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February 14, 2023

No Safe Harbors: DOJ Signals Increased Scrutiny of Information Exchanges


On February 3, 2023, the Antitrust Division of the US Department of Justice (DOJ) withdrew its support for three long-standing policy statements relating to enforcement in healthcare markets, characterizing them as “overly permissive” on subjects such as information sharing.1 The prior day, Principal Deputy Assistant Attorney General (PDAAG) Doha Mekki previewed the withdrawal during a speech in which she announced that the safety zones laid out in the policy statements are “outdated” and “no longer reflect market realities.”2 While the policy statements pertain specifically to healthcare markets, DOJ’s action has far-reaching implications outside of healthcare.

Antitrust enforcers and courts have used the safe harbors contained in the policy statements to analyze the legality of information exchanges in a broad range of industries. As a result, businesses have come to rely on those standards when structuring legitimate benchmarking and other information-exchange activities. DOJ’s recent decision does not automatically call into question the lawfulness of those activities, but creates uncertainty—which is compounded by the fact that the FTC has not withdrawn its support for the three policy statements. Nevertheless, DOJ’s action can be seen as the latest in a series of moves demonstrating the current administration’s more aggressive approach on antitrust.

DOJ’s Withdrawal of the Policy Statements

PDAAG Mekki’s speech addressed the potential anticompetitive nature of certain exchanges of information between competitors and DOJ’s commitment to update its approach to antitrust enforcement in response to evolving markets. PDAAG Mekki explained that unlawful information exchanges can fall into two categories: (1) per se unlawful conduct as a means to facilitate price fixing, bid rigging, or market allocation and (2) unlawful conduct under the rule of reason, if the exchange of information leads to some anticompetitive effect, based on factors such as “the structure of the industry involved and the nature of the information exchanged.”3 According to PDAAG Mekki, DOJ is withdrawing its prior guidance—which established a safe harbor for certain information exchanges—because of its view that modern markets require a case-by-case approach, informed by a reanalysis of what types of practices may result in anticompetitive harm.4

The following day, DOJ withdrew Department of Justice and FTC Antitrust Enforcement Policy Statement in the Health Care Area (Sept. 15, 1993) (1993 Statement), Statement of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996) (1996 Statement), and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011) (2011 Statement).5 The 1993 and 1996 Statements established several separate safety zones to reduce uncertainty regarding potential antitrust liability for healthcare providers who collaborate to “bring down costs to health care consumers while providing effective quality health care services.”6 Those policy statements covered a variety of business activity in the healthcare industry, including joint ventures, joint purchasing agreements, and exchanges of price and cost information. The 2011 Statement primarily addressed collaboration among healthcare providers to provide integrated healthcare to patients through Accountable Care Organizations, as promoted by the Affordable Care Act.7 These policy statements acknowledged the benefits of industry collaboration as a means to improve patient care and reduce healthcare costs.

Among other provisions, the policy statements collectively established a safe harbor where the exchange of price and cost information would not be challenged “absent extraordinary circumstances.”8 Parties seeking this protection could participate in industry surveys as long as they met the following conditions: 1) the survey must be managed by a third party; 2) the information provided is relatively old; 3) the information is aggregated to protect the identity of the underlying sources; and 4) a sufficient number of sources are aggregated to prevent competitors from linking particular data to an individual source. Although this safe harbor was set forth in the government’s healthcare policy statements, antitrust enforcers and courts have applied the guidance to information exchanges more broadly.

For example, the joint DOJ-FTC October 2016 Antitrust Guidance for Human Resource Professionals relies on the safe harbor in the withdrawn policy statements.9 The HR Guidance put businesses on notice that DOJ intended to prosecute naked wage-fixing and no-poach agreements as per se criminal antitrust violations, which has led to multiple prosecutions in recent years.10 But that guidance—which has not been withdrawn—also provides that a labor market “information exchange may be lawful” if it adheres to the four-pronged safe harbor established in the 1996 Statement.11 Because DOJ has withdrawn the underlying policy statements with no apparent plans to replace them, companies should no longer rely on the safe harbor in any context, including labor markets.12

Looking Ahead

DOJ’s announcement aligns with other policy decisions by current agency leadership. The withdrawn policy statements had a stated goal to reduce healthcare costs for consumers by reducing regulatory uncertainty and promoting efficiency.13 However, current DOJ leadership has curtailed DOJ’s emphasis on protecting “consumer welfare” (i.e., lower prices, increases in efficiency, etc.) in favor of protecting “the competitive process.”14 As a result, DOJ has shown increased interest in policing potentially anticompetitive conduct at each level of the supply chain, especially buyer-side conduct, independent of the potential result for end consumers.

By withdrawing the policy statements, DOJ is signaling increased scrutiny of information exchanges, particularly in two contexts:

  1. Information sharing through third parties: In her speech, PDAAG Mekki referenced DOJ’s recent case against poultry processors.15 In that case, DOJ alleged that several poultry processing plants engaged in a conspiracy to share information about wages paid to plant workers. DOJ alleged that the use of a third-party consultant to collect and aggregate industry wage information was designed to circumvent the antitrust laws by giving the false appearance of compliance with DOJ’s now-withdrawn safe harbor.16 By eliminating the safe harbor, DOJ makes clear that it may pursue any information exchanges it believes are anticompetitive, increasing uncertainty for companies that have relied on the prior guidance to enter collaborations with others in their industry.
  2. Artificial intelligence and algorithms: DOJ has expressed concerns about the anticompetitive potential of developments in artificial intelligence and algorithmic pricing. According to PDAAG Mekki, “we are experiencing an inflection point in the use of algorithms, data at scale, and cloud computing. . . . That is why it is important to revisit outdated guidance before it strays even further from market realities.”17 Although information may appear sufficiently aggregated and anonymized to an individual, AI and data analysis capabilities may allow competitors to disaggregate that data and use it for anticompetitive purposes.18 As a result, Assistant Attorney General Jonathan Kanter believes that technological developments could increase the risk of tacit or express collusion, stating, “Whether you use a smoke-filled room in a basement or you’re using AI and an API, it’s still the same thing. It’s still collusion.”19

    DOJ has scrutinized alleged algorithmic collusion in the past. In 2015, DOJ criminally charged an individual and his company, alleging that he and a competitor “agreed to adopt specific pricing algorithms . . . with the goal of coordinating changes to their respective prices.”20 More recently, reports surfaced in November 2022 that DOJ was investigating the rental real estate industry over concerns that rent-setting software facilitated collusion between landlords to inflate rents above competitive levels.21

Of course, collusive agreements—even where effectuated through third parties—are unaffected by the withdrawal of the safe harbor because they have never been protected. Indeed, DOJ has previously brought civil22 and criminal23 cases alleging “hub-and-spoke” conspiracies. But, despite the fact that DOJ’s announcement did not change its position that information exchanges, standing alone, are analyzed under the rule of reason since many are lawful and procompetitive, it is notable that PDAAG Mekki began her comments by noting that information exchanges can be part of criminal antitrust conspiracies.24

While rejecting the “overly formalistic” approach of safe harbors, PDAAG Mekki referenced United States v. Gypsum, a criminal price-fixing case alleging that competitors engaged in a price-fixing conspiracy through “interseller price verification”—essentially an exchange of pricing information among sellers.25 This may signal a more aggressive approach on information exchanges, including pursuing criminal cases alleging an implicit collusive agreement based only on evidence of information exchanges.26 Under its current leadership, DOJ has shown no hesitation reviving dormant approaches to criminal enforcement. In the past year, DOJ filed two criminal cases under Section 2 of the Sherman Act, which had not been enforced criminally since the 1970s.

Compliance Implications

DOJ’s withdrawal of its support for the 1993, 1996, and 2011 Statements removes safe harbors for healthcare companies that have relied on that guidance to enter collaborations to lower costs and increase efficiency, and creates uncertainty for companies in all sectors of the economy. Because many information exchanges are legitimate and procompetitive, DOJ generally will pursue civil enforcement under the rule of reason for information exchanges that do not evidence collusion.

If DOJ views an information exchange as evidence of collusion, however, it may prosecute those cases criminally, even in the absence of an express agreement to collude. This risk is particularly acute for healthcare companies in light of mandatory exclusion from federal healthcare programs as a potential collateral consequence. Notably, the Department of Health and Human Services’ recent memorandum of understanding with DOJ provides for “an orderly winding down or a divestiture of assets” by an excluded company, suggesting that the agencies are prepared to address market disruptions resulting from criminal prosecutions.27

Although DOJ’s appetite for risking access to critical treatments remains to be seen, companies in all industries—especially healthcare—should promptly address the risk of civil or criminal enforcement for information exchanges. When DOJ announced its Section 2 policy change last year, it filed a case under the new policy less than six months later, suggesting that the investigation was ongoing when DOJ made its announcement. Accordingly, DOJ’s statements should not be taken merely as indications of future plans, but as signals about what matters DOJ may be pursuing today. Therefore, companies should evaluate antitrust risk for existing information sharing involving competitors—particularly those related to prices and employee wages and benefits—and ensure that antitrust compliance programs account for DOJ’s current approach.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. Press Release, Dep’t of Justice, Justice Department Withdraws Outdated Enforcement Policy Statements, available here.

  2. Prepared Remarks of Principal Deputy Assistant Attorney General Doha Mekki of the Antitrust Division at GCR Live: Law Leaders Global 2023 (Feb. 2, 2023) (Mekki Remarks), available here.

  3. United States v. US Gypsum Co., 438 US 422, 441 n.16 (1978).

  4. Mekki Remarks, available here.

  5. Press Release, Dep’t of Justice, Justice Department Withdraws Outdated Enforcement Policy Statements, available here.

  6. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement Policy Statements in the Health Care Area at 1 (Sept. 15, 1993) (1993 Statement), available here; see also Dep’t of Justice & Fed. Trade Comm’n, Statements of Antitrust Enforcement Policy in Health Care (Aug. 1996) (1996 Statement), available here.

  7. Dep’t of Justice & Fed. Trade Comm’n, Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011) (2011 Statement), available here.

  8. 1996 Statement, available here.

  9. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidance for Human Resource Professionals (Oct. 2016), available here.

  10. E.g., United States v. DaVita Inc., 2022 WL 266759 (D. Colo. Jan. 28, 2022); United States v. Jindal, 2021 WL 5578687 (E.D. Tex. Nov. 29, 2021).

  11. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidance for Human Resource Professionals at 5 (Oct. 2016), available here.

  12. While the Federal Trade Commission (FTC) has not announced similar plans to withdraw its support for these policy statements, its recent “Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act” describes its intent to pursue “practices that facilitate tacit coordination” (potentially, such as improper exchanges of information) under Section 5 of the FTC Act. See FTC Announces New Guidelines for its Section 5 Enforcement Efforts.

  13. 1993 Statement at 1, available here; 1996 Statement at 1, available here; 2011 Statement at 2, available here.

  14. Remarks of Assistant Attorney General Jonathan Kanter at New York City Bar Association’s Milton Handler Lecture (May 18, 2022), available here.

  15. Mekki Remarks, available here.

  16. Complaint at ¶ 88, United States v. Cargill, No.: 22-cv-1821, (D. Md., filed July 25, 2022).

  17. Mekki Remarks, available here.

  18. Id.

  19. US DOJ’s Kanter warns companies over algorithmic price-fixing, calls for corporate compliance, MLex, available here.

  20. See United States v. Aston, No. 15-419 (N.D. Cal. filed Aug. 27, 2015), available here.

  21. The DOJ Has Opened an Investigation Into RealPage, ProPublica, available here.

  22. United States v. Apple, Inc., 952 F. Supp. 2d 638 (S.D.N.Y. 2013).

  23. United States v. Christian Caleca, 2007 WL 4333610 (S.D. Fla. 2007).

  24. Mekki Remarks, available here.

  25. Id.

  26. See, e.g., United States v. DaVita Inc., 2022 WL 266759 (D. Colo. Jan. 28, 2022) (Jury Instruction No. 14) (“A conspiracy may, however, be disclosed by the circumstances or by the acts of the members, such as their course of dealings or other circumstances. . . . &#91T&#93he evidence need not show that the members of the conspiracy entered into any express, formal, or written agreement. . . .”); United States v. Penn, 568 F.Supp.3d 1135 (Jury Instruction No. 17) (“The agreement itself may have been entirely unspoken.”).

  27. Press Release, Dep’t of Justice & US Dep’t of Health and Hum. Serv., Memorandum of Understanding, available here.