US Antitrust: FTC and DOJ Release Joint Antitrust Statement Announcing Expedited Review and Policy Guidance Regarding Collaborations Related to COVID-19
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On Tuesday, March 24, 2020, the US Federal Trade Commission (FTC) and the US Department of Justice (DOJ) Antitrust Division (collectively, the Agencies) issued a joint statement outlining an expedited antitrust review procedure and providing guidance for businesses seeking to collaborate on projects related to protecting the health and safety of Americans during the COVID-19 pandemic.
The Agencies announced that they will accelerate review of requests for FTC Advisory Opinions and DOJ Business Review Letters.1 A "Staff Advisory Opinion"2 from the FTC and a "Business Review Letter"3 from DOJ are part of well-established procedures for any firm, individual, or group of firms or individuals to submit a proposal and to receive a statement advising whether the Agencies would challenge the proposed activity under the antitrust laws.4
Effective immediately, the Agencies will expedite the review process for requests related to cooperative conduct aimed at addressing COVID-19 and its effects. Specifically, the Agencies will endeavor to respond expeditiously to all COVID-19-related requests for Staff Advisory Opinions or Business Review approvals, and to resolve those requests addressing public health and safety, within seven (7) calendar days of receiving all information necessary to evaluate them.5 Normally, the approval process is iterative, with the agencies often requesting additional information. Accordingly, even with the expedited procedure, the agencies are unlikely to reach a conclusion within seven days of the first outreach.
The Joint Statement details the exact procedure required to submit a request for an expedited FTC COVID-19 Advisory Opinion, but does not address the same with respect to the DOJ Business Review procedures for expedited review. The FTC expedited process tracks the existing requirements for requesting an Advisory Opinion,6 but it also requires a specific explanation regarding how the contemplated collaboration bears on the COVID-19 pandemic. Although the FTC has also specified that an Advisory Opinion issued under this expedited review process will remain in effect for only one year, it has emphasized that the agency would likely continue to adhere to the Advisory Opinion if circumstances related to COVID-19 continue.
The Agencies also signaled that they will be more flexible when reviewing joint behavior related to addressing the spread and impact of COVID-19. The Joint Statement recognizes that healthcare providers or facilities may need to cooperate to provide communities with necessary resources or services (e.g., personal protective equipment, ventilators) and that certain businesses (e.g., suppliers, wholesalers, or distributors) may temporarily need to combine their assets to enable or facilitate the production or distribution of COVID-19-related supplies. The Agencies made it clear that they will not likely take action against such collaborations: "These sorts of joint efforts, limited in duration and necessary to assist patients, consumers, and communities affected by COVID-19 and its aftermath, may be a necessary response to exigent circumstances that provide Americans with products or services that might not be available otherwise." The agencies also note that the antitrust laws already allow for collaboration in many circumstances, and that "many types of collaborative activities designed to improve the health and safety response to the pandemic would be consistent with the antitrust laws."7
Finally, the Joint Statement sounds a note of caution aimed at those who may attempt to take advantage of the crisis to engage in anticompetitive conduct: it reiterates that the Agencies will continue to enforce the antitrust laws against individuals or businesses seeking to "subvert competition or prey on vulnerable Americans," particularly with respect to action that involve per se unlawful coordinated conduct such as price-fixing, wage-fixing, or output restrictions.
The approach of the FTC and DOJ is similar to that of the European Union (EU). On March 23, 2020, the European Competition Network (ECN) issued a joint statement on the application of EU competition law during the COVID-19 crisis. (For more information, see our Advisory dated March 30, 2020.) That statement, recognizing that the "extraordinary circumstances" surrounding COVID-19 "may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products to all consumers," clarified that the ECN will refrain from active intervention against "necessary and temporary measures put in place in order to avoid a shortage of supply."8 The ECN's statement likewise signaled, however, that European competition enforcers would ensure that essential products remain available at competitive prices and that they will not hesitate to take action against companies engaging in cartel or abuse of dominance conduct.9
Tuesday's Joint Statement signals that the FTC and DOJ are attempting to balance policies that allow businesses to rapidly and flexibly respond to the evolving COVID-19 pandemic, while at the same time maintaining the status quo of enforcing laws against anticompetitive conduct, particularly per se violations. Companies should be aware that the Joint Statement does not affect the time for review of transactions under the Hart-Scott-Rodino Act. DOJ has stated that it will be asking parties to provide another 30 days under timing agreements for those transactions that have received a Second Request and the FTC has similarly asked parties to be flexible on timing.10
© Arnold & Porter Kaye Scholer LLP 2020 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.
See FTC-DOJ Joint Antitrust Statement Regarding COVID-1 (Mar. 24, 2020.
FTC rules provide for two types of advisory opinions: (i) Commission advisory opinions, which are voted on by the Commission and are intended to address substantial or novel questions of fact or law, or subjects of significant interest; and (ii) Staff advisory opinions, which typically provide guidance on specific courses of proposed business conduct. The Agencies' Joint Statement applies to expediting only requests for Staff advisory opinions. Information about FTC Advisory Opinions, including the process for requesting one, can be found here.
Information about the DOJ's Business Review procedure can be found here.
The agencies also announced that applications under the National Cooperative Research and Production Act (NCRPA) will be fast-tracked. It is not clear what this means in practice, as the protections of the NCRPA (de-trebling of any antitrust damages and an award of attorneys' fees to a prevailing defendant in any litigation) apply as soon as the notification of a R&D or production joint venture is filed with the DOJ and FTC and published in the Federal Register, without any requirement for substantive review by the DOJ or FTC. The statute requires publication in the Federal Register within 30 days after receiving notification. Earlier publication of the Federal Register notice would only provide additional protection if the notification would otherwise have been published after a lawsuit was filed.
After Hurricanes Katrina and Rita, the Agencies committed to responding to requests for Business Review Letters within five days of receipt. See DOJ Business Reviews and Opinion Letters Related to Hurricane Katrina and Hurricane Rita Aftermath.
Types of information typically provided to the Agencies in connection with a request for an Advisory Opinion include, but are not limited to: (i) the nature of and rationale for the proposed arrangement; (ii) names of participants; (iii) products or services covered; (iv) temporal and geographic scope of the arrangement; (v) proposed contractual or other arrangements (including copies of agreements) among the parties; (vi) the names of the major expected customers; and (vii) information regarding the competitive significance of other providers of the products or services.
Examples of ordinary permitted activities include: (i) collaborating on research and development; (ii) sharing general technical know-how (rather than company-specific data about prices, wages, output, or costs); (iii) developing suggested practice parameters (e.g., standards for patient management to assist providers in clinical decision-making) that may also provide useful information to patients, providers, or purchasers; (iv) joint purchasing agreements among healthcare providers that are designed to increase efficiency and reduce transaction costs; and (v) private lobbying to address the use of federal emergency authority, to the extent that those activities comprise "mere solicitation of governmental action with respect to the passage and enforcement of laws" and are consistent with the Noerr-Pennington doctrine.
See European Competition Network: Antitrust: Joint statement by the European Competition Network (ECN) on application of competition law during the Corona crisis (Mar. 23, 2020).
See id.; see also DOJ: Justice Department Announces Antitrust Civil Process Changes for Pendency of COVID-19 Event (Mar. 16, 2020).