March 25, 2020
In response to emergency conditions presented by the COVID-19 pandemic, the need and opportunity to engage in legitimate competitor collaboration to overcome supply chain disruptions, ensure supply continuity, and better serve markets and customers can be expected to increase. While the antitrust laws are not lifted in these circumstances, they are flexible enough to enable competitors to collaborate where the result is improved supply and output, mitigation of market disruptions, enhanced efficiency, and enhanced customer welfare, provided that appropriate precautions are taken. This Client Alert aims to provide practical guidance for companies considering competitor collaborations or discussing such plans with competitors. First, we discuss a statement issued jointly by the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) on March 24, 2020 that details expedited antitrust review of those competitor collaborations related to the COVID-19 pandemic. Second, we provide practical antitrust guidance for companies exploring competitor collaborations during this time.
The DOJ and FTC have announced that each will issue expedited advisory guidance on whether a specific proposed collaborations between firms would face government antitrust scrutiny including investigations or legal challenges. In issuing their statement, the DOJ and FTC identified examples of likely permissible collaborations including partnerships between health care facilities to provide resources to communities lacking sufficient medical equipment (such as personal protective equipment), coordination of production facilities to manufacture COVID-19-related supplies, and coordination of competitor distribution or service networks to improve transportation and dissemination of medical equipment or health care services.
An applicant requesting guidance regarding a potential COVID-19 related collaboration must provide the following information:
Once receiving all required information, the agencies will provide a response within seven calendar days that describes whether the agency would take enforcement action regarding the proposed arrangement and the basis for the agency’s conclusion. The agencies’ response and related guidance would be effective for one year from the date of issuance. Potential applicants should not commence the collaboration before receiving a response from the agencies.
An affirmative response from the agencies should not be construed as a broad grant of immunity for the contemplated collaboration. Third parties, such as affected competitors or class action plaintiffs, may still attempt to challenge collaborations that harm competition. At the same time, however, it is not necessary for parties engaging in a collaboration to seek or secure government pre-approval for a collaboration, and there is no mandatory waiting period to allow for government review (unlike, for example, an HSR filing before a merger). Parties exploring a cooperative relationship, whether or not government pre-approval is sought, should observe the guidance in the following section to minimize potential antitrust risk from the arrangement.
The agencies’ press release can be found here: https://www.ftc.gov/news-events/press-releases/2020/03/ftc-doj-announce-expedited-antitrust-procedure.
The joint DOJ/FTC guidance can be found here: https://www.ftc.gov/system/files/documents/public_statements/1569593/statement_on_coronavirus_ftc-doj_3-24-20.pdf.
The joint DOJ/FTC guidance sets out a revised process for reviewing COVID-19-related collaborations, but there are numerous cooperative situations that do not call for advisory guidance from the agencies. The agencies have longstanding guidance—the 2000 Antitrust Guidelines for Collaborations Among Competitors (the “Competitor Collaboration Guidelines”)—that sets out the analytical framework and related antitrust considerations in these situations. Under the Competitor Collaboration Guidelines, proposed collaborations often do not raise substantial antitrust concerns provided that they are reasonably necessary to achieve procompetitive objectives and do not result in harm to competition. A proper evaluation of a proposed cooperative relationship requires the early and active involvement of antitrust counsel to assess the goals and effect of the proposed collaboration.
We recommend the following steps when considering a competitor collaboration, whether in response to COVID-19 or in non-public health contexts:
If you have any doubts about the propriety of any discussion or action, stop and seek guidance of counsel before proceeding with the discussion or action.
 Department of Justice, Federal Trade Commissions, Antitrust Guidelines for Collaborations Among Competitors, April 2000, available at: https://www.ftc.gov/sites/default/files/documents/public_events/joint-venture-hearings-antitrust-guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf.
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team.
The following Gibson Dunn lawyers prepared this client update: Adam Di Vincenzo, Kristen Limarzi, Josh Lipton and Chris Wilson. Gibson Dunn lawyers regularly counsel clients on issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19. Please also feel free to contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders and members of the Antitrust and Competition Practice Group:
D. Jarrett Arp (+1 202-955-8678, [email protected])
Adam Di Vincenzo (+1 202-887-3704, [email protected])
Scott D. Hammond (+1 202-887-3684, [email protected])
Kristen C. Limarzi (+1 202-887-3518, [email protected])
Joshua Lipton (+1 202-955-8226, [email protected])
Richard G. Parker (+1 202-955-8503, [email protected])
Cynthia Richman (+1 202-955-8234, [email protected])
Jeremy Robison (+1 202-955-8518, [email protected])
Andrew Cline (+1 202-887-3698, [email protected])
Daniel G. Swanson (+1 213-229-7430, [email protected])
Christopher D. Dusseault (+1 213-229-7855, [email protected])
Samuel G. Liversidge (+1 213-229-7420, [email protected])
Jay P. Srinivasan (+1 213-229-7296, [email protected])
Rod J. Stone (+1 213-229-7256, [email protected])
Veronica S. Lewis (+1 214-698-3320, [email protected])
Mike Raiff (+1 214-698-3350, [email protected])
Brian Robison (+1 214-698-3370, [email protected])
Robert C. Walters (+1 214-698-3114, [email protected])
Peter Alexiadis (+32 2 554 7200, [email protected])
Attila Borsos (+32 2 554 72 11, [email protected])
Jens-Olrik Murach (+32 2 554 7240, [email protected])
Christian Riis-Madsen (+32 2 554 72 05, [email protected])
Lena Sandberg (+32 2 554 72 60, [email protected])
David Wood (+32 2 554 7210, [email protected])
Patrick Doris (+44 20 7071 4276, [email protected])
Charles Falconer (+44 20 7071 4270, [email protected])
Ali Nikpay (+44 20 7071 4273, [email protected])
Philip Rocher (+44 20 7071 4202, [email protected])
Deirdre Taylor (+44 20 7071 4274, [email protected])
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