Federal Reserve and FDIC Withdraw Crypto-Asset Guidance for Banks; OCC Issues Clarification for Banks
Go-To Guide:
The Board of Governors of the Federal Reserve System (Board) has withdrawn supervisory guidance for Board-supervised banks concerning crypto-asset and dollar token activities and Board expectations for these activities.
The Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) also withdrew joint supervisory statements on crypto-asset activities and exposures.
The OCC issued Interpretive Letter #1184 (IL 1184) reaffirming that OCC-supervised banks can provide and outsource crypto-asset custody services.
It is unclear whether the Board and the FDIC will issue additional guidance for integrating cryptocurrency in the U.S. banking system.
Until regulators issue specific and comprehensive crypto-asset guidance, banks should proceed with caution and adhere to existing safety and soundness expectations.
On April 24, 2025, the Board withdrew its supervisory guidance for Board-supervised banks relating to crypto-asset and dollar token activities.1The Board rescinded (1) its Aug. 16, 2022, supervisory letter that required state member banks engaging, or seeking to engage in, crypto-asset activities to provide the Board with advance notification; and (2) its Aug. 8, 2023, supervisory letter that imposed a non-objection process on state member banks issuing, holding, or transacting in dollar tokens2 to facilitate payments.
Furthermore, the Board and the FDIC joined the OCC in withdrawing from their joint statements regarding crypto-asset activities and exposures. The Board and the FDIC withdrew (1) their Jan. 3, 2023, joint statement that identified risks associated with the crypto-asset sector and expressed safety and soundness concerns with crypto-asset activities, and (2) their Feb. 23, 2023, joint statement on liquidity risks related to certain sources of funding from crypto-asset entities, which emphasized the importance of effective risk management practices.3
On May 7, 2025, the OCC issued IL 1184 clarifying that “banks may buy and sell assets held in custody at the custody customer’s direction and are permitted to outsource bank-permissible crypto-asset activities, including custody and execution services to third parties, subject to appropriate third-party risk management practices.” Related services include facilitating the customer’s cryptocurrency and fiat currency exchange transactions, transaction settlement, trade execution, recordkeeping, valuation, tax services, and reporting. The OCC noted that banks may provide crypto-asset custody services in a non-fiduciary or fiduciary capacity subject to 12 C.F.R. part 9 or 150, as applicable. While prior regulatory approval is not required, the OCC expects banks to conduct such activities “in a safe and sound manner and in compliance with applicable law.”
These developments are aligned with the broader objective of the Trump administration to position the United States as a leader in the cryptocurrency and financial technology space, as it noted during its first months after taking office.4
Potential Implications
These actions remove procedural regulatory hurdles for banks engaging in crypto-asset activities. Banks now have greater autonomy to explore permissible crypto-related activities without undergoing a prior supervisory review process. However, without explicit pre-approval, banks bear more responsibility for ensuring permissible crypto-asset activities are “consistent with safety and soundness and applicable laws and regulations.”5
The OCC’s issuance of IL 1184 reaffirms and expands upon previous guidance regarding national banks’ authority to engage in crypto-asset activities in that “[p]roviding crypto-asset custody services is a modern form of traditional bank custody activities.”6
The Board expressed that it “will instead monitor banks’ crypto-asset activities through the normal supervisory process.”7 It is unclear whether the withdrawal of guidance will ease legacy regulatory barriers for banks seeking to engage in crypto-related activities. The Board noted that it will work with the FDIC and the OCC to determine whether additional guidance is appropriate.8 The FDIC stated that it is working with the agencies to explore “issuing additional clarity with respect to banking organizations’ crypto-asset and related activities in the coming weeks and months.”9
Takeaways
While crypto is a newer asset class, federal regulators have made it clear that existing risk management expectations apply, regardless of the type of asset or technology involved. Regulators expect banks to treat crypto activities with the same level of rigor as any other line of business – if not more so, due to their volatility, legal ambiguity, and operational complexities.10 While the federal banking agencies indicated they are considering whether to issue additional guidance, banks are now operating with minimal guidance for crypto-asset specific activities. For now, banks should be prepared to learn of crypto-specific regulatory expectations during the examination process. The agencies’ statements regarding potential new guidance or clarity may serve as an opportunity to provide more tailored guidance in this space.
In the interim, banks currently engaged or considering engaging in digital-asset activity should continue to consider the prior guidance in maintaining or establishing controls for digital-asset activity, and at the same time, remain vigilant of any further guidance the regulatory agencies may provide. Key principles and practices from traditional bank risk guidance should be applied to crypto activities, including, but not limited to: KYC and CDD;11 AML and CFT;12Third-Party Risk Management;13 Operational Risk Management;14 and Governance and Risk Appetite Frameworks.15 While banks should consider engaging federal regulators proactively to seek informal feedback even though formal pre-approval is no longer required, state-chartered banks should also consider whether to engage their state regulators, as there may be divergent comfort levels between federal and state regulators regarding permissible crypto-asset activities.
1Federal Reserve Board, Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities, April 24, 2025 [hereinafter Federal Reserve Board announces the withdrawal of guidance for banks].
2 “Dollar tokens” are tokens denominated in national currencies and issued using distributed ledger technology or similar technologies to facilitate payments. Id.
3 Board, Federal Reserve Board announces the withdrawal of guidance for banks, supra note 1; see also FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, April 24, 2025.
4 White House, Fact Sheet: Executive Order to Establish United States Leadership in Digital Financial Technology, Jan. 23, 2025. White House, Fact Sheet: President Donald J. Trump Establishes the Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, March 6, 2025.
5 FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, supra note 7.
6 OCC, Interpretive Letter 1184.
7 Board, Federal Reserve Board announces the withdrawal of guidance for banks, supra note 1.
8 Id.
9 FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, supra note 7.
10 See, e.g., Fed. Deposit Ins. Corp., Risk Review § 7, May 24, 2024, at 3 (discussing novel and emerging risks associated with crypto-asset activities).
11FIN-2018-G001, Frequently Asked Questions Regarding Customer Due Diligence Requirements for Financial Institutions, April 3, 2018.
12 FinCEN, Anti-Money Laundering and Countering the Financing of Terrorism National Priorities, June 30, 2021.
13 Interagency Guidance on Third-Party Relationships: Risk Management, 88 Fed. Reg. 37920, June 9, 2023.
14 Board, FDIC and OCC, Sound Practices to Strengthen Operational Resilience, Oct. 30, 2020.
15 SR letter 21-3/CA letter 21-1, Supervisory Guidance for Boards of Directors of Domestic Bank and Savings and Loan Holding Companies with Total Consolidated Assets of $100 Billion or More (Excluding Intermediate Holding Companies of Foreign Banking Organizations Established Pursuant to the Federal Reserve’s Regulation YY) and Systemically Important Nonbank Financial Companies Designated by the Financial Stability Oversight Council for Supervision by the Federal Reserve.
Copyright Infringement Liability for Generative AI Training Following the Copyright Office’s AI Report and Administrative
When multiple forces act on an object, its direction of motion is determined by the net force, which is the vector sum of all individual forces.
When this happens within our federal government, we call it “interesting times.”
Not unlike other areas of the United States federal government of late, the U.S. Copyright Office has been thrown into turmoil following a stunning sequence of events this past week. As reported in multiple news outlets:
On Thursday, May 8, 2025, President Donald Trump fired Librarian of Congress Carla Hayden, the first woman and the first African American to be librarian of Congress.[i] The Library of Congress is the larger federal agency within which the U.S. Copyright Office resides.
On Friday, May 9, 2025, the U.S. Copyright Office released a “Pre-Publication Version” of the third and final part of its three-part Report on Artificial Intelligence.[ii] This Part 3 of the Report is entitled “Generative AI Training” and makes the case for finding copyright infringement where copyrighted works are used without permission to train generative AI models (more on this below).[iii] The Report was posted to the Copyright and AI landing page of the Copyright Office’s website a day after the firing of the Librarian of Congress and roughly 5 months after the official Publication of Part 2, which is about a month shorter than the interval between Parts 1 and 2 of the Report.[iv]
On Saturday afternoon, May 10, 2025, the Registrar of Copyrights, Shira Perlmutter, received an email from the White House informing her that her job as Register of Copyrights and Director at the U.S. Copyright Office had been “terminated effective immediately.”[v]
These recent events follow earlier criticism by prominent leaders of technology companies regarding perceived constraints posed by U.S. intellectual property laws on the development of artificial intelligence products and services. For example, on April 13, 2025, Jack Dorsey, co-founder of the companies formally known as Twitter and Square, posted: “delete all IP law,” to which Elon Musk replied, “I agree.”[vi] More broadly, as lobbying in favor of regulatory relief has increased with the change of administration,[vii] the mood in Washington appears to have shifted from caution to pro-development of the AI industry, as shown by the current President’s repeal[viii] of his predecessor’s sweeping executive order and the more recent attempt by Congressional Republicans to insert into the tax and spending bill a moratorium on state AI legislation.[ix]
Given all of this, interested parties may be left to wonder whether and to what extent they should rely upon the guidance and analysis of the Copyright Office’s AI Report. The question is particularly acute for parties involved in active litigation concerning the question of copyright infringement for generative AI training.
What’s next?
Let’s deal with what we know and leave the political speculation to other sources.
First, IP law is not going away anytime soon. Patent and copyright law are enshrined in the U.S. Constitution.[x] And nobody is calling for the end of all trademarks. We all have a brand, after all, and the ability to control one’s reputation by excluding others from unauthorized use is essential to all businesses. Bold statements aside, the law will continue to evolve but the need to support innovation though intellectual property rights retains broad recognition by serious people.
Second, Jack Boyle’s words, spoken in another context, seem to best capture the dynamic environment in Washington these days: “nobody knows ‘nothin.”[xi] Speculation on motive and the future direction of any particular legal issue or policy, including those involving AI, is a risky bet. While a pattern has emerged showing a preference by the administration for prioritizing pro-growth of the AI sector through relaxed legal barriers, ultimately these issues will play out in federal courts where considerations of legal precedent and constitutionality may impose restraints on executive and certain legislative actions.
Third, the U.S. Copyright Office’s AI Report does not carry the force of law. It does signal the Office’s approach to important legal issues within its purview, which approach could theoretically change with the change in leadership. And, more relevantly to the subject matter of this most recent portion of the Report, it can also serve as a roadmap for litigants, persuasive authority for courts, and input to the legislative process.
Fourth, agree with it or not, the Report as written is now in the public domain. Whether or not its authors continue to draw a paycheck from the federal government, and whether their successors write a new chapter or revision, the analysis speaks for itself and has been widely disseminated. A party who ignores this in-depth and well sourced treatment does so at its own peril.
So, what does the Report say?
Prima Facie Case for Infringement. The Report begins by finding that a prima facie claim for copyright infringement is easily met. In the Office’s view, multiple steps required to produce a dataset useful for generative AI “clearly implicate” the copyright owners’ right to control the reproduction of their works. These steps include the collection and curation of the copyrighted works, their use in training, and deployment of the model.[xii] Less clear, in the Office’s view, is whether or not the output material of the resulting generative AI model (which may, in some cases, look very much like and even compete with the original work) may implicate the copyright owners’ rights to control public display and performance of their works.[xiii]
Fair Use Defense. The Report proceeds with an analysis of the “fair use” defense to copyright infringement, including each of the statutory fair use factors set forth in 17 U.S.C. § 107, which are:
the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the copyrighted work.
After an in-depth consideration of each of the factors,[xiv] as informed by existing legal precedent and the comments received through the Notice of Inquiry (NOI) process that gave rise to the Report, the Copyright Office offers the following somewhat equivocal perspective:
As generative AI involves a spectrum of uses and impacts, it is not possible to prejudge litigation outcomes. The Office expects that some uses of copyrighted works for generative AI training will qualify as fair use, and some will not. On one end of the spectrum, uses for purposes of noncommercial research or analysis that do not enable portions of the works to be reproduced in the outputs are likely to be fair. On the other end, the copying of expressive works from pirate sources in order to generate unrestricted content that competes in the marketplace, when licensing is reasonably available, is unlikely to qualify as fair use. Many uses, however, will fall somewhere in between.[xv]
Recommendation for Licensing. Licensing, the Copyright Office suggests, is a workable solution for both resolving the ambiguity of legal rights and fairly balancing the interests of content creators and AI developers.[xvi] Options suggested in the Report may include the forms of streamlined voluntary approaches already in the market as well as adapted statutory approaches such as compulsory licensing and extended collective licensing (“ECL”).
Final Analysis. Governmental turmoil aside, the Copyright Office’s AI Report, now completed with the delivery of its third installment, provides a solid starting point for litigants, courts, legislators, and businesses to understand the competing viewpoints and legal arguments related to artificial intelligence. This guidance will likely show up in legal briefs in the near future and it may also motivate efforts to address these issues legislatively.
ENDNOTES
[i] “Trump administration fires top copyright official days after firing Librarian of Congress,” Associated Press, May 11, 2025 (last visited May 11, 2025).
[ii] See Copyright Office statement on May 9, 2025 accompanying the posting of Part 3 of its Report on Artificial Intelligence (last visited May 11, 2025).
[iii] U.S. Copyright Office Report on Artificial Intelligence, Part 3: Generative AI Training, Pre-Publication Version, May 2025 (herein, “Copyright Report, Part 3”) (last visited May 11, 2025).
[iv] For an analysis of Parts 1 and 2 of the Copyright Office Report on Artificial Intelligence, see “Charting a Course on AI Policy: the U.S. Copyright Office Speaks!,” Krabacher, April 2, 2025.
[v] “Trump fires top US copyright official,” Politico, May 10, 2025 (based on POLITICO receipt of internal Library of Congress communications (last visited May 11, 2025); “Trump administration fires top copyright official days after firing Librarian of Congress,” Associated Press, May 11, 2025 (last visited May 11, 2025).
[vi] “Jack Dorsey and Elon Musk would like to ‘delete all IP law’,” April 13, 2025, Techcrunch (last visited May 11, 2025).
[vii] See, e.g., “Emboldened by Trump, AI Companies Lobby for Fewer Rules,” New York Times, March 24, 2025 (last visited May 13, 2025).
[viii] Executive Order: Removing Barriers to American Leadership In Artificial Intelligence, January 23, 2025 (last visited May 13, 2025).
[ix] State AI Regulation Ban Tucked Into Republican Tax, Fiscal Bill, Bloomberg, May 12, 2025 (last visited May 13, 2025).
[x] U.S. Const. Article I, Section 8, Clause 8 of the U.S. Constitution (the “Patent and Copyright Clause”).
[xi] See. e.g., John Boyle interview posted on Sensible Investing YouTube, September 26, 2012: “All You Need To Know About Investing In Three Words,” (last visited May 16, 2025).
[xii] Copyright Report, Part 3, pg. 26 – 31.
[xiii] Copyright Report, Part 3, pg. 31.
[xiv] Copyright Report, Part 3, pg. 32 – 74.
[xv] Copyright Report, Part 3, pg. 74.
[xvi] See U.S. Copyright Office Report at page 103.
Competition Currents | May 2025
United States
A. Federal Trade Commission (FTC)
1. FTC requests public comment on EnCap, Verdun, XCL petition to modify order.
On April 2, 2025, the FTC announced it was seeking public comments through May 2, 2025, on a petition to reopen and modify its 2022 consent order relating to Verdun Oil Company II LLC’s acquisition of EP Energy LLC. Specifically, the parties asked to remove a prior approval requirement in the consent order (requiring the parties to seek prior approval from the FTC before engaging in certain related transactions in the future) that covered Verdun, which was under common management with XCL Resources Holdings, LLC at the time of the transaction, and their parent entities, EnCap Energy Capital Fund XI, L.P. and EnCap Investments L.P. (together, EnCap). See GT’s April 2022 Competition Currents for more information regarding the original consent order. In their request, the parties noted market changes since the consent decree was entered (including EnCap’s and XCL’s exit from crude oil exploration and production in the Uinta Basin area in Utah after a 2024 sale), which they argue obviates the need for a prior approval requirement.
2. FTC approves modification of Enbridge Inc. final order.
On April 8, 2025, the FTC approved a petition by Enbridge Inc. to set aside the 2017 final consent order in Enbridge’s merger with Spectra Energy Corp. At the time of the Spectra acquisition, Enbridge received an indirect ownership interest in the Discovery Pipeline, a competitor to the Walker Ridge Pipeline that Enbridge owns. The FTC was concerned that the acquisition would give Enbridge access to competitively sensitive information about the Discovery Pipeline and required Enbridge to establish firewalls to limit its access to information relating to the Discovery Pipeline as well as requiring Discovery Pipeline board members affiliated with Spectra to recuse themselves from votes involving the pipeline. In December 2024, Enbridge asked the FTC to reopen and set aside the 2017 order after it sold its interest in the Discovery Pipeline, making the consent decree terms obsolete.
3. Mark Meador confirmed as FTC commissioner.
President Trump nominated Mark Meador as FTC Commissioner, the Senate confirmed him on April 10, 2025, and he was sworn in as commissioner on April 16, 2025. Most recently, Meador worked in private practice and served as a visiting fellow at the Heritage Foundation Tech Policy Center. Previously, he was the deputy chief counsel for antitrust and competition policy for Sen. Mike Lee (R-Utah), as well as a trial attorney in the DOJ Antitrust Division. His term as FTC commissioner will expire on Sept. 25, 2031.
4. FTC seeks public comment on petition to modify Chevron-Hess final order.
The FTC announced on April 11, 2025, that it is seeking public comment through May 12, 2025, on a petition to set aside its final consent order (issued in January 2025) relating to Chevron Corporation’s acquisition of Hess Corporation. The consent order prohibited Chevron from appointing Hess CEO John B. Hess to its board of directors, as called for in the transaction’s merger agreement.
5. FTC seeks public comment on petition to modify Exxon-Pioneer final order.
Similarly, the same day, the FTC also announced that it is also seeking public comment through May 12, 2025, on a petition to set aside its final consent order (also issued in January 2025) relating to Exxon Mobil Corporation’s acquisition of Pioneer Natural Resources. The consent order prohibited Exxon Mobil from appointing Scott Sheffield (founder and former CEO of Pioneer) to its board of directors or from having him serve in any advisory capacity.
6. FTC launches public inquiry into anticompetitive regulations.
On April 14, 2025, the FTC announced that in response to President Trump’s executive order “Reducing Anticompetitive Regulatory Barriers,” it was launching a request for information on the impact of federal regulations on competition (to determine whether any regulations unnecessarily exclude new entrants or protect incumbents, for example). Comments can be submitted through May 27, 2025.
7. Illinois and Minnesota join FTC lawsuit challenging medical device coatings deal.
In March 2025, the FTC sued to block GTCR BC Holdings, LLC’s proposed acquisition of Surmodics, Inc., both of whom engage in manufacturing medical device coatings. GTCR is a private equity firm that also owns a majority of Biocoat, Inc., which per the FTC is the second-largest provider of outsourced hydrophilic coatings, with Surmodics being the largest. The FTC’s complaint alleges that the proposed acquisition is anticompetitive because it would give the combined company more than 50% of the market share for outsourced hydrophilic coatings, which medical device manufacturers use in devices including catheters and guidewires. On April 17, 2025, the FTC amended its complaint to add Illinois and Minnesota as co-plaintiffs.
8. FTC and DOJ issue letter seeking identification of anticompetitive regulations across the federal government.
Also as part of the antitrust agencies’ response to the executive order “Reducing Anticompetitive Regulatory Barriers,” on May 5, 2025, the FTC and DOJ issued a joint letter to all federal government agency heads requesting a list of anticompetitive federal regulations within the respective agency’s rulemaking authority that could reduce competition and innovation – including the agency’s recommendation for whether the regulation should be kept, amended, or rescinded. After receiving public and agency comments, the FTC and DOJ will provide the Office of Management and Budget with its consolidated recommendations.
B. Department of Justice (DOJ) Civil Antitrust Division
1. Justice Department hosts roundtables to address competition issues in the entertainment industry and unfair practices in the labor market.
On April 4, 2025, the DOJ hosted discussions centered on competition issues in the entertainment industry. First, DOJ Assistant Attorney General (AAG) Gail Slater met with union members and legal experts to discuss how non-compete agreements and no-poach agreements impact employees, with experts weighing in on strategies to protect workers. Second, AAG Slater discussed unfair practices in the live entertainment market in order to identify labor-market conduct that harms workers.
2. AAG Gail Slater welcomes Antitrust Division leadership team.
On May 1, AAG Slater appointed Dina Kallay to serve as DOJ deputy assistant attorney general for international, policy and appellate, joining the DOJ leadership team of Roger Alford (principal deputy assistant attorney general), Omeed Assefi (acting deputy assistant attorney general), Mark Hamer (deputy assistant attorney general), William “Bill” Rinner (deputy assistant attorney general), Dr. Chetan Sangvhi (deputy assistant attorney general), and Sara Matar (chief of staff).
3. Justice Department and FTC seek information on unfair and anticompetitive practices in live ticketing.
On May 7, 2025, the DOJ announced that in response to President Trump’s executive order “Combating Unfair Practices in the Live Entertainment Market,” it was launching, jointly with the FTC, a public inquiry aimed at identifying unfair and anticompetitive practices in the live entertainment market. AAG Slater stated of the inquiry, “Competitive live entertainment markets should deliver value to artists and fans alike,” while FTC Chair Ferguson also added, “Many Americans feel like they are being priced out of live entertainment by scalpers, bots, and other unfair and deceptive practices.” Comments can be submitted through July 7, 2025.
C. U.S. Litigation
1. Chalmers v. National Collegiate Athletic Association, Case No. 1:24-cv-05008 (S.D.N.Y. April 29, 2025).
On April 29, U.S. District Judge Paul A. Engelmayer dismissed a proposed class action by 16 former men’s basketball players against the National Collegiate Athletic Association (NCAA). The antitrust suit was filed last July, a month after the announcement of the $2.78 billion settlement that would compensate past athletes for their name, image, and likeness (NIL) and put a future revenue sharing plan in place. The players’ college careers spanned from 1994 to 2016, and Engelmayer agreed with the NCAA’s argument that the statute of limitations on their claims expired, noting in his opinion that “the NCAA’s use today of a NIL acquired decades ago as the fruit of an antitrust violation does not constitute a new overt act restarting the limitations clock.”
2. Compass Inc. v. Northwest Multiple Listing Services, Case No. 2:25-cv-00766 (W.D. Wash. Apr. 28, 2025).
On April 28, Compass Inc. sued the broker-led Northwest Multiple Listing Service (MLS), claiming that the MLS’s rules in Washington that prohibit “premarketing” real estate before they are officially listed for sale is an anticompetitive boycott. Compass—a broker service operating in Washington—engages in “office exclusive” listing that tests the asking price, pictures, and home specifications to a small set of potential buyers before the home is actually put up for sale. Compass alleges that the practice is used in other states, but that Washington prohibits this premarketing because it is “fundamentally unfair and perpetuates inequities that have long plagued the housing system.”
3. Mack’s Junk Removal LLC v Rouse Services LLC, Case No. 2:25-cv-03565 (N.D. Ill. Apr. 23, 2025).
A nationwide class action was filed alleging several large construction equipment rental companies utilized RB Global Inc.’s product, Rouse, to set rates for construction equipment rental. According to the allegations, rental companies defer all rental-pricing decisions to Rouse, which uses an AI algorithm to set rates at anticompetitive levels. The complaint also alleges that Rouse allows participants to get detailed sales data of local competitors, allowing for a greater chance of price fixing.
4. Regeneron Pharmaceuticals Inc. v. Amgen Inc., Case No. 1:22-cv-00697 (D. Del. Apr. 11, 2025).
On April 11, 2025, U.S. District Judge Jennifer L. Hall denied defendant Amgen Inc.’s motion to dismiss an antitrust lawsuit. In the lawsuit, competitor Regeneron Pharmaceuticals alleges that Amgen improperly bundled discounts of its other medications—in which it has market dominance—to pharmacy benefit managers if they would agree to exclusively cover Amgen’s Repatha, a cholesterol-reducing medication. Regeneron, which offers a competing cholesterol medication, claims that such bundling schemes effectively drive other competitors out of the market. In her ruling, Judge Hall held that Regeneron has presented evidence of both improper bundling and “de facto exclusive dealing arrangements” to proceed to further discovery.
The Netherlands
ACM
1. The ACM approves sustainability collaboration in textile sector under competition rules.
The Dutch competition authority (ACM) has issued an informal assessment of the Textile Alliance — an initiative involving companies, trade associations, and civil society organizations in the garments, shoes, leather, and textile sectors — concluding that the initiative complies with Dutch and EU competition law.
The Textile Alliance aims to promote international corporate social responsibility by improving compliance with human rights, environmental, and animal-welfare standards in production and supply chains. According to ACM’s assessment, the arrangements focus on individual company commitments and voluntary tools, such as a collective risk assessment, without mandating uniform actions or exchanging competition-sensitive information. The assessment affirms that competition law does not necessarily pose a barrier to sector-wide sustainability agreements.
2. The ACM approves FincoEnergies’ acquisition of Klaas de Boer with conditions.
The ACM has approved FincoEnergies’ acquisition of Oliehandel Klaas de Boer with conditions to maintain competition in the marine fuel supply market. Both companies are major suppliers of marine fuels in several Dutch ports. The ACM had competition concerns due to limited alternative suppliers and high costs for buyers to switch ports. To address this, FincoEnergies and Klaas de Boer must sell various assets, including tankers and a storage terminal, to GMB Groep and Slurink Transport Services, ensuring continued competition in the affected ports and eliminating competition concerns.
3. The ACM emphasizes the importance of competition for European competitiveness in joint statement.
Certain European competition authorities, including the ACM, have issued a joint statement highlighting the crucial role of competition in enhancing European competitiveness. The statement aligns with the European Commission’s recently presented “Competitiveness Compass” and emphasizes that competition fosters productivity, innovation, and investment. The authorities assert that competition and economies of scale go hand in hand and that competition rules are essential for well-functioning markets. The statement specifically addresses competition in the telecom sector, where the authorities warn that reduced merger scrutiny, particularly in telecommunications, may result in fewer incentives to improve networks, services, and innovation. As such, careful oversight of mergers is deemed necessary. Mergers that harm competition should either be blocked or approved only under strict conditions. The national competition authorities of Belgium, Portugal, Austria, Czech Republic, Ireland, and the Netherlands signed the joint statement.
4. The ACM informs healthcare institutions of competition rules for new cancer and vascular surgery standards.
The ACM has issued guidance to healthcare providers on how to comply with competition law when making regional agreements on the redistribution of care, following new national volume norms for cancer and vascular treatments. These norms limit certain complex procedures to hospitals that perform them frequently, starting in 2026. The ACM emphasized that while cooperation is allowed, such agreements must not amount to unlawful market sharing. The ACM will not intervene in regional care arrangements if all relevant stakeholders are involved and the cooperation pursues clear, measurable goals aimed at improving care accessibility, affordability, and quality.
Poland
A. UOKiK issues conditional clearance for Medicover’s acquisition of CityFit Gyms.
On March 31, 2025, the President of the Polish Office of Competition and Consumer Protection (UOKiK) conditionally approved ABC Medicover Holdings B.V.’s acquisition of 16 fitness clubs. ABC Medicover is a member of the Medicover group, a major private healthcare provider. The transaction consists of the acquisition of sole control over 16 companies operating under the CityFit and CityFit Blue brands. Medicover already has a strong presence in the Polish fitness sector through such brands as Just Gym, Well Fitness, McFit, Stellar, Platinum Fitness, Smart Gym, and Premium Fitness & Gym, operating over 150 clubs nationwide.
Based on its competition assessment, the UOKiK President concluded that while the concentration would not significantly restrict competition on most relevant markets, serious concerns arose in two cities (Bielsko-Biała and Gliwice) where the post-transaction market shares would be particularly high. To address these concerns, the clearance was made conditional on structural remedies. Medicover must divest one club in each of the two concerned cities — either an existing Medicover location or a CityFit club included in the acquisition. The buyer must be an independent third party the UOKiK President approves, with a credible commitment to operating a fitness facility at the divested location for a minimum of two years.
B. UOKiK launches investigation and conducts dawn raids in home appliances sector.
On March 31, 2025, the UOKiK President announced it was launching a preliminary investigation into a suspected price-fixing agreement between Electrolux Poland and major electronics retailers. The proceedings focus on suspicions that Electrolux Poland may have coordinated the retail prices of household appliances—including refrigerators, washing machines, dishwashers, coffee machines, ovens, vacuum cleaners, irons, and kettles—sold under the Electrolux and AEG brands. According to the authority, these practices may have prevented consumers from benefiting from lower prices, both online and in brick-and-mortar stores.
Based on signals received from the market indicating potential antitrust violations, the UOKiK President, after securing court approval, conducted unannounced inspections at the headquarters of Electrolux Poland and several entities operating retail chains, including companies running major home appliances chain stores. The case is still at its preliminary stage and is conducted in rem, meaning that it is not yet directed at any specific undertakings. Should evidence confirm the suspicions, the UOKiK President may open formal antitrust proceedings and bring charges against identified entities.
The investigation follows recent enforcement actions in the sector. Notably, in 2024, the UOKiK imposed over PLN 66 million in fines on companies involved in a decade-long price-fixing scheme concerning Jura-brand coffee machines. That decision also included a close to PLN 250,000 fine on an individual responsible for the agreement.
Italy
Italian Competition Authority (ICA)
1. ICA launches investigation against CNF for alleged concerted practice.
On March 25, 2025, ICA opened an investigation into the National Bar Council (CNF) for an alleged concerted practice in violation of Article 101 of TFEU. The investigation concerns the application of the “fair compensation rule” for lawyers, introduced by Law No. 49/2023. The “fair compensation rule” aims to provide specific protections for legal professionals when dealing with large clients, based on the presumption lawyers are often compelled to accept reduced fees from such clients.
According to ICA, CNF’s interpretation and enforcement of these rules—particularly through the new Article 25-bis of the Lawyers Code of Ethics—exceeds the scope of the law and may restrict competition among lawyers. ICA specifically challenged CNF’s use of ambiguous language prohibiting lawyers from agreeing upon or estimating fees, without specifying the context or limits. In ICA’s view, this lack of clarity failed to specify that the fair compensation obligations (and related disciplinary consequences) apply only to relationships with large corporate clients. By doing so, CNF is allegedly attempting to directly influence the economic behavior of lawyers under its supervision, potentially deterring them from negotiating fees below the indicated benchmarks.
ICA has given CNF a 60-day deadline, starting from the date of notification of this decision, to exercise its right to be heard by the legal representatives of the party. ICA has established that the procedure must conclude by the end of December 2026.
2. Unfair commercial practice: fine of almost EUR 20 million has been imposed on CoopCulture and other tourist operators.
On March 25, 2025, ICA fined Società Cooperativa Culture (CoopCulture) and the following tourist operators: Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. almost EUR 20 million for making it difficult to purchase tickets online to access the Colosseum Archaeological Park. Specifically, the ICA found that CoopCulture failed to take adequate measures to counter ticket hoarding using automated methods while also reserving significant quantities of tickets for sales offered during its own educational tours, from which it gained considerable economic benefits. This forced consumers to turn to tour operators and platforms that resold tickets bundled with additional services (such as tour guides and pick-up) at significantly higher prices.
At the same time, the six tourist operators purchased tickets using bots or other automated tools, thus contributing to the rapid depletion of base-price tickets on the CoopCulture website. By doing so, these operators took advantage of the systematic unavailability of tickets, which forced consumers who wished to visit the Colosseum to obtain tickets bundled with additional services. ICA found that CoopCulture’s conduct constitutes an unfair commercial practice in violation of Article 20, paragraph 2, of the Italian Consumer Code. Also, the conduct of Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. was found to be unfair under Articles 24 and 25 of the Italian Consumer Code.
3. Key takeaways from ICA’s annual report.
On March 31, 2025, ICA published its annual report on its 2024 activities. During 2024, ICA’s activity recorded a notable increase, both in quantitative and qualitative terms, confirming a trend established in recent years. Notably, between January 2024 and March 2025, ICA received 1,452 competition-related reports, examined 121 merger transactions, and concluded two proceedings on restrictive agreements and nine on abuse of dominant position.
In particular, the number of merger filings ICA reviewed increased by approximately 50% compared to the average of the past 10 years. Moreover, in seven cases, ICA exercised its call-in power, pursuant to Article 16, paragraph 1-bis, of Law No. 287/1990, to require notification of a merger not reaching the turnover thresholds for mandatory notification. According to the ICA, recent legislative amendments strengthened its investigative and intervention tools, also contributing to reinforcing enforcement activities against cartels. ICA initiated four proceedings, with over eight investigations covering as many sectors and over 30 companies. ICA reported that the intensified efforts to counter the most serious antitrust violations is also attributable to the establishment of the whistleblowing platform, which received over 200 reports, and to the leniency program, which was recently enhanced.
As for consumer protection, between January 2024 and March 2025, ICA examined 36,900 reports and concluded 71 proceedings; 46 with confirmation of the infringement, 17 with acceptance of commitments, and eight with no violations. According to the ICA’s estimates, the consumer protection activities carried out between 2023 and 2024 enabled savings of over EUR 28 million, as well as the restitution of more than EUR 150 million to 900,000 consumers.
European Union
A. European Commission
1. The European Commission opens investigation into UMG’s acquisition of Downtown after referral from the Netherlands and Austria.
The European Commission has accepted a referral request from the ACM to investigate Universal Music Group’s proposed acquisition of Downtown, a service provider to independent labels and artists. The ACM expressed concerns that the acquisition may negatively affect competition in the Netherlands and potentially other EU countries. Universal Music Group, the world’s largest record company, has a history of acquiring smaller industry players, often without regulatory oversight due to low turnover thresholds.
In this case, the ACM was notified about the acquisition in February 2025, and the deal prompted complaints from industry stakeholders. The Austrian competition authority supported the ACM’s request for a European-level review. The ACM reiterated its call for a “call-in power” to enable review of smaller, potentially harmful mergers even when they fall below standard notification thresholds. The European Commission has now launched a formal investigation into the deal’s cross-border competitive effects.
2. European Commission fines car manufacturers and ACEA EUR 458 million for cartel on end-of-life vehicle recycling.
The European Commission has fined 15 major car manufacturers and the European Automobile Manufacturers’ Association (ACEA) approximately EUR 458 million for their involvement in a long-running cartel concerning the recycling of end-of-life vehicles (ELVs). The cartel, which lasted over 15 years, involved coordination on avoiding payments to car dismantlers and restricting transparency around recycling rates in new vehicles.
Mercedes-Benz was granted immunity under the leniency program for informing the European Commission of the anticompetitive behavior. Other companies admitted their involvement and agreed to settle the case. Some companies received a reduction of their fine for cooperation under the leniency program. This decision is part of the European Commission’s broader efforts to enforce EU competition rules and address anticompetitive practices in the automotive sector.
3. The European Commission approves Safran’s acquisition of Collins Aerospace, with conditions.
The European Commission has approved Safran USA Inc.’s acquisition of parts of Collins Aerospace’s actuation business, subject to commitments to address competition concerns. Safran’s and the target’s businesses are largely complementary, but the initial transaction raised competition concerns, particularly in the market for trimmable horizontal stabilizer actuator (THSA) systems. These systems, used in civil aircraft, were found to have insufficient alternative suppliers post-merger.
To resolve these concerns, Safran committed to divesting its North American THSA business. A market test confirmed the remedy’s effectiveness, and the European Commission approved the deal subject to full compliance, which will be monitored by an independent trustee.
B. European General Court
General Court upholds Symrise raids in cross-border fragrance cartel investigation.
The EU’s General Court has rejected Symrise’s challenge to annul European Commission’s raids of its premises during a 2023 cross-border cartel investigation into the fragrance industry. The court found that the European Commission had sufficient grounds for inspections, based on credible evidence, including open-source intelligence, suspiciously similar tender bids, and confidential information exchanges. Symrise argued that the raids infringed its privacy and defense rights due to an alleged lack of reasonable suspicion. However, the court ruled that the broader context of international cartel suspicion, including indications from Symrise’s own activities and third-party findings, justified the European Commission’s actions. Symrise stressed that the ruling does not equate to the finding of guilt and reaffirmed its denial of any anticompetitive behavior, stating it continues to cooperate with authorities.
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.
Additional Authors: Holly Smith Letourneau, Sarah-Michelle Stearns, Yongho “Andrew” Lee, Alexa S. Minesinger, Alexander L. Nowinski, Miguel Flores Bernés, Valery Dayne García Zavala, Hans Urlus, Dr. Robert Hardy, Chazz Sutherland, Manish Das, Johnny Shearman, Robert Gago, Filip Drgas, Anna Celejewska-Rajchert, Ewa Głowacka, Edoardo Gambaro, Pietro Missanelli, Martino Basilisco, Yuji Ogiwara, Mari Arakawa, Philip Ruan, and Dawn (Dan) Zhang.
Reflections on the FDLI 2025 Annual Conference – Differing Tones, Shared Goals
From “gold standard science” to biopharma “GNC store”, this year’s Food and Drug Law Institute (FDLI) 2025 Annual Conference in Washington, DC, on May 15–16, a vital gathering for life sciences professionals, was full of sound bites, featured two standout sessions: Food and Drug Administration (FDA) Commissioner Dr. Martin A. Makary on Day 1 and Congressman (D-Mass) Jake Auchincloss on Day 2. Their talks, of course, revealed stark differences in approach—Dr. Makary’s forward-looking optimism and Mr. Auchincloss’s calls for concern—yet shared a commitment to advancing innovation and protecting the core of the agency. To be sure, much of what was said (aside from Dr. Makary’s now widely reported-on comment about a new vaccine framework) was not new, but there are a number of industry takeaways when viewed together and in the context of the conference itself.
FDA Commissioner Dr. Martin A. Makary: A Push for Integrity
Dr. Makary focused on restoring trust in the “brand” of the FDA and was empathetic to the people that do the every day work of the agency. He emphasized the difficulty coming in “after” the reductions in force, but pledged to “restore and rebuild” the culture to the best of his ability. This theme was spread throughout Dr. Makary’s remarks. He also stressed agency independence, advocating for policies like limiting advisory committee roles for industry employees to reduce conflicts of interest, but underscored “strong partnerships” with industry in appropriate ways, intimating positive views on user fee programs. Dr. Makaray’s vision includes accelerating approvals with randomized controlled trials and real-world evidence, while maintaining product safety. The “gold standard science and common sense”, in his view, is here to stay, and to be clear, according to Dr. Makary, there will be no reorganization of FDA.
Dr. Makary also spoke at length about the new AI initiative at FDA, announced last week and widely publicized, which will aim to incorporate AI tools for application reviews. The example case was for review of myriad scientific literature appendices in applications that can take days—now minutes—for reviewers to pour through. Dr. Makary also discussed cloud-based endpoints and industry collaboration to further modernize review processes, particularly for predictive toxicology in drug development. Near the end of the session, Dr. Makary teased the new “framework for vaccine makers”, without much more context, in the coming days. Overall, Dr. Makary’s focus on transparency and streamlined, evidence-based approvals signals a regulatory environment that values innovation but demands robust data.
Congressman Jake Auchincloss: A Call to Action
On Day 2, Mr. Auchincloss, a member of the Energy and Commerce Committee, took a more critical tone, framing the FDA’s challenges in both a local and global-political context. He dismissed modernization efforts like DOGE as “dumb,” and lamented HHS Secretary Robert F. Kennedy Jr.’s characterization of FDA personnel as industry “sock puppets.” Mr. Auchincloss urged Congress to provide “political top cover” for the FDA—and Dr. Makary—ensuring bipartisan support to shield the agency’s critical work from political interference, focus on science and public trust, and avoid erosion of public sentiment of the agency.
Mr. Auchincloss also highlighted very real and very present global competition, warning that China is “eating our lunch” in life sciences innovation, particularly in preclinical and phase 1 research. Focus on cutting budgets is contrary to this plight. He pushed for increased R&D investment—suggesting 6% of GDP—and further underscored that we need coordinated efforts across various agencies to “build” better than China in life sciences. On rare and pediatric disease topics, Mr. Auchincloss highlighted recent news about CRISPER therapies and projected that the bipartisan Give Kids a Chance Act would pass. Overall, Mr. Auchincloss’s remarks underscore the need to uphold health and human safety through good science in a politically charged landscape while advocating for policies that bolster U.S. competitiveness.
Takeaways and Common Ground
FDLI did a great job at juxtaposing these sessions—but the perspectives, on the whole, were not substantively opposed, and at times, seemed very much aligned. Both spoke supportively about the FDA’s “gold standard” and the importance of the global marketplace advantage that the US currently holds in the life sciences sector. It would not be a stretch to say that each speaker appears to support the notion that a strong FDA is a good thing. Each speaker also recognized that these are critical elements of the agency and should be protected at all costs. Reading between the lines, moreover, it would be fair to say that each speaker shares a view that the user fee process and engagement with industry is important and should not be scrapped, contrary to what has been reported elsewhere at HHS about the user fee systems.
Similarly, there was a mutual focus on innovation—whether it be AI or R&D investment more broadly—but to be sure, each speaker had their own view on which means of innovation was more important. Even on “efficiency,” the speakers did not seem too far apart. “Modern and efficient”, in Mr. Auchincloss’ words, seemed to match well with Dr. Makary’s view that some change was needed but drastic measures would be counterintuitive to the mission.
The FDLI 2025 Conference underscored that while regulatory and political leaders may differ in approach, their endgame—fostering innovation while protecting public health—aligns. That is also a good thing.
SEC’s Division of Trading and Markets Issues New FAQ Guidance on Broker-Dealer Custody and Net Capital Treatment of Cryptoassets
The Securities and Exchange Commission (SEC) has taken a significant step toward permitting broker-dealers to custody digital assets and toward accounting for such proprietary digital assets in a broker-dealer’s net capital computation. On May 15, 2025, the SEC’s Division of Trading and Markets released a new FAQ titled “Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology,” while simultaneously withdrawing its 2019 Joint Statement with the Financial Industry Regulatory Authority (FINRA) on the broker-dealer custody of digital asset securities. The new FAQ marks a notable shift from Division staff’s cautious approach in the 2019 Joint Statement, offering more practical pathways for broker-dealers to establish possession and control over “crypto assets that are securities”, in compliance with Rule 15c3-3 under the Securities Exchange Act of 1934, as amended (Customer Protection Rule). The update follows the SEC’s April roundtable on crypto custody challenges.
Previous SEC and FINRA Guidance on Custody of Cryptoasset Securities
The SEC’s 2019 Joint Statement with FINRA took a notably cautious stance on broker-dealer custody of “digital asset securities.” That statement expressed significant concerns about whether broker-dealers could comply with the Customer Protection Rule when custodying digital asset securities, emphasizing that digital assets create risks of fraud, theft and irreversible transfers.
This earlier guidance effectively steered broker-dealers away from direct custody by suggesting that “noncustodial activities involving digital asset securities do not raise the same level of concern.” The statement provided examples of permissible non-custodial models while explicitly stating that broker-dealers “may find it challenging to comply” with the Customer Protection Rule’s possession or control requirements when custodying digital asset securities directly. As indicated above, the SEC and FINRA withdrew this Joint Statement concurrently with the SEC’s issuance of the FAQ guidance.
The SEC followed the 2019 Joint Statement with the 2020 “Special Purpose Broker-Dealer” statement (SPBD Statement). This five-year position (set to expire in April 2026) outlined nine specific circumstances under which a broker-dealer would not face SEC enforcement action for deeming itself to have possession or control of customer digital asset securities. These conditions included requiring the broker-dealer to limit its business exclusively to digital asset securities, implement policies to assess distributed ledger technology, demonstrate exclusive control over private keys, establish procedures for responding to blockchain disruptions, and provide specific disclosures to customers about the risks of digital asset securities. The SPBD Statement remains in effect, but Commissioner Hester Peirce solicited comments during the Crypto Custody Roundtable on whether it should be withdrawn and, as discussed below, the new FAQ guidance ameliorates some of the impact of the rigid SPDB Statement.
New Pathway for Broker-Dealer Custody of Cryptoassets
The new FAQ represents a clear shift in approach. Most significantly, the Division clarified in Question 3 of the FAQ that the SEC’s 2020 SPBD Statement’s framework is not mandatory for broker-dealers seeking to custody customer cryptoassets that are securities. Instead, the FAQ states plainly that “a broker-dealer carrying crypto asset securities for a customer or PAB account may establish control under paragraph (c) of Rule 15c3-3.”
This guidance effectively opens standard “good control location” provisions to cryptoasset securities, even acknowledging in Question 2 that “the Staff will not object if such crypto asset securities are not in certificate form when held at an otherwise qualifying control location under paragraph (c) of Rule 15c3-3.” These clarifications remove significant barriers that previously limited broker-dealer participation in digital asset markets. Importantly, the FAQ also makes clear (see FAQ #1) that the possession and control requirements of the Customer Protection Rule do not apply to cryptoassets that are not securities.
Significantly, the new FAQ #4 clarifies that proprietary positions in bitcoin and ether are “readily marketable” and, therefore, may be used in the broker-dealer’s net capital computations, subject to the same haircut treatment as other commodities under Appendix B of SEC Rule 15c3-1. This is a substantial concession from the SEC’s previous requirement of a 100% haircut for these cryptoassets. The FAQ also provides helpful analysis on the application of SIPA and transfer agent requirements to crypto assets that are securities.
Terminology and Scoping Questions Remain
Despite providing guidance on custody of cryptoassets by broker-dealers and other regulatory requirements, the FAQ leaves for another day how one should determine whether a cryptoasset is or is not a security. (SEC Crypto Task Force Chair Hester Pierce, in her statement announcing the FAQs characterized them as an “incremental step along the journey”). The FAQ uses the phrase “crypto asset that is a security” throughout the document without definition, leaving market participants to decide for themselves which tokens might fall under this classification.
Determining whether a cryptoasset transaction constitutes an investment contract and thus a security requires a transaction-by-transaction analysis under the Howey test and its progeny. Courts have consistently held that digital assets themselves are not inherently securities, but rather certain offerings, sales, or transactions involving those assets may constitute investment contracts.[1] The FAQ’s terminology does not fully reflect this important distinction, and questions over the meaning of the term “crypto asset securities” continue to linger. The FAQ nevertheless provides important guidance for those cryptoassets clearly characterized one way or the other and sets up “plug-and-play” guidance as the SEC answers the ultimate question of cryptoasset security status.[2]
[1]See, e.g., SEC v. Ripple Labs, Inc., No. 20 Civ. 10832 (S.D.N.Y. July 13, 2023).
[2] See Katten’s Quick Reads coverage of recent SEC staff statements regarding the classification of memecoins, proof-of-work mining, stablecoins here and here.
DOJ Retracts Biden-Era Independent Contractor Classification Rule
On May 1, 2025, the United States Department of Labor’s (“DOL”) Wage and Hour Division announced it would not enforce or apply the Biden-era 2024 Final Rule regarding independent contractor classification (“2024 Rule”). Specifically, the DOL directed its investigators “not to apply the 2024 Rule’s analysis” in enforcement matters. The DOL’s announcement will undoubtedly make it easier to classify workers as independent contractors at the federal level—and continues a seesaw of regulatory pull-back from Biden-era directives. While the 2024 Rule does remain in effect for private litigation and certain state-specific tests still impose higher worker classification standards than the current federal guidelines, the DOL’s announcement is a win for employers seeking to classify workers as contractors.
The 2024 Rule
Under the 2024 Rule, classifying workers as independent contractors was somewhat akin to threading a needle. Imposed on March 15, 2024, the 2024 Rule mandated a complex, employee-friendly analysis that focused on a holistic review of the “totality of the circumstances” to ascertain whether a worker was “economically dependent” on an employer and, therefore, not an independent contractor. These six factors included:
The nature and degree of an employer’s control over the worker;
The worker’s opportunity for profit or loss;
Any investments by the workers and the employer;
The degree of permanence of the working relationship;
The extent to which the work performed is integral to the employer’s business; and
The amount of specialized skill and business initiative required.
Under the 2024 Rule, no factor was assigned more weight than another. Thus, the 2024 Rule was commonly referred to as the “totality of the circumstances” test. The net result was a high degree of both difficulty and uncertainty for employers seeking to classify workers as independent contractors.
Legal Challenges to the 2024 Rule
Business groups quickly challenged the 2024 Rule in courts across the country. At present, five lawsuits are pending. In each, the main argument is that the 2024 Rule was arbitrary, capricious, and imposed an undue burden on businesses. No court has halted or enjoined the 2024 Rule. While the Biden-era DOL mounted a vigorous defense in each case, the current DOL’s retreat from the 2024 Rule renders the ultimate outcome of these cases unclear. For example, in one case pending before the Fifth Circuit (Frisard’s Transp., LLC v. United States), the Court of Appeals stayed the proceeding after the government submitted a status report noting the DOL was in the process of reconsidering the 2024 Rule-at-issue in the litigation. Ultimately, the DOL’s pivot to the more lenient standard could have massive implications for these proceedings.
The DOL Retracts the 2024 Rule
In its May 1 announcement, the DOL directed investigators to analyze a worker’s status under the longstanding “economic reality” test, described in the Department’s 2008 Fact Sheet 13 and 2019 Opinion Letter. The more traditional economic realities test looks at various factors to determine whether a worker is actually in business for themselves (and therefore a contractor) or dependent on the hiring entity (and thus an employee). These factors include:
Whether the work is integral to the hiring entity’s business;
The permanency of the parties’ relationship;
The contractor’s investments in facilities or equipment;
The degree of control by the hiring entity over the contractor;
The contractor’s opportunity for profit or loss;
The amount of independent judgment or initiative required in marketplace competition for the contractor to succeed; and
The degree of independence with which the contractor organizes and operates their business.
This traditional economic reality test is widely considered more employer-friendly. It is highly-likely that the DOL under President Trump will issue new, formal rulemaking on the subject in the near future.
Employer Takeaways
Regardless of the DOL’s announcement, employers should remain vigilant and ensure they are compliant with applicable classification rules; which greatly vary by jurisdiction.
For example, certain states’ classification standards far outpace federal guidelines and are more employee friendly. California, New Jersey, and Massachusetts use the much stricter “ABC test” to determine whether a worker is an independent contractor. Under that test, employers must prove (1) a worker is free from the hiring entity’s control and direction, (2) the work is outside the hiring entity’s usual course of business, and (3) the worker is customarily engaged in an independently established trade, occupation, or business. Employers must prove all three elements to properly classify a worker as an independent contractor.
Employers should also closely monitor regulatory developments. As noted above, it is highly likely that the DOL will implement a new final rule in the near future. If and when that occurs, employers should be prepared for accompanying changes and evaluate their existing worker classifications. Given the shifting administrative environment, it is crucial that employers stay flexible in order to both maximize opportunities presented by favorable changes and, conversely, be prepared if—or when—the regulatory winds shift once more.
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Supreme Court Scrutinizes Nationwide Injunctions and Birthright Citizenship
The U.S. Supreme Court heard oral arguments this week in Trump v. CASA, a case that could limit the ability of lower federal courts to issue nationwide injunctions, within the context of a challenge to a 2025 executive order issued by President Trump that would deny automatic citizenship to children born in the U.S. to undocumented immigrants and individuals with temporary legal status. Lower courts had blocked the policy from taking effect nationwide. The government challenged both the scope of that relief and the underlying interpretation of the Fourteenth Amendment.
Judicial Power Questioned
The Court is now considering whether federal district courts can continue issuing injunctions that halt enforcement of federal policies across the country and beyond the specific plaintiffs of a given case. District courts have relied on nationwide or universal injunctions for at least the last fifty years to suspend executive action in policy realms that include topics such as immigration, vaccine mandates, Title IX, and “Don’t Ask, Don’t Tell.”
Critics of nationwide injunctions argue that they exceed the scope of judicial power granted in Article III of the U.S. Constitution, encourage forum shopping, and force judges to make quick decisions on difficult and high-stakes legal questions. Proponents of nationwide injunctions state that they are often necessary to protect civil liberties, avoid confusion, and prevent proliferation of litigation.
While the Justices’ views on the constitutionality of President Trump’s Executive Order are expected to fall down party lines and appeared discernable from their questions and comments at oral argument, their views on the remedy—nationwide injunctions—are less predictable. During oral argument, the Justices almost universally expressed concerns about the practicality of eliminating nationwide injunctions while still providing litigants with expeditious avenues of relief. Some of the concerns raised by the Justices were: the hurdles of pursuing remedies through a class action, the Solicitor General’s reluctance to commit to abiding by a Court of Appeals’ precedent, and the burden on individual litigants.
The advocates before the Court offered a range of options that the Court might consider in deciding this issue. The United States’s position is that there should be a bright-line rule against nationwide injunctions. The state and city respondents encouraged the Court to reject a bright-line rule barring nationwide injunctions. Instead, New Jersey’s Solicitor General, representing a coalition of states opposing the Executive Order, offered three circumstances in which nationwide injunctions should be available: First, in circumstances in which a nationwide injunction is the only practical or legal workable way to remedy the harm for the parties (i.e. in the context of birthright citizen; Second, where Congress has so authorized; and Third, in cases where alternative forms of nonparty relief are not legally or practically available. The private party respondents alternatively suggested that the Court could limit universal injunctions to cases that challenge the constitutionality of a statute or policy involving fundamental constitutional rights.
Although the Court may sidestep the substantive issue here—how to interpret the Fourteenth Amendment’s Citizenship Clause—the unique challenges of citizenship highlighted the parties arguments on benefits and challenges of nationwide injunctions. For example, the Justices questioned how a patchwork of U.S. citizenship rules could be applied in practice if a nationwide injunction were not available.
Preparing for a Shift in Litigation Strategy
Organizations engaged in multi-state litigation, or that rely on early-stage injunctions to pause new federal rules, may see their options narrowed. A ruling that limits the availability of nationwide injunctions could require more targeted relief and could lead to inconsistent enforcement across jurisdictions.
This is a case to watch for companies, advocacy organizations, and public institutions navigating federal compliance and regulatory uncertainty. Those with exposure to immigration enforcement, benefits eligibility, or federal grant conditions should be particularly attentive to how the Court rules—and what it signals for executive authority going forward.
Next Steps
Given the potential for far-reaching change, it’s important for affected organizations to:
Monitor the Court’s decision, expected by the end of the Term, expected in late June or early July 2025.
Evaluate any reliance on nationwide injunctions in pending or anticipated litigation.
Review internal policies involving citizenship status, particularly where eligibility for services or programs depends on current federal interpretation.
Engaging experienced counsel early in the process can help clarify potential exposure and ensure flexibility in response to a decision that may reset the rules on both litigation remedies and immigration rights.
Reese’s Law: The Evolving Regulatory and Enforcement Landscape for Consumer Products Containing Button Cell or Coin Batteries
Over the past year, manufacturers, importers, distributors, and retailers of consumer products containing button cell and coin batteries (or products intended to contain them) have continued to adapt to the requirements of Reese’s Law and the Consumer Product Safety Commission’s (CPSC) corresponding enforcement efforts.[1]
Passed by Congress in August 2022, Reese’s Law is intended to protect children and other consumers against the hazard of ingesting button cell or coin batteries.[2] Reese’s Law applies to “consumer products,” as defined by the Consumer Product Safety Act (CPSA),[3] manufactured or imported on or after March 19, 2024, that contain, or are designed to use, a button cell or coin battery.[4] The requirements of Reese’s Law largely fall into two categories: (1) labeling requirements for the products themselves and packaging; as well as (2) “performance requirements” related to how the product itself secures its battery.[5] A discussion of Reese’s Law can be found here with some common FAQs found here.
As detailed below, a few recurrent themes have emerged over the past year with respect to Reese’s Law. Businesses that manufacture, import, distribute, or sell consumer products utilizing button cell and coin batteries should take immediate action to ensure those products are compliant.
Reese’s Law Noncompliance Has Already Been the Source of CPSC Reports and Recalls
Compliance with Reese’s Law is a top priority for the CPSC. Instead of pulling back on enforcement (as seen in other areas of the federal government in recent months), the CPSC has shown that it remains committed to ensuring compliance with Reese’s Law.[6]
To date, noncompliance with Reese’s Law has resulted in several recalls, affecting a wide variety of products, including infant swings, firearm accessories, “smart” patio doors, and submersible RGB LED lights. The violations prompting these recalls run the gamut, including for example, failing to adequately contain the batteries making them accessible to children, and/or failing to include the required labels on the products themselves or their packaging. Many such recalls address both performance and labeling violations.
Businesses should immediately report to the CPSC when they become aware of a potential violation or instance of noncompliance with Reese’s Law. Reporting any potential violations is consistent with the duty that all manufacturers, distributors, importers, and retailers have under Section 15(b) of the CPSA—i.e., the duty to report when a consumer product fails to comply with applicable consumer product safety requirement, such as Reese’s Law.[7]
Compliance May Be Difficult in Certain Circumstances
Reese’s Law provides stringent labeling and performance requirements for consumer products that contain button cell or coin batteries (regardless of whether the batteries are included or sold separately).[8] These requirements can necessitate significant investments of time, money, and other resources to ensure proper compliance.
1. Labeling Requirements
As to labeling, Reese’s Law requires precise labeling on both a covered product’s packaging and the product itself (with some limited exceptions).[9] Compliance may require significant revamping of a covered product’s packaging to include required warning labels and even retooling the manufacture of a covered product itself to include on-product warnings. Even stricter requirements apply to a covered product sold with button cell or coin batteries themselves (i.e., batteries included), rather than by itself, without batteries included.[10]
The CPSC’s recent activity with respect to Apple’s AirTags for noncompliance with the labeling requirements of Reese’s Law are a prime example of labeling enforcement.[11] In its press release announcing an agreement with Apple, the CPSC wrote that Apple had modified both the product itself and the product’s packaging to display the required warnings, and that Apple had taken further action to remediate noncompliant units already sold to consumers.[12] The CPSC concluded its press release with a reminder that manufacturers, importers, distributors, and retailers must report noncompliant products to the CPSC immediately.[13]
2. Performance Requirements
Reese’s Law also includes several “performance requirements” including that consumer products containing button cell or coin batteries must secure the battery inside the battery compartment in such a way that the battery is not exposed or released during reasonably foreseeable use or misuse to minimize the risk of ingestion.[14] For example, a covered product must be able to endure a certain amount of force or tension applied directly to the product, and also be able to withstand drops from certain heights, all without the battery breaking free of the battery compartment.[15] Best compliance practices often include working with a third party testing laboratory to confirm product compliance. Should such testing reveal noncompliance with Reese’s Law for a covered product already in the stream of commerce, it could trigger an obligation under the CPSA to report to the CPSC.[16]
What Does This Mean for My Business?
Complying with Reese’s Law should be top-of-mind for all manufacturers, importers, distributors, and retailers of consumer products containing button cell or coin batteries. Businesses that manufacturer, importer, distribute, or sell covered products should take immediate action to ensure their products comply with the requirements, including consulting with experienced counsel as appropriate and acting on their duty to report any noncompliant products to the CPSC. Additionally, ensuring compliance will require such businesses to coordinate with their suppliers and incorporate these requirements into their annual compliance reviews or audits to identify and correct any compliance gaps.
[1] Safety Standard for Button Cell or Coin Batteries and Consumer Products Containing Such Batteries, 16 C.F.R. § 1263 (2023).
[2] Reese’s Law, 15 U.S.C. § 2056e.
[3] See Consumer Product Safety Act, 15 U.S.C. § 2052(a)(5), which defines a “consumer product” as “any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise” with limited exemptions.
[4] See Notes to Reese’s Law, 15 U.S.C. § 2056e (A product is covered by Reese’s Law if it is “[1] a consumer product [2] containing or designed to use one or more button cell or coin batteries, regardless of whether such batteries are intended to be replaced by the consumer or are included with the product or sold separately.”); see also 16 C.F.R. 1263.2.
[5] See Button Cell and Coin Battery Business Guidance, Consumer Product Safety Commission, https://www.cpsc.gov/Business–Manufacturing/Business-Education/Business-Guidance/Button-Cell-and-Coin-Battery.
[6] See Recalls & Product Safety Warnings, Consumer Product Safety Commission, https://www.cpsc.gov/Recalls.
[7] Consumer Product Safety Act, 15 U.S.C. § 2064(b)(2).
[8] Notes to Reese’s Law, 15 U.S.C. § 2056e; see also 16 C.F.R. 1263.2.
[9] See 16 C.F.R. §§ 1263.3, 1263.4 (2023).
[10] Section 3 of Reese’s Law imposes further requirements on the sale of button cell or coin batteries themselves—specifically that the packaging in which such batteries are sold must comply with the Poison Prevention Packaging Act (PPPA). See Button Cell and Coin Battery Business Guidance, Consumer Product Safety Commission, https://www.cpsc.gov/Business–Manufacturing/Business-Education/Business-Guidance/Button-Cell-and-Coin-Battery; see also 16 C.F.R. 1700.15 (regulation implementing the Poison Prevention Packaging Act).
[11] CPSC Secures Agreement with Apple for Enhanced Warnings to Protect Children from Hazards of Battery Ingestion; Apple Takes Action to Address Labeling Violations on AirTags, Consumer Product Safety Commission, https://www.cpsc.gov/Newsroom/News-Releases/2025/CPSC-Secures-Agreement-with-Apple-for-Enhanced-Warnings-to-Protect-Children-from-Hazards-of-Battery-Ingestion-Apple-Takes-Action-to-Address-Labeling-Violations-on-AirTags.
[12] Id.
[13] Id.
[14] 16 C.F.R. §§ 1263.1(a), 1263.3 (2023).
[15] See id.
[16] Consumer Product Safety Act, 15 U.S.C. § 2064(b)(2).
Department of Labor’s New Guidance on Enforcing Biden Administration’s Independent Contractor Rule
On May 1, 2025, the Department of Labor (DOL) issued a field assistance bulletin providing guidance to the DOL’s Wage and Hour Division staff about the “analysis to apply when determining employee or independent contractor status for purposes of enforcing the FLSA.” The DOL is in the process of evaluating the issue and working on establishing the appropriate standard to address this question of the standard for determining worker classification under the FLSA.
Under the Biden administration, the DOL issued a rule—Employee or Independent Contractor Classification Under the Fair Labor Standards Act (2024 Rule)—outlining the analysis for determining employee or independent contractor status under the FLSA. The 2024 Rule specified that six factors would be considered to evaluate the nature of the workers’ status, but no single factor was dispositive. These factors were (1) worker opportunities for profit or loss, (2) worker and potential employer investments, (3) work relationship permanence, (4) employer control over work, (5) extent to which work performed was integral to employer’s business, and (6) use of worker skill and initiative.
The DOL will no longer apply this analysis. Instead, until a new standard is issued, the DOL’s Wage and Hour Division will enforce the FLSA based on Fact Sheet #13 (2008) and as further informed by Opinion Letter FLSA2019-6 (which the Biden administration withdrew but is now reinstated as FLSA2025-2). Fact Sheet #13 emphasized that there is no “single rule or test” for determining worker classification, but there are seven significant factors to consider:
the extent to which the services rendered are an integral part of the principal’s business;
the permanency of the relationship;
the amount of the alleged contractor’s investment in facilities and equipment;
the nature and degree of control by the principal;
the alleged contractor’s opportunities for profit and loss;
the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and
the degree of independent business organization and operation.
Fact Sheet #13 also highlighted that certain factors are “immaterial” to the analysis. These factors include (1) place where work is performed, (2) absence of formal employment agreement, (3) whether the alleged independent contractor is licensed by the state/local government, and (4) the time or mode of pay.
The now-reinstated Opinion Letter FLSA2019-6, issued during the first Trump administration, outlines the DOL’s Wage and Hour Division’s position on gig economy worker classification. The letter analyzes the status of workers who are engaged through a virtual marketplace platform.
Since these workers were not economically dependent on the virtual marketplace platform, did not have a permanent working relationship with the platform, are able to switch to working for different platforms, have opportunities for profit and loss (even if the platform sets prices), are not integrated into the platform (e.g., they do not develop, maintain, or operate the platform), and the platform did not invest in facilities or equipment for the workers, the workers could be classified as independent contractors.
While the DOL continues to evaluate the appropriate standard, stakeholders should exercise heightened caution when structuring working relationships and reexamine current classifications in light of this regulatory shift.
UPDATE – Departments Issue Nonenforcement Policy Statement!
Related Links
A Bit of Mental Health Parity Relief for Employers Sponsoring Group Health Plans
Departments’ Nonenforcement Policy
Article
On May 15, 2025, the Departments of Labor, Treasury, and Health and Human Services issued their anticipated nonenforcement policy regarding the 2024 Mental Health Parity regulations. As expected, nonenforcement is applicable “only with respect to those portions of the 2024 Final Rule that are new in relation to the 2013 final rule.” (Emphasis added.) The Departments reiterated that “MHPAEA’s statutory obligations, as amended by the CAA, 2021, continue to have effect.” Thus, the requirement to perform and document comparative analyses of health plans’ nonquantitative treatment limitations remains in effect, but the requirement for a plan fiduciary to certify that it complied with its fiduciary duties in selecting and monitoring a service provider to perform and document the comparative analyses will not be enforced until future notice. Also, specific content requirements that weren’t already set out in the statute or prior regulations won’t be enforced until future notice.
Perhaps the most interesting part of the statement for group health plan sponsors (especially those with plans under investigation) relates to the Departments’ intention to “undertake a broader reexamination of each department’s respective enforcement approach under MHPAEA, including those provisions amended by the CAA, 2021.” The Department of Labor has been accused of overreaching in its enforcement investigations, for example, by citing plans for failing to meet specific comparative analysis content requirements before those requirements were known. While it remains to be seen how the nonenforcement policy might affect open investigations, the Departments encourage plans to continue to rely on the prior regulations and subregulatory guidance. Plans should be alert to any updates the Departments make to subregulatory guidance.
Regulators Pause Mental Health Parity Rules Enforcement
Federal regulators recently indicated they will not enforce parts of the final regulations issued in September 2024 under the Mental Health Parity and Addiction Equity Act (MHPAEA) and may soon propose new rules altogether.
Quick Hits
A federal judge recently paused litigation over the 2024 mental health parity regulations focused on nonquantified treatment limitations.
The Trump administration is considering rescinding or adjusting the rules.
The federal agencies will not enforce the 2024 rules in the short term.
On May 12, 2025, the U.S. District Court for the District of Columbia agreed to stay a lawsuit brought by the ERISA Industry Committee to block the 2024 rules related to nonquantitative treatment limitations (NQTLs).
The U.S. Departments of Health and Human Services, Labor, and Treasury requested a stay in the case, telling the court that they are considering rescinding or modifying the 2024 rules. They issued a nonenforcement policy on the portions of those regulations that took effect January 1, 2025, or would take effect January 1, 2026.
The agencies also directed health plans to continue to rely on the 2013 MHPAEA regulations and prior subregulatory guidance.
Background on the Case
Under the federal Mental Health Parity and Addiction Equity Act (MHPAEA), if a health plan offers mental health and substance use disorder benefits alongside medical and surgical benefits, it must provide the mental health and substance use disorder benefits in a manner that is no more restrictive than the medical and surgical benefits.
On September 23, 2024, the federal government issued final rules requiring health plans to provide “meaningful benefits” for mental health or substance use disorders in coverage categories where medical or surgical benefits are also provided. Meaningful benefits cover core treatments, defined as standard treatments or interventions indicated by “generally recognized independent standards of current medical practice.” These regulations require that a plan fiduciary certify that it undertook a prudent process to select a qualified service provider to perform the comparative analysis.
On January 17, 2025, the ERISA Industry Committee sued the three federal agencies to block the 2024 regulations.
Next Steps
Employers may wish to review their mental health and substance use disorder coverage in order to ensure compliance with the MHPAEA. While parts of the 2024 mental health parity rules will not be enforced for now, employers may wish to anticipate that the agencies could propose changes to the 2024 rules or propose new rules in the future.
Importantly, the requirement to perform and document a comparative analysis of a plan’s NQTLs still exists.
Is This Harvard Magazine Article Incorrect?
There have been numerous news reports about the discovery of an original Magna Carta at the Harvard Law School Library, including this article in Harvard Magazine. According to these reports, a document previously categorized as a “copy” of the famous charter has recently been determined to be the seventh known original of King Edward I’s 1300 Magna Carta.
Over the years, I have published several posts about Magna Carta, including Section 11 Class Actions And The Magna Carta, Non-Disparagement, The Magna Carta And Yelp, You Might Be Surprised By These Words In Magna Carta, andWhy The Wall Street Journal Is Wrong About The Magna Carta.
I do have two cavils regarding Harvard Magazine’s article. The article asserts:
A group of rebellious barons forced King John to sign it, establishing fundamental rights such as due process and habeas corpus, a legal concept that guarantees freedom from illegal imprisonment.
Not true. King John, aka John Lackland, did not actually sign the charter. He authenticated the charter by affixing his seal.
Second, the article uses the definite article “the” when referring to the charter. The charter was written in Latin, which does not use articles. This mistake can even be found in the California Education Code Section 33540 which requires that the Instructional Quality Commission “consider” incorporating “The Magna Carta” into the history-social science framework developed by the History-Social Science Curriculum Framework and Criteria Committee.