U.S. antitrust agencies fast-track review of competitor responses to the Covid-19 crisis
The U.S. antitrust agencies announced yesterday a fast-track advanced review process for collaborations between competitors that are intended to advance the health and safety response to the Covid-19 crisis. The agencies’ pledge to respond to applications within as little as a week is welcome action. Their standard process normally takes many months. However, as there is clear guidance on many types of competitor collaborations, it’s likely that many companies will proceed without consulting with the agencies, and only the most sensitive customer-facing collaborations will benefit from the fast-tracked process. The U.S. joins a growing number of competition authorities around the world working to address cooperation between competitors during the pandemic.
Advanced review procedures
Competitors contemplating joint business endeavours may submit the proposed arrangements to the DOJ or FTC for advanced review. Under the DOJ’s Business Review and FTC’s Advisory Opinion processes, the agencies collect information regarding the potential business collaboration and ultimately issue an opinion regarding any competition issues. The agencies’ assessment and clearance are then posted on their websites and in other official agency reports. Normally, if there are signs the agency will respond in the negative, the parties withdraw their application before an official decision is made. This process typically takes many months to complete.
Under the Covid-19 Statement, the agencies will shorten this period for collaborations addressing public health and safety to fewer than seven calendar days of the relevant agency receiving all necessary information. This is a significant procedural improvement, but its real-world benefit may be somewhat limited.
Guidance for competitor collaborations
As the Covid-19 Statement explains, the agencies have already issued several guidelines on permissible collaborations between competitors, including many that arise from proposed cooperations by hospitals and other healthcare providers. These include:
- Research and development partnerships (see the FTC and DOJ’s Joint Antitrust Guidelines for Collaborations Among Competitors);
- Sharing of technical know-how (see the FTC’s Information Exchange: Be Reasonable Publication);
- Medical treatment standards and joint purchasing arrangements among healthcare providers, (see the FTC and DOJ’s Joint Statement of Antitrust Enforcement Policy in Health Care); and
- Lobbying for federal government action (see the FTC’s Staff Report on Enforcement Perspectives on the Noerr-Pennington Doctrine).
The Statement also reinforces some of the important factors that will be taken into account by the agencies, and should be part of any company’s self-assessment. Collaborations are more likely to be consistent with the antitrust laws if they:
- Last only so long as reasonably needed to respond to the pandemic;
- Provide products or services that might not otherwise be available, or as quickly;
- Are necessary to assist patients, consumers and communities; or
- Respond to a request from a government agency, for example under the authority of the Defense Production Act and the Pandemic and All-Hazards Preparedness Act to produce supplies necessary to support public health efforts, since responding to a request of government normally does not in itself insulate private actors against antitrust liability.
Based on this guidance, companies and their counsel will likely feel sufficiently confident under the current exigent circumstances to proceed with many initiatives to support the public health response without first consulting with the agencies.
Where the expedited review process can help
As the pandemic proceeds, there may be greater need for collaboration than is currently being considered where the expedited review measures can give comfort to the parties. The most sensitive customer-facing collaborations will be most likely to benefit from the fast-tracked process. For example, if it becomes necessary for competitors to agree how to allocate or ration resources among their customers, fast-track review has the potential to reduce the barriers to agreeing needed restrictions. Companies may also want to seek comfort in measures needed to coordinate purchasing scarce resources, even though they might qualify for the joint-purchasing safe-harbor. Beyond the guidance already provided, quick review may assist companies where they have any sensitivities on information sharing or coordination risk. For example, in jointly developing and enforcing safety protocols that must be observed across an industry in launching new initiatives to respond to public safety demands.
This is a rapidly developing environment. Companies like Ford, GE and 3M have quickly announced collaborations to jointly produce ventilators, respirators and face shields. As the private sector continues to mobilize, antitrust agencies around the world will likely continue to modify their antitrust enforcement policies to address new issues. Continue to stay updated with the latest developments in antitrust due to the Covid-19 crisis on our LinkingCompetition blog.