https://www.wsj.com/articles/u-s-targets-drug-pricing-no-poach-deals-for-antitrust-action-in-2020-11579124098?mod=djem10pointU.S. Targets Drug Pricing, No-Poach Deals for Antitrust Action in 2020
Justice Department antitrust chief also promises decision on music licensing, criticizes states’ lawsuit against T-Mobile and Sprint
Assistant Attorney General Makan Delrahim said the Justice Department expects to bring its first-ever criminal case accusing employers of colluding not to poach each other’s workers. PHOTO: LEXEY SWALL FOR THE WALL STREET JOURNAL
By Brent Kendall
Jan. 15, 2020 4:34 pm ET
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WASHINGTON—The Justice Department’s antitrust division is preparing to tackle competition issues in several important markets, including alleged price-fixing in the generic-drug industry, rules for music licensing and purported employer collusion that limits options for sought-after workers.
In an interview with The Wall Street Journal this week, Assistant Attorney General Makan Delrahim, the Justice Department’s top antitrust official, said the department would act on those issues in the next several months. He said it was too soon to predict the outcome of his division’s highest-profile endeavor: an investigation of whether dominant tech firms are stifling competition.
“We’re well into the fairway of gathering data and evidence” on the tech probe, Mr. Delrahim said.
The department’s investigation of Alphabet Inc.’s Google includes a collaboration with state attorneys general, and the Justice Department is staying in touch with the Federal Trade Commission as both agencies probe Facebook Inc., he said. Separately, the department is considering whether Google should be allowed to acquire Fitbit Inc., the wearable fitness-product company.
Mr. Delrahim also said he was closely tracking how the National Collegiate Athletic Association was handling the issue of payment for college athletes, expressing concerns with the group’s restrictions on benefits and compensation.
As Mr. Delrahim bounced between meetings, a sprawling stack of papers dominated his conference room table, signaling what looks like a busy year of enforcement developments.
T-Mobile and Sprint
Among Mr. Delrahim’s most immediate concerns is the New York trial that will decide whether T-Mobile US Inc. can buy Sprint Corp. Thirteen states are challenging the merger even though the department and the Federal Communications Commission approved it after securing a menu of concessions from the carriers.
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Mr. Delrahim said he worries the merger market could suffer if the states prevail. Expert federal agencies found problems with the merger and fixed them, he said.
“I think if the states win, it creates major uncertainty in M&A,” Mr. Delrahim said, adding that he hopes the companies would appeal if they lose.
The plaintiff states, led by California and New York, fired back at the Justice Department’s arguments last week, saying states are independent enforcers and owe no deference to their federal counterparts.
Closing arguments took place Wednesday. Mr. Delrahim took an unexpected turn in the spotlight when the states introduced evidence showing he had exchanged text messages with Charlie Ergen, chairman of Dish Network Corp., as Mr. Ergen was negotiating a deal in which Dish would acquire assets from the merging companies designed to allow it to become a new wireless competitor. Critics questioned whether Mr. Delrahim was too involved in trying to engineer the agreement.
“I was doing my job to ensure consumers benefit in the end,” Mr. Delrahim said. “I was trying to make sure the divestiture buyer in Dish has the greatest chance of succeeding.”
Travel industry case looming
The Justice Department has a direct stake in a different merger trial set to begin Jan. 27 in Delaware. It sued to prevent Sabre Corp., the lead booking service for travel agents, from buying Farelogix Inc., an upstart that the Justice Department says has newer, better flight-booking technology.
Mr. Delrahim said the litigation could be relevant for tech cases because it raises issues about preserving competition through innovation and limiting dominant firms from buying nascent competitors.
“Every case has its own set of facts, but this could have underlying implications,” he said.
Sabre argues the two companies offer complementary products, and combining them will drive faster innovation that serves airlines and travelers.
Charges in generic-drug industry
Mr. Delrahim said the Justice Department is preparing to file new criminal cases against the generic drug industry for allegedly fixing prices. The department has been investigating possible criminal conduct by generic drug companies for years, but federal cases have been slow to materialize.
Two lower-profile companies and two executives have been charged. The most recent case came in December, when Rising Pharmaceuticals was charged with fixing prices on a hypertension drug. The company reached a deferred prosecution agreement in which it accepted responsibility and agreed to pay restitution as well as civil damages.
State enforcers separately have been pursuing civil cases against the industry.
A harder line on employers’ hiring practices
Mr. Delrahim said the division separately expects to bring its first-ever criminal case accusing employers of colluding not to poach each other’s workers.
The antitrust division has pursued several civil cases in recent years against companies that entered into no-poach agreements, especially in the tech sector. When businesses agree not to recruit or hire each other’s workers, it robs employees of opportunities, information and the ability to use competing offers to negotiate better terms, the Justice Department has argued.
Charging a company or executive with a crime for this practice would mark a major escalation of the government’s approach.
“We’ll see a case in the first half of this year,” Mr. Delrahim said.
Monitoring Live Nation, weighing music licensing rules
The antitrust division made news late last year by requiring Live Nation Entertainment Inc. to extend by five years its compliance with a Justice Department settlement imposing restrictions on the concert-promotion giant when it bought Ticketmaster in 2010. A federal judge still needs to approve the extension.
The department alleged Live Nation violated the settlement by strong-arming venues that didn’t want to use its Ticketmaster subsidiary, which the company denies. Mr. Delrahim said the extended settlement has new provisions that will make it easier to monitor and pursue Live Nation if there are future violations.
More music news is likely on the way: Mr. Delrahim said he expects to announce a decision in the next few months on whether to modify or terminate decades-old antitrust settlements dictating how music is licensed for play on radio, television, streaming services or in venues like restaurants. Changes to the rules could help artists and shake up how businesses, broadcasters and streaming services secure rights from songwriters and publishers.
Write to Brent Kendall at brent.kendall@wsj.com