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Antitrust Agencies Expedite Review of Coronavirus-Related Collaborations

Client Alert

Authors: Jan P. Levine, Robin P. Sumner, Daniel N. Anziska and Dennie B. Zastrow

3/25/2020
Antitrust Agencies Expedite Review of Coronavirus-Related Collaborations

On March 24, the Department of Justice and the Federal Trade Commission released a joint statement that provided guidance to companies interested in collaborating on efforts to “protect the health and safety of Americans during the COVID-19 pandemic.” The Antitrust Division of the DOJ and the Bureau of Competition of the FTC (collectively, the Agencies) acknowledged that there are many ways federal, state and local governments, as well as private businesses, can collaborate without violating the antitrust laws. To facilitate this collaboration, the Agencies have created an expedited procedure for companies to receive guidance to ensure their efforts comply with federal antitrust laws.

Currently, the Antitrust Division offers the business review process and the Bureau offers the advisory opinion process to assist interested companies in determining whether their proposed conduct would violate the antitrust laws. These processes require companies to provide all necessary information regarding their proposed conduct to the Agencies, and it often takes several months for the Agencies to respond. The Agencies recognize that, in this time of national emergency, a much faster response is warranted. To meet this need, the Agencies are offering expedited review of any requests related to COVID-19 or that address public health and safety. This expedited review shall be completed within seven business days of receiving “all necessary information,” which includes the following:

  • a description of the nature and rationale of the proposal, including the names of the participants, the product(s) or service(s) the proposal will cover, and the temporal and geographic scope of the arrangement

  • any proposed contractual or other arrangements among the parties, including copies of any documents memorializing the contract or arrangement

  • the names of the major expected customers

  • any available information regarding the competitive significance of other providers of the product(s) or service(s).

Any statement regarding the Antitrust Division’s enforcement intentions will be in effect for one year from the date of the response.

The Agencies further recognize that joint ventures may be necessary “for businesses to bring goods to communities in need, to expand existing capacity, or to develop new products or services.” To that end, the Agencies have committed to work “expeditiously” to process filings under the National Cooperative Research and Production Act, which provides flexible treatment for certain “standard development organizations and joint ventures.”

Recognizing that some parties must take action immediately, the Agencies have provided examples of the following activities permitted under the antitrust laws:

  • collaboration on research and development

  • sharing technical know-how, as opposed to company-specific data about prices, wages, outputs or costs

  • developing suggested practice parameters, or “standards for patient management developed to assist providers in clinical decision making,” that could also prove useful to patients, providers and purchasers

  • joint purchasing arrangements among health care providers “such as those designed to increase efficiency of procurement and reduce transaction costs”

  • private lobbying focused on the use of federal emergency authority.

 

The Agencies also recognize the exigent circumstances created by COVID-19 and will take those circumstances into account. The Agencies specifically have noted that “health care facilities may need to work together in providing resources and services to communities without immediate access to personal protective equipment, medical supplies, or health care” and that other businesses “may need to temporarily combine production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies they may not have traditionally manufactured or distributed.” These types of activities, which are limited in duration and necessary to assist patients, may be necessary during these extraordinary times, and the Agencies will take this under consideration when evaluating proposed conduct.

The Agencies warned, however, that they will pursue companies that use COVID-19 as an opportunity to engage in wrongdoing. Specifically, the Agencies noted they will be ready to pursue civil violations of the antitrust laws, “which include agreements between individuals and business to restrain competition through increased prices, lower wages, decreased output, or reduced quality as well as efforts by monopolists to use their market power to engage in exclusionary conduct. The [Antitrust] Division will also prosecute any criminal violations of the antitrust laws, which typically involve agreements or conspiracies between individuals or businesses to fix prices or wages, rig bids, or allocate markets.”

If you require assistance in determining whether these expedited procedures may be helpful to you, please do not hesitate to reach out to the antitrust teams at Pepper Hamilton and Troutman Sanders.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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