness to establish that the company had long been aware of its power in search and deliberately tried to sidestep antitrust scrutiny.In more than three hours of testimony, Mr. Varian was asked about views that he shared with other Google employees on the power of defaults, the threat of Microsoft’s entry into search and his awareness of language that could invite the attention of antitrust regulators. The Justice Department drew from Mr. Varian’s emails and memos from as far back as the early 2000s.Mr. Varian is scheduled to return to the witness stand on Wednesday.Nico Grant More

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    Biden Administration Unveils Tougher Guidelines on Mergers

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    The proposed road map for regulatory reviews, last updated in 2020, includes a focus on tech platforms for the first time.The Biden administration’s top antitrust officials unveiled tougher guidelines against tech mergers on Wednesday, signaling their deepening scrutiny of the industry despite recent court losses in their attempts to block tech deal-making.Lina Khan, the chair of the Federal Trade Commission, and Jonathan Kanter, the top antitrust official at the Department of Justice, released draft guidelines for merger reviews that for the first time include a focus on digital platforms and how dominant companies can use their scale to harm future rivals.The guidelines — which generally provide a road map for whether regulators block or approve deals — show the Biden administration’s commitment to an aggressive antitrust agenda aimed at curtailing the power of companies like Google, Meta, Apple and Amazon.The guidelines, which aren’t enforced by law, follow a losing streak in the courts. A ruling last week prevented the F.T.C. from delaying the closing of Microsoft’s $69 billion acquisition of the video game maker Activision Blizzard. In January, a court sided against the F.T.C. in its lawsuit to stop Meta’s purchase of Within, a virtual reality app maker.The forceful antitrust posture is a pillar of President Biden’s agenda to stamp out economic inequality and encourage greater competition. “Promoting competition to lower costs and support small businesses and entrepreneurs is a central part of Bidenomics,” a senior administration official said in a call with reporters.The new guidelines would apply to all deals across the economy. But they highlight obstacles to competition among digital platforms, including how an acquisition of a nascent rival may be intended to kill off future competition. Such deals, known as killer acquisitions, are prevalent in the tech industry and at the heart of an F.T.C. antitrust lawsuit against Meta, which owns Facebook, Instagram and WhatsApp. The agency has accused Meta of buying Instagram in 2012 and WhatsApp in 2014 to prevent future competition.The F.T.C. and Justice Department also said they would look at how companies used their scale, including their large number of users, to ward off competition. These so-called network effects have helped companies like Meta and Google maintain their dominance in social media and internet search.The agencies also laid out ways in which mergers involving “platform” businesses, the model used by Amazon’s online store and Apple’s App Store, could harm competition. An acquisition could hurt competition by giving a platform control over a significant stream of data, the draft guidelines said, echoing concerns that tech giants use their vast troves of information to squash rivals.“As markets and commercial realities change, it is vital that we adapt our law enforcement tools to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy,” Mr. Kanter said in a statement. “Simply put, competition today looks different than it did 50 — or even 15 — years ago.”While they lack the force of law, the guidelines can influence how judges look at challenges to mergers and acquisitions. The effort to update the guidelines has been closely watched by businesses and corporate lawyers that navigate regulatory scrutiny of megadeals.The guidelines were last updated in 2020. In 2021, Mr. Biden ordered the Justice Department and the F.T.C. to update them again as part of a broader effort to improve competition across the economy. The agencies will take public comment on the proposals and could make amendments before final guidelines are adopted.“These guidelines contain critical updates while ensuring fidelity to the mandate Congress has given us and the legal precedent on the books,” Ms. Khan said in a statement.While the F.T.C. experienced the recent court losses, it has forced some companies, including the chip-maker Nvidia and the aerospace giant Lockheed Martin, to abandon some large deals. The Justice Department blocked the publisher Penguin Random House from buying Simon & Schuster, using an unusual argument that the merger would harm authors who sold the publication rights to their books. More

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    Biden Team to Counter Tech Espionage Unveils Cases Involving China and Russia

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    A new division set up by the government to pursue sanctions evasion and technology espionage announced arrests of individuals with ties to foreign governments.The Biden administration announced arrests and criminal charges on Tuesday in five cases involving sanctions evasion and technology espionage efforts linked to Russia, China and Iran.Two Russian nationals were taken into custody last week under accusations of sending aircraft parts to Russia in violation of sanctions imposed after the invasion of Ukraine. In another case, a former Apple engineer is accused of stealing the company’s autonomous vehicle technology to provide it to a Chinese competitor.The announcements were the work of a recently established “technology strike force,” which aims to protect critical American technology or data from theft by hostile nations. The strike force was set up in February and brings together agents with the Commerce and Justice Departments, as well as the F.B.I. and local attorneys offices.Federal agents are working to trace the global movement of U.S. goods and data, as well as the funds used to pay for them. The effort seeks to crack down on the global networks that are channeling goods and technology through opaque jurisdictions and middlemen to try to circumvent sanctions and technology restrictions imposed by the United States.In another case unveiled Tuesday, a California-based engineer is accused of trying to steal source code for advanced machinery that can be used to make parts for military submarines and aircraft to sell it to several Chinese companies.Two other cases were announced, including charges against China-based agents who were accused of attempting to send materials used in weapons of mass destruction to Iran, according to U.S. officials, and charges involving the alleged provision of advanced technology to Russia that could be repurposed by the Russian military.Matthew G. Olsen, the assistant attorney general of the Justice Department’s national security division, told reporters that the cases showed the U.S. government’s ability “to accelerate investigations and surge our collective resources to defend against these threats.”“Foreign nation states are working hard to acquire our most sensitive technologies,” said Matthew Axelrod, the assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security. “We’re working even harder to stop them.”Oleg Patsulya and Vasilii Besedin, the two Russian nationals who were arrested last week under suspicion of trying to procure millions of dollars of prohibited parts for Russian airlines, were charged with conspiracy to violate the Export Control Reform Act and conspiracy to commit international money laundering. If convicted, they would face up to 20 years in prison for each charge.The Commerce Department issued a temporary denial order Tuesday against the men, which prohibits them from transactions involving any U.S. products for 180 days.The order also applies to a freight forwarder in the Maldives that the men had utilized to route shipments of prohibited products into Russia, as well as a Russian airline, Smartavia, that sought to purchase these products.On Thursday, federal officials seized luxury goods purchased with proceeds of their scheme, a U.S. official said. More

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    JetBlue Expects U.S. Move to Block Merger With Spirit

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    JetBlue said it saw a “high likelihood” of an antitrust suit by the Justice Department this week, but declared that the deal would foster competition.JetBlue Airways said Monday that it saw a “high likelihood” that the Justice Department would sue the company this week over its planned acquisition of Spirit Airlines. The $3.8 billion deal could create a new challenger to the nation’s four dominant carriers, but would add to industry consolidation.JetBlue said that it had long prepared for such a lawsuit and that its timeline for closing the deal was unchanged, provided it overcomes the expected challenge in court.“We believe there is a high likelihood of a complaint from D.O.J. this week, and we have always accounted for that in our timeline to close the transaction in the first half of 2024,” the company said.Critics of the deal say removing Spirit from the market would limit competition and further consolidate an already concentrated industry. While JetBlue is known for affordable fares, Spirit offers even lower prices, charging extra for everything from printing boarding passes at airport kiosks to selecting seats in advance. After the deal, JetBlue would reconfigure Spirit’s densely packed planes, removing seats, increasing legroom and adjusting the economics of each flight.According to two people familiar with the Justice Department’s plans, a government lawsuit will contend that after removing seats from Spirit planes, the combined airline would not be able to increase revenue per passenger without raising prices.Buying Spirit would allow JetBlue to accelerate its plans for growth. Today, JetBlue controls more than 5 percent of the U.S. airline market. After the acquisition, it would have a 10 percent share, making it the fifth-largest airline in the country. United Airlines, the fourth-largest carrier, has a 15 percent market share. Southwest Airlines, Delta Air Lines and American Airlines each have a more than 17 percent share.“JetBlue’s combination with Spirit allows it to create a compelling national challenger to these dominant airlines,” JetBlue said in a news release on Monday describing some of its arguments in favor of the deal.The acquisition would benefit consumers and disrupt the industry, it said, allowing JetBlue to bring low fares to new markets and forcing those large airlines to match its lower prices. JetBlue also said it had committed to giving up some of Spirit’s holdings in markets such as Boston, New York and Fort Lauderdale, Fla., where the combined airline would have an outsize presence.But the two people familiar with the Justice Department’s plans said its suit would assert that there was no guarantee that other airlines, with different cost structures from Spirit’s, would pick up Spirit slots that JetBlue might offer to shed.In addition to the Justice Department, the Transportation Department could also stand in the way of the deal by blocking the transfer of operating certificates, opponents of the sale have argued.After the expectation of a federal move to block the acquisition was reported on Monday, Spirit shares fell more than 8 percent. JetBlue shares were up about 1 percent.Unions representing workers at both airlines are divided on whether the merger should proceed. Last month, the Association of Flight Attendants-C.W.A., which represents 5,600 flight attendants at Spirit, wrote to Attorney General Merrick B. Garland and Transportation Secretary Pete Buttigieg to express support for the deal.“The JetBlue-Spirit merger will help to correct conditions in the industry with demonstrable improvements and protections for workers along with greater competition that benefits workers and consumers alike,” the union’s president, Sara Nelson, said in the letter. “This is the anti-merger, merger.”In a separate letter, the head of the Transport Workers Union, which represents 6,800 JetBlue flight attendants, asked Mr. Garland and Mr. Buttigieg to prevent the acquisition, arguing that it would violate antitrust laws and undermine competition and workers.In a letter in September, Senator Elizabeth Warren, a Massachusetts Democrat, asked Mr. Buttigieg to use his department’s “historically underutilized” authorities to intervene.JetBlue is also awaiting the outcome of a Justice Department antitrust lawsuit over the airline’s partnership with American in Boston and New York. A federal judge in Boston is expected to issue a decision in that case imminently.Lauren Hirsch More

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    U.S. Tries New Tactic to Protect Workers’ Pay: Antitrust Law

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    The Justice Department is using antitrust law to charge employers with colluding to hold down wages. The move adds to a barrage of civil challenges.Antitrust suits have long been part of the federal government’s arsenal to keep corporations from colluding or combining in ways that raise prices and hurt the consumer. Now the government is deploying the same weapon in another cause: protecting workers’ pay.In a first, the Justice Department has brought a series of criminal cases against employers for colluding to suppress wages. The push started in December 2020, under the Trump administration, with an indictment accusing a staffing agency in the Dallas-Fort Worth area of agreeing with rivals to suppress the pay of physical therapists. The department has now filed six criminal cases under the pillar of antitrust law, the Sherman Act, including prosecutions of employers of home health aides, nurses and aerospace engineers.“Labor market collusion dots the entirety of the U.S. economy,” said Doha Mekki, principal deputy assistant attorney general in the department’s antitrust division. “We’ve seen it in sectors across the board.”If the courts are swayed by the government’s arguments, they could drastically alter the relationship between workers and their employers across large swaths of the economy.“The expansion of Sherman Act criminal violations changes the ballgame when it comes to how companies engage with their workers,” noted an analysis by lawyers at White & Case, including J. Mark Gidley, chair of the firm’s global antitrust and competition practice. “Executives and managers could face jail time for proven horizontal wage-fixing conspiracies.” In addition to fines for corporations or individuals, the Sherman Act provides for prison terms of up to 10 years.The Biden administration is also deploying antitrust law in civil cases to shore up workers’ pay. And in another first, the Justice Department filed a lawsuit in November to stop Penguin Random House’s attempt to buy Simon & Schuster on the grounds that the resulting publishing Goliath would have the power to depress advances and royalty payments to authors.The move to block the publishers’ merger “declines to even allege the historically key antitrust harm — increased prices,” the White & Case lawyers argued. It is “emblematic of the Biden administration’s and the new populist antitrust movement’s push to direct the purpose of antitrust away from consumer welfare price effects and towards other social harms.”And yet the Justice Department’s push builds on a rationale for criminal antitrust enforcement articulated since the Obama administration. “Colluding to fix wages is no different than colluding to suppress the prices of auto parts or homes sold at auction,” said Renata Hesse, acting assistant attorney general for antitrust, in November 2016. “Naked wage-fixing or no-poach agreements eliminate competition in the same irredeemable way as per se unlawful price-fixing and customer-allocation agreements do.”The Biden administration has picked up the argument with a vengeance. Last summer, President Biden issued an executive order mandating a “whole of government” effort to promote competition across the economy. Last month, the Treasury Department issued a report on just how anticompetitive labor markets have become.Corporate America is alarmed. “In their minds, everything is an antitrust issue,” said Sean Heather, senior vice president for antitrust at the U.S. Chamber of Commerce. “There is a role for antitrust in labor markets,” he added. “But it is a limited one.”The State of Jobs in the United StatesJob openings and the number of workers voluntarily leaving their positions in the United States remained near record levels in March.March Jobs Report: U.S. employers added 431,000 jobs and the unemployment rate fell to 3.6 percent ​​in the third month of 2022.A Strong Job Market: Data from the Labor Department showed that job openings remained near record levels in February.New Career Paths: For some, the Covid-19 crisis presented an opportunity to change course. Here is how these six people pivoted professionally.Return to the Office: Many companies are loosening Covid safety rules, leaving people to navigate social distancing on their own. Some workers are concerned.The latest criminal indictment, brought in January against owners and managers of four home health care agencies in Portland, Maine, is emblematic of the new approach.According to the indictment, the agencies agreed to keep the wage of health aides at $16 to $17 an hour. They encouraged other agencies to sign on, prosecutors said, and threatened an agency that raised its pay to between $17 and $18.50.The agencies’ margin is essentially the difference between the wage and the reimbursement from the Maine Department of Health and Human Services. In April 2020, the department raised the rate to $26.20 an hour, from $20.52, explicitly to “fund pay raises for approximately 20,000 workers,” according to the indictment.The agencies’ agreement, the indictment said, was “a per se unlawful, and thus unreasonable, restraint of interstate trade and commerce in violation of Section l of the Sherman Act.”That blows directly against the position of the Chamber of Commerce. Last April, it filed a brief in a similar case, opposing the government’s argument against an outpatient medical care facility that agreed with a rival not to solicit each other’s employees. The Justice Department was overstepping, the brief argued, because the company couldn’t know the behavior was “per se” illegal — an outright breach of the law irrespective of its effects — since the government’s argument had not been tested in court.American companies “are entitled to fair notice of what conduct is and is not prohibited by the federal antitrust laws,” it argued. “Because no court has previously held that nonsolicitation agreements are per se illegal, this prosecution falls far short of the fair notice that due process requires.”A federal court in a separate case has since sided with the government’s interpretation. In November, Judge Amos L. Mazzant III of the United States District Court in the Eastern District of Texas denied a motion to dismiss a federal criminal indictment alleging wage-fixing at a staffing company providing physical therapists, agreeing that price fixing would be “per se” illegal and that the defendants had fair warning that their behavior was against the law.But beyond the legal wrangling brought about by the Justice Department’s new approach, there are striking examples of efforts by employers to suppress wages.“I suspect those things are all over the place,” said Ioana Marinescu, an economist at the University of Pennsylvania’s School of Social Policy and Practice, whether it is employers hoarding highly paid computer engineers or chicken plants paying $15 an hour. “The benefits of collusion may not be super large, but if the costs are quite low, why not do it if you can extract profit?”Until recently, over half of all franchise agreements in the United States, at companies including McDonald’s, Jiffy Lube and H&R Block, included provisions barring franchisees from hiring one another’s workers, according to research by the economists Alan B. Krueger and Orley Ashenfelter. Economic analysis has found that suppressing competition for workers, reducing their options, generally means lower wages. After challenges from several state attorneys general, hundreds of companies abandoned the practice.Another study found that 18 percent of workers are under contracts that forbid moving to a competitor. Most are highly skilled and well paid. Employers who invest in their training can plausibly argue that the noncompete clauses protect their investment and prevent workers from taking valuable information to a rival.But such provisions cover 14 percent of less-educated workers and 13 percent of low-wage workers, who receive little or no training and hold no trade secrets. Several states have challenged the provisions in court. Some, including California, Oklahoma and North Dakota, have prohibited their enforcement.Then there is the litigation. There are civil cases from the 1990s: one by the Justice Department against the Utah Society for Healthcare Human Resources Administration and several hospitals in the state that shared wage information about registered nurses and matched one another’s wages, keeping their pay low. Lawsuits filed by nurses in 2006 accusing hospital systems of conspiring to suppress their wages led to multimillion-dollar settlements in Albany and Detroit.In 2007, the Justice Department sued the Arizona Hospital and Healthcare Association for fixing the rates that hospitals paid to nursing agencies for their temporary nurses, putting a cap on their wages. In settling the case, the association agreed to abandon the practice.The pace picked up after a Justice Department lawsuit in 2010 taking aim at no-poaching agreements involving Adobe, Apple, Google, Intel, Intuit, Pixar and later Lucasfilm. The companies settled the case without admitting guilt or paying fines, but Adobe, Apple, Google and Intel paid $415 million to settle a subsequent class-action lawsuit.Since then, lawsuits have been filed across the industrial landscape. Pixar, Disney and Lucasfilm paid $100 million to settle an antitrust challenge to their agreements not to hire one another’s animation engineers. In 2019, 15 “cultural exchange” sponsors designated by the State Department paid $65.5 million to settle a lawsuit claiming, among other things, that they colluded to depress the wages of tens of thousands of au pairs on J-1 visas. Since 2019 Duke University and the University of North Carolina have paid nearly $75 million to settle two antitrust cases over agreements not to recruit each other’s faculty members.This month, Local 32BJ of the Service Employees International Union filed a complaint with the Federal Trade Commission arguing that Planned Companies, one of the largest building services contractors in the Northeast and Mid-Atlantic, illegally forbids its clients to hire its janitors, concierges or security guards either directly or through another firm — locking its workers in.In perhaps the biggest case of all, in 2019 a class action was filed against the American chicken industry, growing to cover some 20 producers responsible for about 90 percent of the poultry market. The complaint accused them of exchanging detailed wage information to fix the wages of about a quarter-million employees, including hourly workers deboning chickens, refrigeration technicians and feed-mill supervisors on a salary.Four of the chicken processors have settled, agreeing to pay tens of millions of dollars. In February, Webber, Meng, Sahl & Company, one of two firms that collected wage data for the poultry companies, settled as well, offering a fairly clear window into the industry’s attempts to suppress wages.In a declaration to the court, part of the settlement agreement, the law firm’s president, Jonathan Meng, said the chicken companies had used the firm “as an unwitting tool to conceal their misconduct.” He offered details about how poultry executives would share detailed wage information. “They wanted to know how much and when their competitors were planning to increase salaries and salary ranges,” he said, because it would allow them “to limit and reduce their salary increases and salary range increases.”Most of the defendants, however, are still contesting the case. They have argued that to prove collusion, the plaintiffs must show that wages across the industry moved in tandem, an argument the court has yet to rule on.Another hurdle is convincing judges that chicken industry workers amount to a specific occupation. If workers deboning chickens could easily leave the poultry industry to work for a better wage at McDonald’s or 7-Eleven, they would have a tougher case to prove that anticompetitive practices by poultry processors caused them direct harm.In pursuing such cases, the government is likely to be challenged by corporate groups every step of the way.Mr. Heather at the Chamber of Commerce, for one, argues that “this narrative that lax antitrust is responsible for income inequality” is wrong. He notes a study sponsored by the chamber showing that corporate concentration is no higher than in 2002 and has been declining since 2007. “The heart of the premise is just flawed,” Mr. Heather said.Moreover, Mr. Heather said, labor markets are already covered by labor laws. “The chamber has an objection to the blending of antitrust and workplace regulation,” he said.Mr. Gidley of White & Case broadly agrees. “It is intriguing to us to see the last 40 years of antitrust law thrown out the window,” he said in an interview. “If antitrust is no longer about low prices but about a clean environment and wages and this, that and the other, it loses its compass.” More

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    Justice Dept. Charges Russian Oligarch With Violating Sanctions

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    WASHINGTON — The Justice Department said on Wednesday that it had charged a Russian oligarch with violating U.S. sanctions and unveiled additional measures intended to counter Russian money laundering and disrupt online criminal networks in an effort to enforce financial penalties on Moscow.The moves came as the United States has ratcheted up pressure on the Kremlin and some of the wealthiest Russians in light of growing evidence of atrocities in Ukraine and as Attorney General Merrick B. Garland said the United States was helping its European partners investigate potential war crimes.The oligarch, Konstantin Malofeev, 47, is widely considered one of Russia’s most influential business moguls — he is said to have deep ties to President Vladimir V. Putin — and is among the more prominent conservatives in the country’s Kremlin-allied elite. (The indictment renders his surname as Malofeyev.)The actions demonstrated the reach of a task force created last month to find and seize the assets of wealthy Russians who violate U.S. sanctions on Russia, and the penalties appeared meant to enforce the far-reaching economic sanctions that the United States has imposed along with European allies.“The Justice Department will use every available tool to find you, disrupt your plots and hold you accountable,” Mr. Garland said, adding that officials had moved “to prosecute criminal Russian activity.” He pointed to the seizure this week of a $90 million yacht owned by Viktor F. Vekselberg, who was previously targeted with sanctions over Russian interference in the 2016 presidential election.Mr. Garland said law enforcement was also pursuing Mr. Malofeev for illegally transferring money in violation of sanctions.The criminal charges against Mr. Malofeev, which were unsealed in Federal District Court in Manhattan, follow an indictment filed there in March against a former Fox News employee, John Hanick. Mr. Hanick, an American citizen, is accused of working for the oligarch from 2013 to 2017, and was arrested in February in London.Justice Department officials said in a statement on Wednesday that the charges against Mr. Malofeev were in connection with his hiring of Mr. Hanick “to work for him in operating television networks in Russia and Greece and attempting to acquire a television network in Bulgaria.”The U.S. Treasury Department, in imposing sanctions on Mr. Malofeev in December 2014, called him “one of the main sources of financing for Russians promoting separatism in Crimea.”Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement on Wednesday that the sanctions barred Mr. Malofeev from paying or receiving services from American citizens, or from conducting transactions with his property in the United States.Russia-Ukraine War: Key DevelopmentsCard 1 of 4U.N. meeting. More