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Two recent settlements reached between federal antitrust authorities and antitrust defendants highlight that the federal government is open to settlements in which the defendants agree to curb allegedly anticompetitive conduct. The government publicly tallies the resolution as a win, and companies get out of tricky situations by following through on or expanding compliance initiatives already in place. But obtaining a good deal with the feds isn’t the end of the story in today’s market, with private plaintiffs and state regulators ready to jump in to fight solutions they deem inadequately protective.

John Deere

In the latest installment of the right-to-repair wars, the Federal Trade Commission (FTC) and enforcers from Illinois, Arizona, Michigan, Minnesota, and Wisconsin settled an antitrust case against Deere & Company alleging monopolization of the market for equipment repair.

The Allegations

Federal and state antitrust enforcers alleged that Deere enjoys monopoly power in the market for diagnostic tools capable of enabling all repairs on John Deere agricultural equipment (repair tools). They contend that Deere has developed such a repair tool but makes it available only to its authorized dealers. By contrast, Deere offers farmers and independent repair providers (IRPs) an inferior tool that “lacks many of the key functions necessary to enable comprehensive repair.” Consequently, regulators alleged, farmers and IRPs are forced to turn to dealers “for repairs that they would do themselves or take to an IRP but for Deere’s restrictions, and “thus unable to competitively constrain Deere dealers in the provision of these and other key repair services.”

The Settlement Terms

Deere agreed to pay $1 million to cover the government’s costs and attorneys’ fees. The company also pledged to change its practices relating to access to repair resources. Among other concessions, Deere agreed to make repair resources on par with those offered to its authorized dealers available to consumers and IRPs that request them. It also agreed to instruct its dealers to do the same without discriminating or retaliating against any such consumer or IRP. Further, to ensure that word reaches consumers, Deere agreed to post a notice on its website and deliver a copy of the final stipulated order to every consumer and IRP that has purchased Deere equipment in the last three years.

This settlement comes on the heels of a separate proposed $99 million settlement between Deere and a putative class of farmers with similar claims. Certain plaintiffs continue to contest both monetary adequacy and the substantive sufficiency of the proposed injunctive relief. Although the class action court has preliminarily approved the private resolution’s monetary terms, the private plaintiffs continue to litigate additional terms, providing a stark contrast to the more easily negotiated resolution with the feds.

Live Nation/Ticketmaster

In an unusual move, early last year the Department of Justice (DOJ) settled with Live Nation and its wholly owned subsidiary, Ticketmaster (together, Live Nation) in the middle of trial. Nonetheless, state enforcers pressed on and secured a favorable jury verdict in the same case. Now, the DOJ and Live Nation have asked the court to approve the settlement.

The Allegations

This case has been well-publicized. At bottom, the plaintiffs allege seven categories of anticompetitive conduct:

  • That Oak View Group is a “potential competitor-turned-partner” that acts as a “hammer” and “protect[or] for Live Nation;
  • That Live Nation-Ticketmaster threatened financial retaliation against a potential competitor in the U.S. concert promotions market;
  • That Live Nation-Ticketmaster strategically acquired several smaller and regional promoters it viewed as threats in the market;
  • That Live Nation’s market power prevents concert venues from choosing other promoters or ticketers;
  • That Live Nation “locks” concert venues into long-term exclusive contracts;
  • That Live Nation’s practices prevent new and different promotions, competitors, and business models from emerging; and
  • That Live Nation restricts artists’ use of key venues unless those artists also agree to use their promotion services.

The Settlement Terms

As with the Deere federal resolution, the proposed final judgment in the Live Nation matter focuses primarily on conduct remedies (i.e., rules governing how Live Nation must behave going forward, as opposed to “structural remedies” that would force a breakup or divestiture of the company). Among other items, Live Nation is obliged to develop and provide an open distribution and ticket authentication system, offering more ticketing options to concert venues. Live Nation is further prohibited from imposing de facto restrictions on competition by contractual, pricing, technological, or other restrictive means, and must also allow a handful of identified concert venues to cancel or modify all contracts that relate to the provision of booking or promotion services and/or ownership interests in those venues. Perhaps most notably, Live Nation is prohibited from (1) retaliating against venues for choosing a different ticketing service or (2) conditioning the provision of events on use of defendants for ticketing services or event booking. Senior Justice Department officials have called the resolution “a win-win for everybody” (see Justice Department and Live Nation settle over illegal monopoly case | AP News).

The settlement has yet to be approved by the court. But 21 plaintiff states have asked the court to authorize discovery under the Tunney Act, 15 U.S.C. § 16(f), into the settlement because of “significant concerns that the Settlement is not in the public interest.” The states’ discovery request principally targets the substantive design and efficacy of the settlement’s proposed remedies, including the open distribution and ticket authentication system, the divestiture and venue booking terms, and the reappointment of the compliance monitor, as well as process-related concerns about potential outside influence on the settlement negotiations, including communications with the White House Counsel’s Office.

Key Takeaways

  • Federal antitrust enforcers — DOJ and FTC alike — are now willing to accept behavioral remedies as a basis for resolving antitrust cases. This marks a notable change from the prior administration, which preferred or required structural remedies, such as divestitures and injunctions dismantling the challenged conduct or structure. Under the past administration, enforcers viewed behavioral remedies as less effective and too difficult to monitor and enforce over time.
  • Companies facing antitrust scrutiny may find the government amenable to defense- favorable resolutions that allow the government to claim a “win,” while companies still achieve underlying business goals.
  • The more flexible resolution approach with the government does not extend to private class actions or even state regulators, however. It is even possible that plaintiffs’ firms and state regulators may take a more aggressive approach if the federal government is perceived to be too industry friendly.