FTC and DOJ Announce Expedited Procedure to Provide Antitrust Guidance to Businesses Responding to COVID-19 Pandemic
Date: April 02, 2020
On March 24, 2020, the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) Antitrust Division released a joint statement “detailing an expedited antitrust procedure and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic.” Noting that the pandemic “will require unprecedented cooperation between federal, state, and local governments and among private businesses to protect Americans’ health and safety,” the agencies’ statement expresses their “wish to make clear to the public that there are many ways firms, including competitors, can engage in procompetitive collaboration that does not violate the antitrust laws.”
The agencies already have mechanisms, such as DOJ’s Business Review procedure and FTC’s Advisory Opinion procedure, for individuals or entities to seek guidance about proposed conduct, which typically take months to complete. Given the rapidly expanding crisis, however, the statement says that “the Agencies will aim to respond expeditiously to all COVID-19-related requests, and to resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.” Each request “must explain how it is related to COVID-19” and describe pertinent details of the proposal.
In addition, the statement recognizes that “some individuals and businesses may need to act immediately in addressing this ongoing pandemic.” It identifies several examples of coordination where the risk of running afoul of the antitrust laws seems so low, especially relative to the important benefits and exigent circumstances, that they are deemed eligible to be treated as “safe harbors”:
- Collaboration on research and development
- Sharing technical know-how
- Joint purchasing arrangements among health care providers
- Coordination by health care facilities to provide “resources and services to communities without immediate access to personal protective equipment, medical supplies, or health care”
- Combined “production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies they may not have traditionally manufactured or distributed”
According to the statement, “[t]hese sorts of joint efforts, limited in duration and necessary to assist patients, consumers, and communities affected by COVID-19 and its aftermath, may be a necessary response to exigent circumstances that provide Americans with products or services that might not be available otherwise.” Yet other forms of safe harbors typically involve some form of readily quantifiable calculation. For example, the agencies’ Antitrust Guidelines for Collaborations Among Competitors exempt competitor collaborations where the parties together account for no more than 20% market share in any relevant market where competition may be affected. The absence of such factors here suggests a need for extra caution before concluding that a collaboration seemingly eligible for safe harbor treatment will in fact qualify. This is all the more true given that the agencies chose to end the joint statement with a warning that they “will not hesitate” to pursue civil and criminal penalties against people or entities that view the pandemic “as an opportunity to subvert competition or prey on vulnerable Americans.”
Companies considering any new projects to address unmet needs caused by the COVID-19 pandemic should consider consulting with experienced legal counsel to help navigate this new ad hoc procedure.
FOR MORE INFORMATION
For more information, please contact:
Mark R. Butscha, Jr.
Michael W. Jahnke
Thomas F. Zych
We have assembled a firmwide multidisciplinary task force to address clients’ business and legal concerns and needs related to the COVID-19 pandemic. Please see our COVID-19 Task Force page for additional information and resources.
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