DOJ and FTC’s Cybersecurity Policy Statement Should Ease Antitrust Nerves

by Robins Kaplan LLP
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Several recent and well-publicized cyberattacks have increased the visibility of their threat to businesses’ private financial information and customers’ personal information. The increased attention has also led companies and industries to do a better job (or at least think about doing a better job) sharing information to promote cybersecurity. To that end, many industries have worked toward developing robust Information Sharing and Analysis Centers (ISACs) – to name a few, Retail, Real Estate, Financial Services. But with open lines of communication to share information among competitors comes the opportunity for allegations of anticompetitive behavior.

The sharing of highly technical information related to cyberattacks and how to prevent them seems innocent enough. However, some regulators have raised yellow flags about such communications, principally to prevent their abuse for the purpose of sharing financial and customer information. To provide businesses with an incentive to share the information necessary to fend off cyberattacks, and certainty that that sharing will not be punished, the Department of Justice and Federal Trade Commission (the “Agencies”) have issued their “Antitrust Policy Statement On Sharing Of Cybersecurity Information” (the “Statement”).[1]

In the Statement, the Agencies acknowledge the value of sharing technical information – such as threat signatures, indicators, and alerts – to defend against cyberattacks. They also acknowledge some private firms’ hesitation to share information because they believe such sharing may raise antitrust issues. But in the Statement, the Agencies “explain their analytical framework for information sharing and make it clear that they do not believe that antitrust is – or should be – a roadblock to legitimate cybersecurity information sharing.” In their words, “Cyber threat information typically is very technical in nature and very different from the sharing of competitively sensitive information such as current or future prices and output or business plans.”

The Statement also reconfirms the Government’s commitment to sharing cyber threat information with industry. It encourages industry to take advantage of the Department of Justice’s Computer Crime and Intellectual Property Section’s trained prosecutors who focus on investigating and prosecuting cybercrime and intellectual property cases in each of the nation’s 94 federal districts. And it notes the availability of the National Security Division’s (NSD) National Security Cyber Specialists (NSCS) Network to assist in this process.

But while the government resources are broader and deeper than many individual companies, there is a recognized need for the sharing of private-to-private cyber threat information as well. Of course, “Sharing can take many forms – it may be unstructured or very structured, human-to-human or automated, or somewhere in between.” In whatever form, sharing increases the security, availability, integrity, and efficiency of our nation’s information systems.

With or without these benefits, “The Agencies do not believe that antitrust is – or should be – a roadblock to legitimate cybersecurity information sharing.  While it is true that certain information sharing agreements among competitors can raise competitive concerns, sharing of the cyber threat information … is highly unlikely to lead to a reduction in competition and, consequently, would not be likely to raise antitrust concerns.” To decrease whatever residual uncertainty remains, the Statement describes how the Agencies analyze cyber threat information sharing, and the analysis of Information Sharing Agreements like those involved in participating in ISACs. The Statement confirms that they are subjected to a rule of reason analysis to consider the overall competitive effect of the agreement. As they put it, “Rule of reason analysis focuses on the state of competition with, as compared to without, the relevant agreement.  The central question is whether the relevant agreement likely harms competition by increasing the ability or incentive profitably to raise price above or reduce output, quality, service, or innovation below what likely would prevail in the absence of the relevant agreement.”

The Statement concludes that a properly crafted agreement confined to the sharing of cyberthreat information may demonstrate the lack of competitive harm on its face, both because of its business purpose, and because the scope of its implementation may not permit the sharing of the type of information that would create competitive harm: “[I]t is less likely that the information sharing arrangements will facilitate collusion on competitively sensitive variables if appropriate safeguards governing information sharing are implemented to prevent or minimize such disclosure.” For example, the Agencies recognize that “Cyber threat information typically is very technical in nature.” Sharing information such as a threat signature (a sort of digital fingerprint for a virus or malware) or the source IP address or target port of a Denial of Service (DOS) attack is very different in kind “from the sharing of competitively sensitive information such as current or future prices and output or business plans which can raise antitrust concerns.” “Generally speaking … disseminating information of this nature appears unlikely in the abstract to increase the ability or incentive of participants to raise price or reduce output, quality, service, or innovation.” With this explanation, however, comes the Agencies’ caveat that “this type of analysis is intensely fact-driven.” But in the analysis of an Information Sharing Agreement chosen for discussion in the Statement, the Agencies repeated that “’[a]s long as the information exchanged is limited…to physical and cybersecurity issues, the proposed interdictions on price, purchasing and future product innovation discussions should be sufficient to avoid any threats to competition.  Indeed, to the extent that the proposed information exchanges result in more efficient means of reducing cybersecurity costs, and such savings redound to the benefit of consumers, the information exchanges could be procompetitive in effect.’”

Reading the Statement in conjunction with the Guidelines and other authorities it cites leaves the unequivocal impression that regulators will not be concerned with information sharing agreements which are confined to the legitimate sharing of cyberthreat information. Thus, parties entering into information sharing agreements would be well-served to ensure not only that the agreements themselves limit the type of information that can be shared, but that those limits are observed. Only where a cyberthreat information sharing agreement becomes a ruse for anticompetitive conduct will the sharing of cyberthreat (and other) information raise a red flag under a rule of reason.

[1] The Statement is accessible at http://www.ftc.gov/public-statements/2014/04/department-justice-federal-trade-commission-antitrust-policy-statement

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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