A few weeks ago, the Justice Department’s Antitrust Division announced the withdrawal of three long-standing policy statements related to antitrust enforcement in healthcare markets — Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (Sept. 15, 1993), Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996), and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011) — finding them to be “overly permissive” in light of significant changes in the healthcare landscape during the past three decades.
As background, the now-withdrawn policy statements covered various business activities in the healthcare industry, including exchanges of price and cost information, joint ventures and joint purchasing agreements. They acknowledged the benefits of industry collaboration and established several “safe harbors” for healthcare providers when engaging in certain joint conduct. For decades, the safe harbors contained in these statements assured companies that certain types of joint conduct would be viewed as legitimate and procompetitive absent exceptional circumstances. Antitrust enforcers and courts have also looked to the safe harbors to analyze the legality of information-sharing activities between competitors.
Doha Mekki, the Principal Deputy Assistant Attorney General (PDAAG) for the Antitrust Division of the DOJ, previewed the DOJ’s position in her remarks one day prior to the withdrawal, categorizing the “safety zones” contained in the policy statements as “outdated” and no longer reflective of market realities. For example, companies previously considered information sharing as “safe” if: (i) an independent third party aggregated information (ii) that was at least three months old (iii) in a way that prevented identification of any single company’s competitively sensitive data. See 1996 Statement, at 45. However, in her remarks, PDAAG Mekki said that data intermediaries can actually enhance—rather than reduce—anticompetitive effects. PDAAG Mekki also took issue with the notion that data that are at least three months old are unlikely to be competitively sensitive. She explained that the rise of data aggregation and pricing algorithms have increased the competitive value of historical data by allowing competitors to disaggregate data and use them for anticompetitive purposes.
Although the withdrawal of the policy statements and the lack of any immediate replacement may create uncertainty for healthcare companies, the information-sharing guidance provided by caselaw such as Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. 2001), which did not expressly rely on the policy statements at issue, may remain instructive. Under Todd, the exchange of information is not illegal per se (unless it is predicated on a price-fixing agreement or other per se unlawful activities), but can be found unlawful under a rule of reason analysis, which entails weighing the procompetitive benefits and anticompetitive effects of the information exchange. Id., at 198. In this analysis, courts usually look at the “structure of the industry involved” and “the nature of the information exchanged,” the latter of which involves consideration of factors such as the “specificity of the information”, the “time frame of the data”, and “whether the data are made publicly available”. Id., at 211-13.
It is perhaps also worth noting that the DOJ has not yet affirmatively withdrawn the Antitrust Guidelines for Collaborations Among Competitors that it issued jointly with the FTC in April 2000. The intention of the guidelines was to explain how the two agencies analyze certain collaborations among competitors. But in light of the developments described above, it is unclear whether the analytical approaches outlined in this guidance remain (or will remain) instructive.
The DOJ’s evolving approach may lead businesses to reevaluate antitrust risks associated with existing information-sharing programs involving competitors. We will continue monitoring the DOJ’s enforcement actions and caselaw development in this area.
