Let’s face it, antitrust concerns probably do not top your list of legal concerns at this time. So, it is fair to ask whether companies should worry much about antitrust right now.
The short answer is, yes. The rules have not changed, and those who do not heed them now may pay dearly later. At the same time, we realize you probably have better things to do than read another alert that recites a long list of antitrust dos and don’ts. So, we will briefly summarize what has happened to date and provide some guidance for these times. This blog is part one in a three-part series dealing with antitrust and price gouging. We will also offer podcasts on these topics.
On March 24, 2020, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued a Joint Antitrust Statement Regarding COVID-19. In it, they acknowledged that responding to the crisis may require competitors to collaborate. They reiterated that “procompetitive” collaborations between competitors are permitted and, given the current crisis, there may be good reason to do them. Such permissible collaborations can include those related to:
- production and logistics;
- research and development efforts;
- standards for patient management in the healthcare setting; and
- joint purchasing agreements.
Additionally, while competitors must be careful about sharing information, the antitrust laws permit such sharing if it leads to procompetitive and efficient outcomes and is not likely to lead to anticompetitive consequences, such as higher prices, lower output or reduction in quality, or innovation. In the current environment, sharing information regarding best practices for addressing COVID-19 will typically not raise antitrust concerns.
All such collaborations and information sharing should be narrowly tailored to achieve the procompetitive objectives, both in scope and duration, and companies must ensure that there is no “spillover” into markets and time periods (i.e., post-COVID-19) that do not require such collaboration. Certainly, the current crisis should not be viewed as an opportunity for competitors to collectively “correct” the market. Companies should also be careful about withholding access to certain facilities they normally make available to competitors. While such restrictive access may be justifiable, it could also lead to claims of monopolization and/or conspiracies to rid the market of a competitor. Notably, as business returns to normal, companies must not be tempted to collaborate (or continue with collaborations) that no longer are necessary to meet the crisis. While certain collaborations may make the transition back to normalcy easier, they may also restrict competition needlessly. For instance, an agreement among competitors not to poach each other’s furloughed employees might make it easier to restock a company’s labor force, but would also likely be seen as anticompetitive, just as in ordinary times. Because all of the above situations and collaborations are highly fact-specific, you should consult experienced antitrust counsel before contemplating any competitor collaboration, information sharing or restricting access to certain facilities.
The agencies issued another statement, entitled Joint Antitrust Statement Regarding COVID-19 and Competition in Labor Markets. In it, the agencies make it clear that while certain information may be shared and certain agreements entered into, they will not “tolerate anticompetitive conduct that harms workers, including doctors, nurses, first responders, and those who work in grocery stores, pharmacies, and warehouses, among other essential service providers on the front lines of addressing the crisis.” Even absent an agreement with others, certain unilateral anticompetitive conduct or unfair practices may be still be investigated and prosecuted by the agencies.
Competitors who desire to engage in collaborative conduct and wish to obtain the enforcement agencies’ view ahead of time can submit a request for a Business Review Letter to DOJ or seek an Advisory Opinion from the FTC. While that process can normally take a few months, the agencies have promised to expedite their review for COVID-19-related matters and provide a response within seven days of receiving all necessary information. There is also a rather cumbersome process under the Defense Production Act (DPA) by which a company can obtain antitrust immunity for certain agreements that are needed to fulfill the goals of the DPA.
Finally, we cannot stress enough that you must be careful about what you say in your documents. Jokes about correcting the markets or ridding the market of pesky competitors may not be taken lightly by post-COVID-19 juries. Certainly, comments about “taking advantage” of the current situation, even if meant as gallows humor, will not be seen as such when read a few years from now and could cost a company dearly.
In our next installment in this series of blogs, we will discuss the various issues surrounding price gouging, which is occupying many of the consumer protection authorities today.
Information about COVID-19 and its impact on local, state and federal levels is changing rapidly. This article may not reflect updates to news, executive orders, legislation and regulations made after its publication date. Visit our COVID-19 resource page to find the most current information.