DOJ Antitrust Division Encourages Competitor Collaborations To Address COVID-19

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U.S. antitrust agencies have jointly announced that they are encouraging certain competitor collaborations in response to the COVID-19 epidemic, and that—although antitrust laws remain in force—the agencies will provide unusually quick advisory guidance to firms wondering whether their collaborations will pass antitrust muster.

On August 27, 2020, the head of the Department of Justice (DOJ) Antitrust Division (the “Division”), Assistant Attorney General Makan Delrahim, further explained that collaborations focusing on innovation may receive particularly favorable review by DOJ. Delrahim stated that the COVID-19 crisis “has underscored the importance of our innovation culture,” as individuals, small businesses, and large corporations have had to “re-think their business processes from the ground up” and find “new and innovative ways to operate and deliver goods and services.”[1] Delrahim also emphasized that crises such as the COVID-19 pandemic present an “opportunity for tremendous growth” and innovation.[2] His message was clear and, coming from an antitrust enforcer, refreshing: antitrust will not stand in the way of crisis-driven innovation, and DOJ will not penalize growth (or profit) that results from innovation success.

Delrahim pledged that the Division will encourage innovation by quickly reviewing proposed competitor collaborations and other business activities aimed at addressing public health and safety issues related to COVID-19. He once again called attention to DOJ’s Joint Antitrust Statement Regarding COVID-19 (the “Joint Statement”) with the Bureau of Competition of the Federal Trade Commission (FTC), in which the agencies announced that they would expedite the Division’s Business Review Process. Through the Business Review Process, the Division provides companies with an evaluation of whether their proposed business activities—including joint ventures, information exchanges, and other collaborations—might raise antitrust concerns, and whether the Division would likely pursue an enforcement action against those activities.[1]

The Joint Statement makes clear that addressing the virus will “require unprecedented cooperation between federal, state, and local governments and among private businesses to protect Americans’ health and safety,” and that business “may need to act immediately in addressing [the] ongoing pandemic.”[2] Therefore, the Division will expedite its review of potential collaborations under the Business Review Process from several months to just seven days after receiving all necessary information. The Joint Statement also reaffirms the agencies’ longstanding position that certain competitor collaborations, such as cooperating on research and development efforts, sharing technical know-how rather than company-specific data, and joint purchasing agreements among healthcare providers, are procompetitive and consistent with the antitrust laws.

Since issuing the Joint Statement in March, the Division has issued four public review letters through the temporary expedited Business Review Process.[3] Most recently, in his August 27, 2020 speech, Delrahim touted the Division’s approval of a proposed collaboration among biotechnology companies to facilitate the production of a COVID-19 treatment once it is approved by regulators.

On July 23, 2020—just eight days after the request was submitted—the Division announced that it would not challenge an information exchange among six pharmaceutical companies regarding “facilities, capacity, raw materials and supplies that could be used to produce successful COVID-19 monoclonal antibody treatments.”[4] The Division’s review found that the information exchange would accelerate and expand the availability of virus treatments once they are approved, without facilitating collusion in the markets in which the parties compete.[5] Importantly, while the companies proposed exchanging highly technical information regarding their manufacturing capabilities so they could “move quickly” to produce the COVID-19 treatments, they committed to avoid exchanging competitively sensitive information “relating to costs of inputs, costs of production, or prices of the treatments.”[6]

The Division’s speedy review and subsequent approval shows that it is committed to fostering innovative solutions through collaborations that are “not only benign but procompetitive.”[7] Indeed, the arrangement is a prime example of how companies can engage in lawful collaborations to help achieve the “[c]ritical innovations and technological developments” necessary to tackle challenges caused by COVID-19 and other societal challenges.[8]

The Joint Statement strongly warns against exploiting the COVID-19 crisis by engaging in unlawful anticompetitive behavior. It cautions that the agencies “stand ready” to prosecute criminal and civil antitrust violations, including (1) agreements to restrain competition by increasing prices, lowering wages, and decreasing output, (2) using market power to engage in exclusionary conduct, and (3) fixing prices or wages, rigging bids, and allocating markets.[9]

Companies considering a potential competitor collaboration, information exchange, or other joint activity should carefully consider the arrangement’s competitive effects and whether to secure guidance through the Division’s Business Review Process. The agencies have provided further detailed guidance on these issues in their Antitrust Guidelines for Collaborations Among Competitors, Statements of Antitrust Enforcement Policy in Health Care, and on the FTC website. By closely studying these guidance materials and using the Division’s Business Review Process, businesses can work to find innovative solutions to society’s most pressing challenges—including those caused by COVID-19—while reducing the risk of antitrust violations and avoiding a potential enforcement action.

[1] See Dep’t of Justice, What Is a Business Review?, https://www.justice.gov/atr/what-business-review (last updated June 25, 2015).

[2] Dep’t. of Justice & Fed. Trade Comm’n, Joint Antitrust Statement Regarding COVID-19 at 1 (Mar. 24, 2020),https://www.ftc.gov/system/files/documents/public_statements/1569593/statement_on_coronavirus_ftc-doj-3-24-20.pdf [“Joint Statement”].

[3] See Dep’t of Justice, Business Review Letters and Request Letters, https://www.justice.gov/atr/business-review-letters-and-request-letters (last updated July 28, 2020).

[4] Press Release, Dep’t of Justice, Department Of Justice Issues Business Review Letter To Monoclonal Antibody Manufacturers To Expedite And Increase The Production Of Covid-19 Mab Treatments (July 23, 2020), https://www.justice.gov/opa/pr/department-justice-issues-business-review-letter-monoclonal-antibody-manufacturers-expedite.

[5] Letter from Makan Delrahim, Ass’t Att’y Gen., Dep’t of Justice, to Thomas O. Barnett, Covington & Burling 6 (July 23, 2020), https://www.justice.gov/atr/page/file/1297161/download.

[6] Id. at 7, 10.

[7] Fed. Trade Comm’n & Dep’t. of Justice, Antitrust Guidelines for Collaborations Among Competitors at 1 (Apr. 2000), https://www.justice.gov/atr/page/file/1098461/download.

[8]See supra note 1.

[9] Joint Statement at 3.

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