Antitrust and Unfair Competition Law

KATHLEEN FOOTE’S RECOLLECTIONS OF ANTITRUST ENFORCEMENT UNDER SEVEN CALIFORNIA ATTORNEYS GENERAL 

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April 2024

Over 34 years, Kathleen Foote worked for and then headed the Antitrust Section of the California Attorney General’s Office under seven different Attorneys General. Kathleen’s memoirs highlight the impressive accomplishments of the Section through the decades.

JOHN VAN DE KAMP (JANUARY 1983–JANUARY 1991)

When I joined the Antitrust Section in 1988, the Section had five lawyers in San Francisco, two in Sacramento, and three or four in Los Angeles. Mike Spiegel, Charles Kagay, and Wayne Liao had just left to form their own law firm, taking with them a major petroleum products antitrust case known as MDL-150. Jesse Markham joined the Section shortly before I did. Sandy Gruskin was the Section Chief, with Andrea Ordin as the Chief Assistant for the Public Rights Division.

Attorney General (AG) Van de Kamp had given the “Spiegel shop,” as I sometimes heard our Section called, strong support in filing major cases with the purpose of developing both California law and California’s stature on the national stage as an antitrust enforcer. Two of the cases went to the U.S. Supreme Court (California v. American Stores,1 affirming the state’s power to challenge mergers notwithstanding a federal consent decree, and California v. ARC America,2 affirming the validity of California’s indirect purchaser recovery law), and one case went to the California Supreme Court (State of California ex rel. John Van de Kamp v. Texaco,3 rejecting, alas, the premise that mergers could be challenged under the Cartwright Act).

INSURANCE. Insurance was a hot political issue in the late 1980s, and one in which Van de Kamp was deeply interested. The California v. Hartford Fire suit was filed in the Northern District of California district court three weeks after I joined the Office and was assigned to Judge Schwarzer. The complaint alleged a 1983–1984 conspiracy by liability insurers and reinsurers, both domestic and foreign, to restrict the terms of commercial general insurance. With 18 states involved, most of them actively so, Hartford was the first true multistate case and served as the model for a structure that became the norm for managing multistate litigation, with an executive committee, a cost-share agreement, regular meetings and agendas, and various decision-making protocols. My antitrust knowledge was pretty thin compared with others, but thanks to my city council experience, nobody else knew as much as I did about administrative processes, group decision-making, and committees. When cleaning out my office last fall, I stumbled across a keepsake: a ballot cast for members of the Hartford case’s Executive Committee. The Committee was quite an Antitrust Hall of Fame, including names like Mike Brockmeyer (MD), Trish Conners (FL), Bob Langer (CT), Kevin O’Connor (WI), Laurel Price (NJ), and Lloyd Constantine (NY), as well as Tom Greene from California.

The issue of jurisdiction over foreign companies in Hartford went to the U.S. Supreme Court, where the states suddenly found their case supported by a flock of amici curiae, including the U.S. Department of Justice (DOJ).4 It led to the Court’s seminal interpretation of the jurisdictional reach of the U.S. antitrust laws to apply to conduct by foreign defendants (such as Lloyd’s of London) outside the United States, but intended to affect markets within the United States. I have seen Hartford cited as one of the most important antitrust rulings of the second half of the 20th century.

When the case finally settled in 1995, the remedy was in effect a cy pres one, involving the formation and funding of two new nonprofit organizations. This was unquestionably the most ambitious, as well as creative, settlement of which I have ever been a part. For a couple of years, I was the point person getting each of the organizations established, after having conducted the initial discussions of the idea with California public sector risk managers, and later working with the National League of Cities and similar groups. One organization was created to develop a national municipal liability database to give newly formed self-insurance pools and joint powers authorities a solid foundation for future underwriting and reserving. The other new organization, named the Public Entity Risk Institute, was a think tank kind of organization intended to establish best practices, make training grants, and conduct seminars to facilitate self-insurance for both municipal entities and not-for-profits. Eventually the two organizations merged, and in 2013 became part of the Public Risk Management Association.

DANIEL LUNGREN (JANUARY 1991–JANUARY 1999)

Dan Lungren served as AG for eight years starting in January 1991 and was the lone Republican in the AG’s Office under whom I worked. On the campaign trail, Lungren was rumored to have signaled a desire to cut back on consumer protection and antitrust. However, once Lungren gained the AG position, he quickly came to appreciate the importance of vigorous enforcement in both areas.

HOSPITAL MERGERS. Perhaps because his father had been Nixon’s personal physician, Lungren had grave concerns over consolidation in the nonprofit healthcare world, especially the acquisition of nonprofit hospital providers by for-profit entities. Under Lungren, the Charitable Trust Section of the AG’s Office, which oversaw acquisitions of nonprofits with the assistance of the Antitrust Section, was very active in reviewing any healthcare nonprofit transactions.

AGRICULTURE. When the Wells Fargo/First Interstate merger was announced, Lungren publicly expressed his concerns. I was assigned to the matter and worked with Tony Nanni’s banking group at the DOJ. While that U.S. group focused on potential impacts on small business lending, my investigation turned instead to impacts on agricultural lending. At the time, there were very few lenders extending unsecured crop loans, which were vital to California’s Central Valley agricultural businesses. Lungren’s affinity for agriculture and connections with the Farm Bureau were very helpful. The merger was approved subject to numerous Central Valley branch divestitures, and Lungren sought assurances that priority would be given by the merged entity to agricultural lending. Agriculture has been a focus area for the Section ever since.

MICROSOFT. Also, during the Lungren administration, California joined the multistate monopolization case against Microsoft, which paralleled the suit brought by the DOJ. The New York AG led the litigation for the states, though California moved into a larger lead role after Lungren was no longer the AG.

TOBACCO. During his second term, a much bigger focus for Lungren was the high-profile national tobacco litigation. California, along with several other states, stepped directly into the tobacco cases that had originally been brought by private counsel, seeking redress for states and state agencies that shouldered many of the huge costs of tobacco use and addiction. California opted to handle our case in-house; then-Antitrust Section chief Tom Greene was tapped to put together a team of at least 40 lawyers and paralegals. Although most of the case was built on the Unfair Competition Law theories, I headed a subgroup that pursued antitrust theories, some of which were very interesting.

In the 1950s, after the government issued statements that cigarettes could cause cancer, amidst the public dismay, some tobacco companies rapidly began developing “safer” cigarettes. Those (like me) old enough to remember will recall the television ads by Tareyton promoting its charcoal filter, with cartoon illustrations of how it captured the tars and nicotine as the smoke passed through the filter. With market shares threatening to shift dramatically to the “safer” versions, at least one complaint alleged, the tobacco companies, working through a single advertising agency, apparently agreed to pool and share all health research and agreed not to advertise competing health claims for their brands. I would have loved to have seen this aspect of the case pursued further.

Lungren and the other states eventually reached a Master Settlement Agreement with seven tobacco companies that paid the states $206 billion and agreed to fund a $1.5 billion anti-smoking campaign, signed in November 1998; California was allocated 12.7% of this settlement, and the AG established a permanent Tobacco Section to enforce the complex injunctive terms.

BILL LOCKYER (JANUARY 1999–JANUARY 2007)

Bill Lockyer’s stint as AG was a game-changer for the Antitrust Section. He was part of the first wave of career legislators in California who found themselves pushed out of office by newly enacted term limits. Lockyer had spent more than 25 years in the state legislature and was the Senate Majority Leader. Having gone to law school part-time while in the Assembly, he had never practiced law, let alone served as a District Attorney, as most AGs did. His background was policymaking, and he arrived with a policy agenda. He was jovial, informal, and approachable. He went out of his way to connect with rank-and-file employees and made it clear to us that he loved the job, and he loved the work we were doing. He went to bat for an expansion of the Antitrust Section and presided over more key antitrust enforcement decisions than any other AG during my years with the Office.

GAS PRICES. No sooner had Lockyer gotten elected than he was plunged into one of California’s recurring gasoline crises, which always involved public outcries for antitrust investigation of rapidly rising prices. While launching such an investigation, he also convened—legislative-style—a blue-ribbon committee of experts to examine the root causes of the volatility of California gas prices and to come up with a report and recommendations, many of which are still valid today. Tom Greene chaired the committee. I was not deeply involved in gasoline at that time, though I became so later. The Section has performed numerous investigations into the oil industry, usually in collaboration with the Federal Trade Commission, including several under Lockyer.

SUTTER. Lockyer was strongly opposed to the proposed merger of Summit Hospital with Alta Bates, the nearby Sutter hospital in North Oakland, based on evidence and stakeholder concerns that it would give Sutter significant market power in the East Bay. Lockyer was very proactive, holding two days of public hearings. He concluded that the Office should oppose the merger, even though the FTC, to our surprise, declined to proceed. This was not the first or only time that the California AG pursued enforcement actions after federal antitrust authorities declined to act. California’s challenge to the American Stores and Lucky Stores merger in the California v. American Stores, 495 U.S. 271 (1990), litigation followed the FTC’s approval of the merger. Newly named the Antitrust Section Supervising Deputy in San Francisco, where the case was filed, I found myself frantically trying to line up a trial team. We managed to put on what I thought was a strong case but lost. A few years later, the FTC’s Bureau of Economics did a retrospective study of the merger, concluding that Lockyer had been right to challenge it.

VITAMINS CASES. The Vitamins Indirect Purchaser Antitrust Litigation was a civil damages case that followed one of the first and largest international cartel prosecutions by the DOJ. State AGs exercising their authority to sue as parens patriae could seek damages for their vitamin-buying consumers so long as their state law allowed indirect purchaser recoveries. [NOTE: SCOTUS banned such recoveries under federal law in its 1977 Illinois Brick decision, but many states, including California, promptly enacted consumer recovery laws, generically known as “Brick repealers.”] As settlement discussions began, private counsel started soliciting state AGs to join their cases. Lockyer faced a politically difficult decision whether to band together with a group of fellow AGs in joint negotiations or instead partner with the California consumer class action counsel, who were negotiating a separate settlement. He opted for the separate California-only group, and a swift and favorable settlement of over $80 million for California was reached. Lockyer did work with other states’ AGs, however, in launching the 2006 multistate filing in the DRAM civil litigation.

CY PRES. Of the $80 million in Vitamins settlement money, about $40 million was to be distributed via a cy pres process for the benefit of California consumers to not-for-profit organizations to fund programs linked to health and nutrition around the state. This was an astonishing sum to dispose of without clear guidance. My Marin Community Foundation background came in handy, as did my 1999 experience working with AG Lockyer and Consumers Union on spend-down plans for a much earlier settlement that established a healthcare markets research entity at UC Berkeley. (See www.petris.org.) Taking advantage of the retirement of Consumers Union’s highly respected Senior Advocate Harry Snyder, I persuaded private counsel to engage Mr. Snyder to design and implement a suitable grant-making plan to achieve the objectives of the litigation, and Snyder to accept. The court was extremely happy about the approach Mr. Snyder designed, which included several different Requests for Proposals (direct nutrition services, education and advocacy, and research) and periodic reports on each that were presented for judicial approval. While no subsequent antitrust settlement has resulted in a cy pres distribution quite so large, each AG has endorsed the professional grant-making approach initiated in Vitamins, and the Section has had the satisfaction of funding dozens of fascinating projects around California from such settlements.

ENERGY TASK FORCE. Not long after California began having major electricity shortages and price spikes, it was discovered they were being caused by market manipulations and capped retail electricity prices. Lockyer, as an activist AG, created an Energy Task Force composed of numerous attorneys borrowed from several Sections within the AG’s Office, including from the Antitrust Section, and appointed Tom Greene to lead it. I was to take over as the acting Chief of Antitrust in Tom’s absence, a role I kept from 2001 to 2003.

SAFEWAY CASE. In 2003, a major collective bargaining fight arose between three large supermarket chains and the union of supermarket workers. It erupted into a major strike that lasted several months, during which it was rumored that the chains’ battle plan included a secret side agreement amongst the competing supermarkets. The rumor grabbed our attention, but we didn’t know at first whether the agreement, if it existed, presented an antitrust issue. I had just been confirmed as the official Antitrust Section Chief, after two years in the “acting” role, so I saw this as the first big test of my judgment, both legal and political. Once I got a copy of the secret agreement (its provisions regarding profit sharing during the strike were made public in our federal complaint), it was clear that it did present an antitrust issue and that the biggest legal question would be whether it qualified for antitrust immunity under the implied labor exemption. The exemption issue was an especially juicy one from a plaintiff’s perspective because a fourth chain, not a member of the collective bargaining group, was nevertheless a participant in the agreement.

Our lawsuit to enjoin the profit-sharing agreement as a Sherman Act violation was immediately condemned by the chains as politically motivated, a criticism that was assisted by the fact that Lockyer himself, pro-labor politician that he was, joined one of the picket lines for one day with his baby son on his shoulder. However, vindication came as the Section consistently won rulings in the case—two at the trial court level, and two at the Ninth Circuit, and under three successive AGs—and that the profit-pooling agreement was not insulated from antitrust scrutiny by the implied labor exemption and did state an antitrust claim. The case established an extremely important legal precedent that also ended the likely proliferation of such agreements around the country.

A FUN LOCKYER MOMENT. Turns out the tequila market is highly segmented: high-end tequila is a completely different market than low-end tequila. That might not be such a big surprise to tequila drinkers. But guess what? There are higher end, and even higher end, and higher-higher end levels beyond that: five or six distinct tequila markets well beyond mere classifications into reposados and anejos, according to economic experts who know what competes with what. Lockyer requested a personal briefing on the status of a merger investigation I was doing that included some tequilas. I showed up to brief him about the merger on a day when his staff said he was uncharacteristically cranky and distracted. He was, that is, until I mentioned tequila and its multiple high-end quality levels. With a sudden light of enthusiasm in his eye, he demanded to know all the details. “Well, I have a chart,” I said. “Lemme see that!” as he reached for it. “I brought two copies,” I told him. “You can keep one.” Big grin, as he folded it up and slid it into his jacket pocket.

MICROSOFT. Lockyer was deeply interested in the DOJ-led Microsoft case and believed the states, which had launched the initial investigation, had an important role to play. He and others hired John Roberts, then recognized as a top Washington appellate counsel, to represent the states’ interests before the District of Columbia Circuit in Microsoft’s appeal from Judge Jackson’s adverse rulings. In 2001, after the case was returned to the trial court with its monopolization ruling intact, the case went into mediation. The newly elected Bush administration adopted a proposed settlement that many states criticized, as did many commentators in the Tunney Act proceeding that ensued. Nine states ultimately did join the DOJ in settlement. However, Lockyer and eight other state AGs went through a full-blown bench trial to seek more robust remedial terms to restore pre-violation competition, like those terms adopted in Europe. Most of the remedies that the California-led group sought were not granted, but the final judgment gave us the same powers held by the DOJ group to oversee our almost identical Microsoft judgment, which we did for the next seven years. The judgment, like the settlement, was widely criticized as too weak; however, it did allow some new competitors—and their investors—to push forward notwithstanding their fears about Microsoft. And the states’ role in the litigation was particularly important to build credibility as a national-level enforcement presence, notably so in the high-tech arena. That became especially useful later when California’s privacy law first went into effect.

CORPORATE FRAUD UNIT. With New York’s AG Eliot Spitzer regularly grabbing headlines for his pursuit of securities fraudsters and other corporate wrongdoers, Lockyer lacked the authority to do the same. That power was in the hands of the Department of Corporations. Lockyer pushed the legislature for parallel authority and got it, but there was no budget to go along with it, so he turned to the Antitrust Section to help develop an initial approach to enforcement. Luckily for me, the wonderful Mark Breckler was working in the Antitrust Section at the time, after having spent some 25 years at the Department of Corporations. Mark was both knowledgeable and creative, and he and I had a few memorable discussions about what the best kind of case would be to inaugurate the AG’s new authority. Mark filed several corporate fraud cases with a distinct consumer protection flavor, brought in prompt and very large settlements, and quickly became the Chief of a newly created Corporate Fraud Section. My loss, but the Office’s gain. Mark later became Chief of the entire Public Rights Division, and in that role was my immediate boss for several years before he retired.

EDMUND G. (“JERRY”) BROWN (JANUARY 2007–JANUARY 2011)

As AG, Jerry Brown was very focused on climate change and lacked Lockyer’s energetic approach in antitrust matters. However, he was supportive of the Antitrust Section and its cases, as well as a gasoline investigation begun following the gas-pricing spikes in the wake of Hurricane Katrina. During his tenure, we filed several major civil damages cases, joining the TFT-LCD and CRT litigations. 

Moreover, Brown kept faith with ongoing Section projects, including Microsoft monitoring, the Safeway appeal, and Antitrust Section leadership of NAAG’s multistate work on pharmaceutical pricing. During his tenure, the Antitrust Section reached settlements in DRAM, filed several amicus briefs in the federal Cipro and DDAVP litigations, secured a two-year extension of the Microsoft settlement monitoring authority, and settled the multistate Ovcon suit.

WASTE SERVICES. National waste disposal company mergers are ones that ring all the bells for state AG involvement: high state-specific impacts, local markets, areas of state/municipal agency injury, and significant value-added aspects to our participation. The bell is rung even harder when the market is one that falls within the state’s traditional police powers regarding public health and safety, like waste disposal. The Republic Services/Allied Waste merger (announced on June 23, 2008, by the industry’s second and third largest waste management companies) was one of those. As a former mayor, Brown appreciated the importance to California’s municipalities of cost-effective waste disposal services. He also recognized the merging parties as successors of the very companies that he had dealt with as the Mayor of Oakland before becoming the AG.

HIS INIMITABLE STYLE. My first face-to-face with AG Brown was at a meeting with several well-dressed counsel for a major company; I don’t remember the topic. But I do remember that when Jerry arrived (somewhat late as I recall), he was accompanied by his dog, a large and affable old pooch named Dharma. The visiting attorneys promptly stood up and stepped forward to shake hands with Brown, but just as promptly stepped backward as Dharma companionably began licking their high-gloss wingtips. Dharma then settled under the conference table and went to sleep, contributing an occasional snore, or worse, to the proceedings. (As a former small-town mayor myself, I couldn’t resist asking Brown afterwards if he ever missed being Mayor of Oakland. He denied it, but then conceded that he did sometimes miss the direct involvement in neighborhood policing and redevelopment.)

2010 retirement celebration for Barbara Motz (center), the Antitrust Section’s Supervising Deputy AG in Los Angeles.

2010 retirement celebration for Barbara Motz (center), the Antitrust Section’s Supervising Deputy AG in Los Angeles.

RESALE PRICE MAINTENANCE. The 2007 SCOTUS (divided) decision in Leegin Creative Leather Products v. PSKS, 551 U.S. 877 (2007), eliminated the traditional per se treatment of Retail Price Maintenance, reversing long-established precedent. A question immediately arose as to whether the AG would follow Leegin or would continue to treat RPM agreements as per se unlawful. My phone lit up with calls from private counsel asking that question. The issue was familiar to Brown because during his first stint as Governor, in 1975, he signed legislation repealing California’s Fair Trade Laws that had explicitly allowed RPMs since the 1930s. Those laws had blessed RPMs in certain markets as necessary protections of independent merchants from predatory pricing of the big chains. [Like California, 44 other states had similar laws, which later economic research demonstrated were ineffective.] Brown’s position was that Leegin did not change California law, which contains explicit bans on agreements affecting price, so the Section proceeded to sue two companies using RPMs—Dermaquest and BioElements—to underscore the continued per se standard, articulating it in subsequent settlement agreements.

PHARMA PAY-FOR-DELAY. The Section’s involvement, through NAAG, in multistate cases challenging pay-for-delay agreements and similar patent-manipulation practices by pharmaceutical companies to keep drug prices high had begun as early as 2000. But in 2010, Brown became personally interested and involved after receiving a call from the FTC about joining its lawsuit against Actavis, to be filed in California. He was enthusiastic about doing so, and though that case was soon removed to Georgia on its way to becoming a major Supreme Court decision,5 he supported the Section’s participation in several new multistate pay-for-delay cases as well as a series of amicus filings in others.

KAMALA HARRIS (JANUARY 2011–JANUARY 2017)

AG Harris found antitrust issues intellectually engaging. She was a strong supporter of Antitrust Section initiatives, as well as its collaborations with the DOJ. She was deeply interested in the Section’s strategic thinking about how to advance certain areas of law. And despite budget issues, she managed to achieve a modest increase in the Section’s staffing.

Kathleen and members of the Antitrust Section at the 2013 Golden State Institute Antitrust Lawyer of the Year dinner.
Kathleen and members of the Antitrust Section at the 2013 Golden State Institute Antitrust Lawyer of the Year dinner.

PHARMA. During her very first week in office, AG Harris approved the filing of a California-authored 32-state amicus brief in a leading pay-for-delay matter before the Supreme Court.6 Later in her tenure, she authorized the filing and/or settling of other pay-for-delay matters. In a step reminiscent of her push for more mortgage fraud relief dollars for California, she rejected one potential pharma multistate settlement as inadequate, opting to have California pursue separate litigation on its own. That California suit settled later, after Harris’s election to the U.S. Senate, for a sum that was multiples of the amount from the multistate settlement. Most significantly, perhaps, she filed a letter brief with the California Supreme Court urging it to take up In re Cipro Cases I & II,7 and when the Court did take them up, she filed a merits brief urging a more strenuous liability standard for such cases to apply under the Cartwright Act than what was applied under the federal rule of reason test.

CIVIL DAMAGES. During her tenure, Harris presided over a series of civil damages cases arising from federal criminal cartel prosecutions. Although DRAM had been filed in federal court as part of a large multistate case, the Section had filed its next case, TFT-LCD, in state court in part to tee up the then-burning question of whether the Class Action Fairness Act (CAFA) would require its removal to federal court. The Washington AG did the same, and both cases were remanded to their respective state courts; remands that defendants promptly and unsuccessfully appealed to the Ninth Circuit. The question of CAFA’s applicability to parens patriae cases filed by state AGs went to SCOTUS later and was resolved favorably to the states.8 A global settlement of the TFT-LCD litigation yielded over $1 billion for indirect purchasers and very significant civil penalties for California. (As an aside, during my first meeting with Harris to review the antitrust matters in progress, when I mentioned the anticipated scale of the LCD settlement, she grinned and murmured “cha-ching.”)

OTHER KEY RULINGS. The Ninth Circuit’s en banc ruling on the implied labor exemption in the Safeway case issued in 2011 and posed an immediate decision for Harris whether to seek Supreme Court review of a portion of it. (See https://www.antitrustinstitute.org/work-product/ninth-circuit-gets-it-half-right-brunell-commentary-on-california-v-safeway/.) Harris opted not to do so, a strategic choice that preserved intact the important portion of the precedent-setting ruling rejecting the employer group’s claim of antitrust immunity. In 2013, the Ninth Circuit adopted the reasoning of an amicus brief filed by the AG in AT&T Mobility LLC v. AU Optronics Corp., recognizing the extraterritorial reach of the Cartwright Act and holding it not to be in violation of due process. Harris recognized the importance of this ruling and was excited about its additional implications for the UCL, even calling me to exchange views on the case.

EBAY. When the DOJ invited the AG to join an action challenging eBay’s “no-poach” agreement with Intuit to avoid recruiting or hiring one another’s employees, it was a great opportunity to emphasize that California was as eager to prosecute those practices as the feds were. The DOJ had pursued several other Silicon Valley companies that had similar no-poach agreements, and class actions were also being litigated. The complaint Harris filed against eBay paralleled the federal claims, but added Cartwright and Section 16600 claims as well. Our settlement with Intuit was promptly filed in state court. Notwithstanding the similarity of the complaints, the judge separated our two eBay actions, dismissing the AG’s complaint and requiring us to amend to allege detailed and specific harms to the state caused by the no-poach agreement. The upshot was that while the DOJ was preparing for trial against eBay, we were on our third amended complaint. The DOJ and California settled roughly contemporaneously, but the California settlement included a monetary component and release of parens patriae claims. Those included, for the first time, in addition to restitution funds for affected employees, compensation for harm to California’s general economy, or “dead-weight loss.” Harris appreciated the opportunity the case presented to pursue that claim and fully endorsed it.

TECH. Harris was concerned about the growing dominance of Big Tech entities, although reluctant to bring a standalone challenge without an explicit connection to local California markets. When the tech sector expressed concerns about software piracy by foreign companies, she pushed us to see if a local connection existed, and we found one. That resulted in two lawsuits against foreign manufacturers of clothing that imported large quantities of merchandise into California. Their routine use of pirated software allowed them to compete unfairly with small-scale apparel producers in the Los Angeles garment industry and threatened the small L.A.-based tech shops that developed proprietary software to serve them.

XAVIER BECERRA (JANUARY 24, 2017–MARCH 18, 2021)

[Becerra was appointed to Harris’s unexpired term when she resigned to go to the Senate, so he did not join the office until January 24, 2017. He served a little over four years, until March 18, 2021, when he left the AG’s office to become Secretary of Health and Human Services.]

Becerra brought to the AG’s Office deep experience in healthcare policy and legislation. As a Congressman, he had been a member of the House Ways and Means Committee, and as a senior member of its Subcommittee on Health, he had been one of the drafters of the Affordable Care Act. Healthcare was a central theme of his tenure as AG with regard to antitrust as well as other areas. However, it was by no means his only interest. Becerra was a very strong supporter of the Section’s work, persuading the legislature to expand its size significantly. And he enjoyed trying to explain his antitrust matters to public audiences in ways they could understand. (He liked to do it in Spanish as well, and I thoroughly relished an opportunity he once gave me to supply him with the Spanish word for competition: “competencia.”)

AG Becerra in March 2018 announcing the filing of his antitrust case against Sutter Health, flanked by lead-deputy Emilio Varanini and Antitrust Section chief Kathleen Foote.

AG Becerra in March 2018 announcing the filing of his antitrust case against Sutter Health, flanked by lead-deputy Emilio Varanini and Antitrust Section chief Kathleen Foote.

SUTTER. In my early conversations about the work of the Antitrust Section with Becerra’s chief of staff, he made it clear that Becerra was already deeply concerned by the exercise of market power by large health systems around the country. The Antitrust Section under AG Harris had reviewed economic studies that demonstrated sharply higher cost trends in Northern California and had conducted a broad review of healthcare systems, focusing eventually on market power exercise by Sutter Health. Sutter had in the interim been sued by two groups of private antitrust firms. And the DOJ, with the North Carolina AG, had sued a North Carolina hospital system to address similar issues.

The litigation Becerra brought against Sutter was filed in state court, where we hoped to develop further jurisprudence under the Cartwright Act. The complaint itself contained a detailed description of the injunctive remedies sought by the state and encouraged important discussion within the healthcare community about the effects of the contracting practices, through which Sutter was able to wield its market power. The settlement, a joint one with the state court private plaintiffs’ group, was pathbreaking and a major victory for Becerra and the Section. Its terms also served to establish a roadmap for the Office’s position on provider consolidation, as well as a new template for working with private litigants in this area.

A 10-year period of monitoring Sutter’s compliance with the settlement terms was transferred, along with other healthcare-related and pharma matters, to the newly created Healthcare Rights and Access Section. That Section began as a special strike force created by Becerra to defend the federal Affordable Care Act from being dismantled during the Trump administration, and it now embraces the healthcare work previously done by several other Sections within the DOJ, including the Antitrust Section.

GASOLINE. Shortly after AG Becerra arrived, Valero sought to acquire the only remaining large independent storage terminal for finished gasoline products. With this acquisition, the major oil refiners would have the gasoline supply locked up and, in the event of a shortage, independent suppliers might find themselves blocked from bringing replacement fuels into California. California was working with the FTC and expected the FTC to file an action to stop the acquisition, but at the last minute, with only two FTC Commissioners (and three vacancies), the FTC took no action. This was another last-minute scramble for me to recruit a trial team, when Becerra quickly decided to go ahead with his own suit against Valero because it was the “right thing to do.” When I broke the news to him and his executive staff that hiring outside counsel and experts for a merger challenge was an extremely expensive proposition, Becerra did not flinch. And our success in blocking the acquisition was a vindication that he cited again and again.

PHARMA. The Antitrust Section had a 20-year history of supporting multistate actions challenging pharmaceutical companies using patents and agreements to block competition, going back to the Cardizem and Mylan cases. While Becerra’s highest concern was initially healthcare providers, he quickly became a stalwart supporter of enforcement efforts in the pharmaceutical sector. The Provigil matter was settled under his watch, though it had begun under Harris’s direction. And Becerra actively sponsored and supported AB 824, a legislative limitation of pay-for-delay agreements between competing pharmaceutical companies that effectively extended the California Supreme Court’s ruling in the In re Cipro Cases I & II.9

T-MOBILE/SPRINT. AG Becerra, AG James in New York, and several other state AGs were stunned when the DOJ entered into a consent decree with T-Mobile and Sprint authorizing their merger to proceed on the condition that some Sprint assets be sold to Dish Network, based on the dubious premise that Dish would replace the lost competition. Rather than endorse that settlement, several states, including California and New York, proceeded to take the case to trial, an effort that demanded great resources and one which was hampered by the DOJ’s startling effort to scuttle their initiative. While the outcome was a loss for the states and the Antitrust Section, it more firmly established California as an antitrust enforcer to be reckoned with nationally. And someday I expect to read a retrospective study confirming my continued belief that the states were right all along about the anticompetitive effects of this merger.

TECH. Becerra saw the need to become active in the technology space. He approached the antitrust issues in that space methodically, wanting to personally understand all the challenges in this area, and the range of possible actions and remedies to decide where to put any enforcement emphasis and maximize the use of limited resources within the Office. Becerra authorized several investigations, some of which led to cases filed after he left office.

Becerra’s decision to join the DOJ lawsuit against Google regarding its search functions and self-preferencing was an important step in restoring the bipartisanship in antitrust enforcement that had frayed during the Trump administration. Becerra became one of the few Democratic AGs to join the DOJ case, although others soon filed a companion case. The case went to trial in late 2023. I hope that the clearly bipartisan group of states assisting the DOJ will help undo some of the harm to the credibility of antitrust enforcement at both state and federal levels that political polarization has occasioned.

ROB BONTA (APRIL 23, 2021–PRESENT)

AG Bonta was appointed by Governor Newsom when AG Becerra resigned to join the Biden administration. Bonta almost immediately saw antitrust as an important part of his administration and legacy. He joined the DOJ and other states’ AGs in a challenge to the American Airlines/Jet Blue codeshare agreement and signed onto a Utah-led multistate lawsuit against Google, which has settled in recent weeks. When Bonta arrived, the Antitrust Section was larger and more robust than it had been previously. However, Bonta quickly saw the need to build it further and has fiercely fought for more resources going forward. As of my retirement at the end of 2022, the Section included 27 attorneys and 8 paraprofessionals.

GASOLINE. Bonta recently announced the settlement of the Vitol/SK Energy case, involving manipulation by major trading companies of the primary pricing index for gasoline prices. Filed under AG Becerra and based on evidence of trades during gas shortage periods in 2015–2016 intended to influence the index, it is the first gas-pricing lawsuit to emerge from our numerous gasoline investigations since MDL-150. In 2022, it afforded an opportunity for the Section to obtain a significant appellate ruling on personal jurisdiction over a defendant foreign parent company not operating in California, but with a focus on California markets. SK Trading Int. Co. Ltd v. Superior Court of SF County, 77 Cal. App. 5th 378, 292 Cal. Rptr. 3d 246 (2022).

AMAZON. The Amazon suit, which grew out of a two-year investigation begun by Becerra, was filed by Bonta in September 2022. Like Sutter and Vitol, it is also brought under state law and in state court. The complaint’s allegations describe how Amazon’s contractual controls over the prices its third-party sellers charge on other platforms, which are claimed to reduce prices to purchasers, actually raise prices on a vast array of products sold to California’s consumers. These contractual controls are also believed to discourage the growth of online markets that would present effective competition for Amazon. Although it is not a monopolization case, it is reminiscent of the federal Microsoft monopolization case of a generation ago. With its Cartwright Act claims extensively documented with citations of material found during the investigation, it is certainly one of the most ambitious and important cases ever undertaken by the Section. It survived a demurrer last year and is being closely watched, as is the case filed in September 2023 by the FTC.

EPIC v. APPLE AMICUS. UCL lawyers will have noticed that while Apple’s defeat of Epic’s Sherman Act claims against it were recently upheld by the Ninth Circuit, Epic’s UCL claim was also upheld. The opinion’s discussion of the UCL issue is not extensive, but it underscores the limited approach needed when a federal court interprets state laws and confirms that the “unfair” prong of the UCL is a viable means of reaching certain conduct in its incipiency that may not yet rise to the level of a provable violation of existing law. Such an interpretation of California precedent had been carefully laid out in an amicus brief filed in the case by Bonta, who also noted the vast areas of California consumer protection policies that rely on the UCL as a means for enforcement.

I am looking forward to watching the progress of the Amazon case and others, which like Sutter incorporate so many of the lessons I Iearned over the last 20 years. And of course, I want to cheer on the extraordinarily talented attorneys in the Antitrust Section who are carrying them forward under the leadership of AG Bonta and Senior Assistant AG Paula Blizzard, my successor as Chief of the Antitrust Section.

End Notes

1. California v. American Stores, 495 U.S. 271 (1990).

2. California v. ARC America Corp., 490 U.S. 93 (1989).

3. State of California ex rel. Van de Kamp v. Texaco, Inc., 46 Cal. 3d 1147 (1988).

4. Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993).

5. FTC v. Actavis, 570 U.S. 136 (2013).

6. Thirty-two state AGs filed an amicus brief in support of certiorari before the U.S. Supreme Court in Louisiana Wholesale Drug Co., Inc., et al. v. Bayer AG, et al. involving manufacturers of ciprofloxacin HCl (“Cipro”).

7. In re Cipro Cases I & II, 61 Cal. 4th 116 (2015).

8. Mississippi ex rel. Jim Hood v. AU Optronics Corp., 571 U.S. 161 (2014).

9. In re Cipro Cases I & II, 61 Cal. 4th 116 (2015).


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