United States: Price Police: White House Announces Strike Force On Unfair And Illegal Pricing

On March 5, U.S. President Joe Biden announced a "Strike Force on Unfair and Illegal Pricing," a new multi-agency effort led by the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice (DOJ). According to the White House, the Strike Force will "root out and stop illegal corporate behavior that hikes prices on American families through anti-competitive, unfair, deceptive, or fraudulent business practices."¹

Importantly, the announcement calls out specific industries that will be under Strike Force scrutiny:

• Prescription drugs and health care
• Food and grocery
• Housing
• Financial services

This announcement comes on the heels of aggressive FTC and DOJ antitrust enforcement efforts, including the FTC's expanded interpretation of unfair methods of competition under Section 5 of the FTC Act and DOJ's revival of the long-dormant practice of criminally prosecuting certain monopolization violations under Section 2 of the Sherman Act.

Notably, DOJ has already scrutinized the identified industries. For example, as part of a deferred prosecution agreement with a generic pharmaceutical company in 2023, DOJ imposed a penalty of US$225 million and required the company to divest a product line to address allegations of collusion in drug pricing.² Similarly, DOJ has brought multiple civil and criminal cases involving the agricultural industry — one of those cases resulted in a criminal guilty plea with a fine exceeding US$100 million.³

More recently, DOJ has submitted statements of interest in private litigation involving the apartment rental and real estate brokerage industries.⁴ As President Biden emphasized in his State of the Union Address on March 7, "[f]or millions of renters, we're cracking down on big landlords ... who break antitrust laws by price-fixing and driving up rents."⁵

For its part, in February 2024, the FTC signaled further scrutiny of health-care markets, requesting public comment on "[w]hether and to what extent [drug] manufacturers, GPOs, and drug wholesalers are complying with their legal obligations under Section 3 of the Clayton Act and the Robinson-Patman Act."⁶ This follows a June 2022 FTC policy statement declaring that "paying or accepting rebates or fees in exchange for excluding lower cost drugs may constitute commercial bribery under Section 2(c) of the Robinson-Patman Act."⁷

Under the Biden administration's whole-of-government approach, scrutiny of pricing practices will not be limited to the FTC and DOJ.⁸ The Strike Force will supplement the FTC's and DOJ's preexisting enforcement efforts with an expanding group of federal regulatory agencies — including the Departments of Agriculture, Health and Human Services, and Transportation, along with the Securities and Exchange Commission, the Federal Communication Commission, and the Consumer Financial Protection Bureau — further increasing regulatory and enforcement risk for companies.

For example, on the same day as the Strike Force announcement, USDA announced that it had finalized a rule under the Packers and Stockyards Act of 1921 that, among other things, prohibits certain contracting practices. According to USDA, the new rule is designed to "help producers and growers that have suffered from increasingly consolidated markets over the last 30 years by enhancing market integrity and ensuring fair access to economic opportunities."⁹

The Biden administration likewise has focused its attention on prices for financial services. On the same day as the Strike Force announcement, the Consumer Financial Protection Bureau announced that it had finalized a rule to reduce credit card late fees from the current average of $32 down to $8 in order to "cut excessive credit card late fees by closing a loophole exploited by large card issuers."¹⁰

Although the White House announcement is short on details regarding the structure and operations of the Strike Force, this multi-agency model echoes DOJ's highly successful Procurement Collusion Strike Force (PCSF), an interagency effort led by the Antitrust Division to combat collusion and fraud in government procurement. Since its inception in November 2019, the PCSF has continued to grow in agency membership, and has opened more than 100 criminal investigations and trained more than 31,000 government personnel to detect antitrust offenses in government contracting. And in that time, the PCSF has investigated and prosecuted over 65 companies and individuals involving over US$500 million worth of government contracts.¹¹

While there has been criticism from business groups that this announcement is "an attempt to return to the failed policy of government price controls which President Nixon tried fifty years ago,"¹² businesses must nevertheless manage legal risk arising from the Strike Force. History has shown that agency action often follows presidential announcements. Therefore, companies — especially those in the identified industries — should review their business practices for compliance with antitrust and competition laws, as well as consumer protection and competition rules and regulations issued by relevant government agencies.

Footnotes

1. Press Release, The White House, Readout of the Sixth Meeting of the White House Competition Council (Mar. 6, 2024).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.