Efforts to combat the COVID-19 pandemic or to respond to related supply shocks or other collateral consequences may give companies reason to collaborate with competitors in ways that could benefit the public, but which involve antitrust risk. In order to facilitate procompetitive collaborations, the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) jointly announced an expedited process to review proposed competitor collaborations specifically related to COVID-19.
- DOJ and FTC reviews of proposed collaborations among competitors are not mandatory unless the proposed collaboration involves a transaction reportable under the Hart-Scott-Rodino Act, but voluntary reviews can give assurances to companies about how enforcers might view a particular collaboration.
- If a review is requested for a proposed collaboration that is related to “public health and safety” to combat COVID-19, the DOJ or FTC will act promptly to respond within seven calendar days of receiving all necessary information.
- The DOJ and the FTC reiterated that they will pursue vigorous enforcement of the antitrust laws against any individuals or businesses that may use the COVID-19 pandemic "to subvert competition or prey on vulnerable Americans.”
- Companies seeking to engage in a collaboration with competitors for any reason should consult with antitrust counsel to ensure that the collaboration is structured to ensure compliance with antitrust laws.
- In addition, because a collaboration among companies in the United States may also impact competition in other countries, it is important to obtain antitrust counsel to ensure compliance in all affected jurisdictions.
In response to the COVID-19 pandemic, on March 24, 2020, the DOJ and the FTC issued a joint statement announcing expedited procedures for providing guidance for proposed collaborations among individuals and businesses seeking to address public health and safety issues. The antitrust agencies recognize that expedited guidance is necessary at this time to enable businesses to engage in collaborations that may be helpful to expand capacity, develop new products or services, or to bring goods and services to individuals and communities. Examples of collaborative efforts that may not violate the antitrust laws, depending on the details of the proposal, include temporarily combined production and distribution, shared equipment, raw materials, or medical supplies, collaborative research and development, shared technical know-how, participation in joint purchasing arrangements, joint development of standards for patient management, and joint participation in private industry meetings with government officials to discuss responses to COVID-19.
The DOJ and FTC also noted in their joint statement that they will pursue civil violations of the antitrust laws against individuals and businesses that are using the COVID-19 pandemic as an opportunity to harm competition or vulnerable Americans. DOJ also may prosecute criminal violations of the antitrust laws, which include agreements or conspiracies between individuals and businesses to fix prices or wages, rig bids, or allocate or divide markets.
Regardless of the objective, a company considering a collaboration with any competitor should obtain antitrust advice to structure the collaboration to achieve the procompetitive purpose while minimizing any negative impacts on competition. Companies should also obtain counsel to ensure antitrust compliance in all jurisdictions in which they compete with the other participants to the collaboration, even if the primary competitive overlap is in the United States.
It is not mandatory in the United States to seek FTC or DOJ pre-approval for a competitor collaboration, unless it involves a reportable transaction under the Hart-Scott-Rodino Act. But companies that seek feedback on how these antitrust enforcers are likely to view a specific collaboration can obtain guidance through the DOJ’s Business Review Letter procedure or the FTC’s Advisory Opinion Process. In practice, the FTC and DOJ do not receive many requests under the Business Review Letter or Advisory Opinion programs, in part because requests are not required, businesses can obtain advice from their antitrust counsel, and responses from the agencies typically take many months, which can delay procompetitive collaborative efforts.
In response to new and unique challenges among businesses to combat the COVID-19 pandemic, the FTC and DOJ announced a new voluntary guidance review process for proposed collaborative efforts. In their March 24, 2020 joint statement, the agencies committed to provide responses within seven calendar days after receiving all necessary information for collaborations that are related to “public health and safety” and to respond “expeditiously” to all other COVID-19 related requests.
Interested parties will need to address how their collaboration is related to COVID-19 in addition to a detailed written description of their proposal. Antitrust counsel can help to draft such proposals in ways that resonate with the DOJ and FTC and reduce the need for subsequent submissions of additional information, or provide guidance on issues relating to competitor collaboration independent of seeking review under the DOJ and FTC’s new process.