U.S. keeps losing antitrust cases, including against UnitedHealth, but few expect pullback

The U.S. government has been hit with four painful losses at antitrust trials recently, including cases against UnitedHealth Group and Cargill, but legal experts do not expect the Biden administration's regulators to slow its efforts.

In fact, the Justice Department and Federal Trade Commission (FTC) have vowed to press on aggressively.

The top competition lawyer at the Justice Department, Jonathan Kanter, told lawmakers on Sept. 20 that "part of the job that we have before us is to litigate cases and to take risks when it's appropriate and necessary to defend the American public, particularly in areas such as health care."

He added: "We are not going to back down from bringing meritorious cases."

The department has merger fights underway in industries like airlines, publishing, national security and residential locks.

The Justice Department lost two merger fights last month, failing to stop Minnetonka-based UnitedHealth Group's $13 billion bid to buy Change Healthcare, which closed on Monday, and U.S. Sugar's deal for Imperial Sugar Co.

FTC Chair Lina Khan noted the agency had sued to block six mergers outright in the past year.

"Congress has tasked us with stopping unlawful mergers," she said in a statement to Reuters. "If we determine that a merger would violate the law, we have a responsibility to act, and we will not shrink from that duty."

Recent losses "won't cause them to back down unless they get blowback from a quarter that I don't know about," said Henry Su, a former FTC official now at the law firm Bradley Arant Boult Cummings.

In July, a jury found chicken producer executives, including three former Pilgrim's Pride officials, not guilty of price-fixing.

And a judge at the Federal Trade Commission ruled on Sept. 1 against the agency's effort to stop Illumina's merger with Grail.

Meanwhile, companies have changed their behavior, structuring deals to avoid accusations that they break antitrust law, and preparing for court fights that would have been avoided in the past by negotiations between the agency and companies to sell assets or otherwise remedy competition concerns.

"Anyone thinking about doing a merger that raises antitrust concerns must either fix it before notifying the government or go into the merger review ready to litigate," said Andre Barlow of the law firm Doyle, Barlow & Mazard in an email. "The days of cooperating with the antitrust agencies in a merger review to work out a negotiated settlement may be gone. The antitrust agencies are taking a litigation approach so the merging parties must do the same."

Minnetonka-based Cargill and Continental Grain did just that when their joint venture acquired Sanderson Farms to combine it with Wayne Farms, both chicken producers. Both Sanderson and Wayne had plants in Laurel, Miss., but Wayne sold its facility shortly after the deal was announced, raising a huge barrier to the government challenging the deal.

The $4.5 billion deal closed in July.

All of this is not to say the Biden administration's regulators have not had big successes.

The FTC sued to stop U.S. arms maker Lockheed Martin Corp. from buying rocket engine maker Aerojet Rocketdyne Holdings, as well as chipmaker Nvidia Corp.'s planned purchase of Arm Ltd. Both were abandoned.

The FTC also filed complaints to block the mergers of big health care companies in New Jersey, Rhode Island and Utah. Those also were abandoned.

The Justice Department has also had deals scrapped under pressure, including in shipping containers, construction materials and engineering.

Still, William Kovacic, who teaches antitrust law at the George Washington University Law School, said continued losses would hurt the agencies.

"Ultimately to build your program, you need litigated victories," he said. "There is some undefined critical mass of victories you need to be credible."