While the Department of Justice (DOJ) Antitrust Division and Federal Trade Commission (FTC) are widely viewed as the stewards of U.S. antitrust laws, state attorneys general have long played an important, albeit varying, role within the United States' antitrust enforcement regime. During periods of lax federal enforcement, state attorneys general have often ramped up their prosecution of potentially anticompetitive business practices and transactions. During periods of vigorous federal enforcement, they have often served as strong partners for the DOJ and FTC by offering valuable insights about competitive dynamics in local markets, assisting with obtaining information from key market participants within their states, and helping to develop and implement litigation strategies for cases tried before federal judges presiding in their states.

In recent years, many state attorneys general have significantly escalated their antitrust enforcement activity and demonstrated an increasing willingness to bring enforcement actions even when the DOJ or FTC have expressly declined to do so. Leading the charge has been the New York State Attorney General Office, which for decades has been a vigorous enforcer of both state and federal antitrust laws.

This past June, for example, New York Attorney General Letitia James led a coalition of 10 state attorneys general who filed suit in the Southern District of New York to enjoin T-Mobile's proposed $26.5 billion acquisition of Sprint. In announcing this lawsuit, Attorney General James proclaimed that "this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent." This pending lawsuit has been viewed as particularly bold and noteworthy for several reasons.

First, the states—perhaps sensing that the DOJ was preparing to approve a deal it had preemptively killed only a few years earlier—filed their complaint before the DOJ had completed its investigation and settlement discussions with the companies.

Second, it is essentially unprecedented for state attorneys general to challenge a "megamerger" where the DOJ and FTC—which have greater resources and more experience trying complex merger litigation—have opted not to do so.

Third, the states have continued to pursue this merger challenge even after the DOJ announced that it reached a settlement with the companies that it believes addresses the competitive concerns raised by the transaction. Indeed, eight new states have joined the lawsuit since the DOJ announced its settlement, which Attorney General James has described as failing to protect consumers, innovation, and workers.

Fourth, this lawsuit represents the first time that the states have sued to challenge a telecommunications merger where the two federal agencies responsible for reviewing the competitive effects of such mergers—the DOJ and Federal Communications Commission—have signed off on the deal.

Finally, in pursuing this merger challenge, the states will ultimately have to place the DOJ's settlement on trial (i.e., the states will have to "litigate the fix" proposed by the DOJ and companies) because they will need to prove why this settlement does not sufficiently protect consumers and competition.

Further illustrating that the New York Attorney General's Office is playing a central role in today's beefed up state antitrust enforcement is the fact that Attorney General James confirmed earlier this month that her office is leading a bipartisan coalition of state attorneys general conducting an antitrust probe into Facebook. In confirming the existence of this investigation, Attorney General James promised that the states "will use every investigative tool at [their] disposal." Attorney General James has since confirmed that her office is also participating in a bipartisan antitrust probe being conducted by 49 state attorneys general into Google.

This article discusses the increased level and prominence of state antitrust enforcement during the past three years, as well several recent and important antitrust matters in which the New York Attorney General Office has played a key role. Given that companies will increasingly have to engage with state antitrust enforcers in a meaningful and substantive manner on both merger and civil non-merger investigations and litigation, this article also discusses various strategic and practical considerations that companies should bear in mind when interacting with state attorneys general.

State Antitrust Enforcers Are Increasingly Flexing Their Muscle. In addition to being able to enforce their state's antitrust statutes, state attorneys general have the express authority to bring civil actions under the federal antitrust laws on behalf of their state, state governmental entities, and citizens. During the past three years, state attorneys general have shown an increasing willingness to exercise this authority even where it means (1) reaching an enforcement decision at direct odds with the decision reached by the DOJ or FTC in a coordinated investigation, or (2) publicly taking a policy position that conflicts with the position taken by the DOJ or FTC.

While the T-Mobile/Sprint merger challenge represents the most visible example of state and federal antitrust enforcers disagreeing on an enforcement decision, there are several other noteworthy examples of the increased independence and assertiveness being exhibited by state antitrust enforcers. Some of these examples include:

• None of the more than 20 state attorney general offices that actively investigated the AT&T/Time Warner merger joined the DOJ's failed challenge to the transaction. In fact, nine state attorneys general filed an amicus brief opposing the DOJ's unsuccessful appeal of the trial court's decision.
• In 2015, the DOJ and 17 state attorneys general secured a decision, after a nearly two-month long trial, declaring certain American Express rules unlawful under the federal antitrust laws. After the Second Circuit reversed the trial court's decision, 11 state attorneys general filed a petition for certiorari. Despite being the lead plaintiff, the DOJ Antitrust Division—which by then had a new senior leadership team—chose not to seek certiorari in 2017 and thereafter affirmatively opposed the states' petition even though it argued that the Second Circuit's decision was incorrect. Nonetheless, the U.S. Supreme Court agreed to hear the case, which the states ultimately lost in a 5-4 decision.
• The DOJ, FTC and several state attorneys general have been actively investigating and prosecuting naked "no-poach" agreements (g., agreements between competing employers not to hire or recruit each other's employees that are not part of an otherwise lawful agreement or collaboration) in recent years. However, the DOJ and state attorneys general have taken directly opposing positions in private litigation challenging the legality of "no-poach" clauses in corporate franchise agreements. The DOJ has argued that courts should review these clauses under the rule of reason whereas various state attorneys general have argued that these clauses should be deemed per se unlawful.
• After the FTC declined to seek any Colorado-related remedies in connection with a merger in the healthcare industry, the Colorado Attorney General required the companies to agree to modify certain contracts with health insurers and providers. In announcing this settlement, the Colorado Attorney General stated: "I recognize that this case marks an important step in state antitrust enforcement … . I am committed to protecting all Coloradans from anticompetitive consolidation and practices, and will do so whether or not the federal government acts to protect Coloradans."

New York's Antitrust Bureau Has Long Been A Leader Within the State Antitrust Enforcement Community. The fact that the New York Attorney General Office has been and will likely continue to play a central role in this period of reinvigorated state antitrust enforcement is not surprising because its antitrust bureau has brought a number of consequential enforcement actions—both in partnership with federal antitrust enforcers and independently—over the years. Recent examples of enforcement actions in which New York's antitrust bureau has played a prominent role include:

• Walgreens/Rite Aid Merger: In 2017, Walgreens abandoned its effort to acquire Rite Aid in its entirety after the FTC and several state attorneys general raised concerns about the transaction. Soon thereafter, Walgreens announced that it planned to acquire over 2,000 Rite Aid stores across the nation. Working with the FTC, the New York State Attorney General required the companies to restructure the transaction, which resulted in Walgreens acquiring nearly 200 less Rite Aid stores in New York than originally planned. The restricting of the transaction also resulted in Walgreens acquiring fewer Rite Aid stores in Connecticut and New Jersey.
• Electronic Books Litigation: In 2012, the DOJ and 33 state attorneys general (which were led by New York, Texas and Connecticut) sued Apple and various book publishers, alleging that the companies illegally conspired to raise the prices of electronic books. The book publishers immediately settled and entered settlements with the state attorneys general (and class counsel in a related private lawsuit) which required them to collectively pay $166 million in damages plus attorney fees and litigation costs. After losing at trial and unsuccessfully challenging this decision on appeal, Apple paid $400 million in damages, as well as attorney fees and litigations costs, to settle the state attorneys general's action and the private lawsuit.
• LIBOR: For the past several years, New York has been leading a coalition of 40 state attorneys general that have been investigating the alleged manipulation of the London Interbank Offered Rate—which serves as the benchmark for various types of financial instruments—by a number of banks. To date, this investigation has resulted in four banks agreeing to settlements totaling nearly $500 million.
• Alzheimer's Drug Litigation: In 2014, the New York State Attorney General Office secured an injunction, after a five-day evidentiary hearing, prohibiting Allergan (f/k/a Actavis) from allegedly seeking to inflate its profits by forcing Alzheimer's patients to switch from a medication that would soon face competition from generic drug manufacturers to a medication that had a longer patent.
• Tour Buses Litigation: Working alongside the DOJ, the New York Attorney General sued the two largest providers of hop-on, hop-off tour bus services in New York City for forming a joint venture that allegedly created a monopoly. The companies ultimately agreed to unwind their joint venture and disgorge $7.5 million in unlawful profits, which was on top of the $19 million they paid to settle a private lawsuit.
• LCD Litigation: During 2011 and 2012, the New York Attorney General and various other state attorneys general secured more than $1.1 billion in damages through settlements reached with various companies for allegedly conspiring to fix the prices of liquid crystal display screens used in televisions, computer screens, and laptops.
• DRAM Litigation: In 2014, the New York Attorney General, along with various other state attorneys general, secured $310 million in damages for consumers that were harmed by an alleged price fixing conspiracy among major manufacturers of certain memory chips used in various types of electronic devices.

Strategic and Practical Considerations When Engaging With State Antitrust Enforcers. Below are several factors that parties should consider when assessing the most effective manner in which to engage with state attorneys general prior to or during an antitrust investigation:

• Unlike the leaders of the DOJ Antitrust Division and FTC, most state attorneys general are elected officials who have to answer to their constituents. As a result, state attorneys general might be more inclined to take into consideration possible public reaction when making an antitrust enforcement decision. In addition, they might be more willing to listen to the views of key players in their state's electoral process—such as influential lawmakers, important employers and labor unions, and powerful interest groups—prior to making an enforcement decision. Thus, the efforts of parties seeking to persuade an attorney general office to reach a specific enforcement decision could be helped by having these types of groups advocate—either through public statements or direct communications with state attorneys general—for their desired outcome. Such third-party advocacy is likely to be more persuasive and effective when presented within an antitrust analytical framework.
• Given that state antitrust enforcers have recently become more active and shown a willingness to act separately from their federal counterparts, parties should assess early on whether any state attorneys general are likely to be particularly interested in an investigation and, if so, determine whether their objectives would be served by proactively engaging with these state attorneys general. Such proactive engagement at the outset of an investigation could take the form of early meetings with senior leaders and/or investigative staff, written submissions that frame the key issues, or expressing a willingness to respond to targeted information requests. Factors that may influence a state attorney general office's interest in an antitrust matter could include whether a large number of residents would be or have been harmed by a transaction or business practice; whether an investigation relates to an important industry in the state; whether a merger may result in significant job losses in the state; or whether the issues involved in an investigation have received considerable local or national media attention.
• While state attorneys general have recently shown a greater willingness to bring enforcement actions when federal enforcers fail to do so, the inability to rely on the DOJ or FTC's expertise and resources poses challenges that could make state enforcers more reluctant to bring cases that present higher litigation risks, such as vertical merger challenges or conduct that would require a full blown rule of reason analysis. Accordingly, parties should take into account the theories of harm that are likely to arise in an investigation and whether federal enforcers are likely to act on such theories when formulating and adjusting their engagement strategy with respect to state enforcers.
• There are significant differences among state attorneys general. Some offices have a more pro-enforcement culture and philosophy when it comes to antitrust matters. Certain offices have more experienced staff and greater resources that enable them to take an aggressive enforcement approach. In addition, some offices may be more inclined to focus on industries that are important to their state's economy and residents. Consequently, parties should take these differences into account when determining their strategy for engaging with state antitrust enforcers. For instance, these differences may cause parties to seek to set the tone for an investigation early on by lining up the support of potentially "friendlier" state attorneys general through immediate and proactive engagement with them. These differences could also cause parties to focus their efforts on state attorneys general that are viewed as leaders within the state antitrust enforcement community.
• If faced with parallel state and federal investigations, parties should generally welcome and encourage coordination between the investigative teams. Such coordination helps limit the time, burden and cost associated with overlapping investigations. In addition, such coordination can help parties minimize the risk of conflicting enforcement decisions that can disrupt their business operations, hurt employee morale, and create challenges with important customer and supplier relationships.
• Relatedly, parties faced with parallel state and federal investigations should ensure that the positions they take before both investigative teams are consistent because state and federal enforcers often share information with each other. If they believe that parties are misleading them in any way, this can prolong both investigations, increase the time and money that parties have to spend on the investigations, and make it much harder to obtain the desired outcome.
• Certain state laws provide less confidentiality protection than federal laws. Thus, parties should familiarize themselves with each state's confidentiality protections for material produced during antitrust investigations when negotiating the scope of information requests and any related confidentiality agreements.
• Given that state antitrust enforcers tend to have small staffs and limited resources, they may consider closing or limiting the scope of an investigation if they believe that consumer harm is not sufficiently widespread to justify the expenditure of those resources. Similarly, state antitrust enforcers may take a "wait and see" approach in an investigation if there is pending private litigation that could adequately protect consumers and the competitive process. Thus, while not conceding any wrongdoing, parties seeking to persuade state attorneys to close or curtail an investigation could highlight the limited alleged harm or the fact that such harm (if any) would likely be adequately addressed through other processes.

Juan A. Arteaga is a partner in Crowell & Moring's antitrust and white-collar groups. He is a former Deputy Assistant Attorney General for the U.S. Department of Justice's Antitrust Division, where he served between 2013 and 2017.