In a budget change proposal (BCP), the California Department of Justice (DOJ) is asking for $7.96 million — $3.98 million from the Attorney General Antitrust Account and $3.98 million from the Unfair Competition Law Fund — and 20 positions in the 2023-2024 Fiscal Year starting July 1. (All numbers are rounded.) The DOJ also seeks $7.79 million — $3.89 million from the Attorney General Antitrust Account and $3.89 million from the Unfair Competition Law Fund — and 20 positions ongoing to “prosecute antitrust violations within the gas and oil, technology, and agricultural sectors” according to the BCP. Among the takeaways:
- The resources sought will enable creation of “specialized teams focused on technology, agriculture and gasoline markets” and will let DOJ do “independent investigations and litigation in California state courts,” to develop state antitrust laws in these areas. The money would fund two supervising deputy attorney general positions; 12 deputy attorney general (DAG) positions; four senior legal analysts; and two research specialist IIIs. These would amount to more than $5.6 million in FY 2023-24 and nearly $5.5 million ongoing. The money would also fund an unspecified number of external consultants, amounting to more than $2.3 million in FY 2023-24 and the same ongoing. The department workload is roughly even across technology, gasoline, agriculture and other case areas — but staff are “at capacity and are unable to effectively maintain the level of litigation activity needed for effective enforcement.” California is a co-plaintiff in “three major multistate lawsuits against two of the Big Tech companies,” per the BCP, but participation by the DOJ “had to be reduced to relatively back-seat monitoring roles in order to make room for full investigation of other Big Tech companies and practices.”
- DOJ highlights a need for more enforcement of antitrust laws as mergers and acquisitions have risen, “market investment has increased and companies seek to expand and to increase their market shares.” The sheer numbers of mergers and acquisitions have risen markedly; per the BCP, “deal volume in 2021 was 60 percent higher than 2020, which was 50 percent higher than 2019; the number of transactions in 2021 was 24 percent higher than 2020.” In the area of IT, there remains, DOJ said, “a need to vigilantly investigate the largest technology companies that are under scrutiny worldwide for potential antitrust violations.” During FY 2021-22, DOJ “allocated six additional DAG positions for technology investigations that it self-funded temporarily” to address workload issues. But, it said, the jobs can’t be sustained internally and “permanent resources are required in order for (Antitrust Law Section) ALS to continue this critical work.”
- Regarding the six DAG positions it temporarily self-funded, DOJ indicates those were “to address the workload demands of a major antitrust investigation” and were for “tech antitrust enforcement.” These enabled the appropriate section of DOJ to “pursue a major investigation against a big tech company,” according to the BCP. But, the department adds, “staffing is also needed to participate in additional tech cases with federal enforcers and multistate groups, either recently filed or anticipated to be filed during FY 2022-23.” For these, the attorney general will need “permanent resources.” Attorneys general in eight states — New York, Colorado, North Carolina, Nebraska, Utah, Iowa, Tennessee and Arizona — and Texas to a certain extent now lead “all multistate big tech investigations and litigation,” per the BCP, which adds: “California’s joinder in these multistate matters is not in every case an optimal use of enforcement resources, and does not position the Attorney General to exercise significant control over the outcome.” It also doesn’t enable the department to fully wield its “unique authority ... to obtain broad forward-looking injunctive remedies, or to pursue a consistent approach to development of tech sector enforcement principles for California companies in keeping with the strong legislative mandate of deterrence” recognized in state statute and by the state Supreme Court via case law.
- The resources represented in the BCP will, DOJ said, enable it to stand up a “consistent” group around technology enforcement, and to take a greater leadership position on technology antitrust issues. The department’s section will be able to litigate independently or in the lead of a multistate group, multiple antitrust cases simultaneously, and DOJ will be able to center its “primary efforts on developing California state antitrust law in state courts, instead of federal law in federal courts.” The California Attorney General’s role here has become “even more central,” DOJ said, since the federal Class Action Fairness Act in 2005 “forced almost all consumer class actions for state law antitrust violations into federal court,” where state distinctions could become blurred. Being able to clarify California law in this area and make it more visible via “litigation choices and case law” will influence “competition enforcement elsewhere” that may yet be unformed to develop in a manner consistent with California, leveling the playing field for business similar to what’s now happening in the area of privacy law.
