Joint DOJ & FTC Antitrust Guidance Warns Employers About Colluding and Sharing Competitive Data During the COVID-19 Crisis

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Last month federal agencies adjusted antitrust guidelines to facilitate collaboration between competing companies where the information-sharing and collaboration activity has a legitimate purpose, like making the workplace safer for employees or helping to provide a resource for public health purposes. Joint efforts to produce COVID-19-related protective items is an example of such a permissible collaboration. These efforts should not, however, be confused with information sharing on things like wages, benefits, or terms and conditions of employment that would improve a company’s competitive position compared to others.

On April 13, 2020, the Department of Justice (DOJ) and Federal Trade Commission (FTC) issued new guidance warning employers that they are not relaxing previously issued guidelines prohibiting anticompetitive behavior by employers.  Among other things, the joint statement cautions employers that:

The Agencies are on alert for employers, staffing companies (including medical travel and locum agencies), and recruiters, among others, who engage in collusion or other anticompetitive conduct in labor markets, such as agreements to lower wages or to reduce salaries or hours worked. For years, the Agencies have challenged unlawful wage-fixing and no-poach agreements, anticompetitive non-compete agreements, and the unlawful exchange of competitively sensitive employee information, including salary, wages, benefits, and compensation data. Moreover, the Division may criminally prosecute companies and individuals who enter into naked wage-fixing and no-poach agreements. Even absent a collusive agreement, the Bureau may pursue a civil enforcement action against companies and individuals that invite others to collude.

The statement’s reference to employers that “invite” others to collude can be construed as a warning to employers not to engage in efforts to collect and share competitive information regarding things like compensation plan adjustments during the COVID-19 pandemic.

Previously, in response to COVID-19 response planning by companies, the FTC and DOJ issued a Joint Antitrust Statement Regarding COVID-19 providing guidance and an expedited review process for approval of collaboration projects that have a legitimate purpose.  Much of the original COVID-19-related guidance focused on collaboration between health care providers, and the expedited process for approvals is projected to be much faster than normal (a goal of seven days).  However, in its guidance the agencies also emphasized that they would still prosecute for illegal “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 most recent guidance echoes and emphasizes that message.

Consequently, nothing in the guidance issued by DOJ and FTC during the COVID-19 pandemic withdraws or suggests any suspension of DOJ and FTC opposition to information sharing among employers with respect to wages, benefits, or other terms and conditions of employment.  See Antitrust Guidance and Antitrust Red Flags for Employment Practices.  Accordingly, efforts to collect and share information on what competitors are doing with respect to wage reduction programs, benefit programs, paid leaves of absence, furloughs, and the like, are likely to remain a problem.

It is possible to engage in some market analysis and benchmarking through data collection shared within industries, but in order to pass muster under DOJ and FTC guidelines this would normally need to be data acquired and compiled by a third party, aggregated, and anonymized. The nature and type of permitted collaboration based on DOJ and FTC guidance, however, has been a source of confusion and the subject of continued discussion in the business and legal communities. Consequently, before participating in data collection and sharing activities that concern any of the subject areas that are competitive in nature, employers should seek qualified legal advice.

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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