Insights

Growing focus on antitrust enforcement at the federal level in recent years has been accompanied by a similar trend at the state level. Notably, multiple states have enacted or are considering enacting various legislative or regulatory changes that would create new regulatory requirements for businesses and make antitrust suits significantly easier for state attorneys general and private plaintiffs. These include new pre-transaction notice requirements, as well as the expansion of existing state antitrust statutes to cover more types of conduct while shifting the burden and expense of litigation from plaintiffs to defendants. In several cases, states have expressed a clear intent to increase enforcement related to the private equity and healthcare industries specifically.

California’s Assembly Bill 824 (“AB 824”) was enacted in October 2019 to curb “reverse payment” settlements among pharmaceutical companies that are used to resolve or settle patent infringement claims. The law establishes a presumption that such settlement agreements, through which a brand-name manufacturer compensates a generic manufacturer to forego its patent challenges in exchange for an agreement to enter at a later date (but before the expiration of the branded company’s patents), are anticompetitive and unlawful. AB 824 imposes significant financial penalties, with violators facing civil fines of up to three times the value received from the agreement or $20 million, whichever is greater.

The Southern District of Texas published an unsealed version of its January 31, 2025 opinion denying the Federal Trade Commission’s (FTC) motion for a preliminary injunction to enjoin Tempur Sealy’s acquisition of Mattress Firm. The decision marks another loss for vertical merger enforcement efforts, particularly agency efforts to block these deals outright rather than accept settlement “fixes.” This case—coupled with other agency losses like AT&T/Time Warner and Microsoft/Activision—will likely make it even more difficult for enforcers to win vertical merger challenges, particularly when the merging parties lack sufficient market share to foreclose competitors and offer remedies to fix the alleged competitive concerns.