This post has been updated as of March 24, 2020.
On Monday, March 23, it was reported that the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) were preparing to announce a streamlined procedure through which companies seeking to collaborate on a response to the coronavirus pandemic may obtain an expedited review and approval of their contemplated venture. (https://www.bloomberg.com/news/articles/2020-03-23/u-s-to-speed-antitrust-reviews-for-firms-teaming-up-on-virus). Specifically, the DOJ and FTC are expected to jointly commit to processing and completing reviews of coronavirus-targeted collaborations in one week or less. The agencies may roll out the details as early as Monday.
Ordinarily, the time required for the agencies to review proposed collaborations for antitrust compliance can span months. However, as the coronavirus pandemic has escalated, the agencies have reportedly been inundated with urgent requests from companies for guidance on collaborations under contemplation. Through this accelerated process, the FTC and DOJ can bolster the efforts of government to address critical shortages in medical supplies and facilitate the development of technology and strategies for treatment, vaccination, and prevention.
Sheppard Mullin will update readers as more information becomes available.
March 24th Update
On Tuesday, March 24, the Federal Trade Commission (FTC) and Department of Justice (DOJ) issued a joint statement “detailing an expedited antitrust procedure and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic.” Titled the “Joint Antitrust Statement Regarding COVID-19,” the statement begins with the recognition that “[a]ddressing the spread of Coronavirus Disease 2019 (“COVID-19”) will require unprecedented cooperation between federal, state, and local governments and among private businesses to protect Americans’ health and safety.” To support and facilitate cooperative efforts, the DOJ and FTC confirm that they “will aim to respond expeditiously to all COVID-19-related requests, and to resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.” As a result of this policy change, companies will be able to secure the resolution of an antitrust query within 7 days.
The FTC and DOJ’s statement also signals the adoption of a more flexible approach to the regulation of collaborations to address coronavirus. Observing “that many individuals and businesses are trying to address a rapidly evolving crisis as quickly as possible,” the FTC and DOJ emphasize that they “will . . . account for exigent circumstances in evaluating efforts to address the spread of COVID-19 and its aftermath.” And in view of the fact that “joint ventures may be necessary for businesses to bring goods to communities in need, to expand existing capacity, or to develop new products or services,” the FTC and DOJ have invoked the National Cooperative Research and Production Act, which provides for “flexible treatment under the antitrust laws for certain standard development organizations and joint ventures.”
Citing the FTC and DOJ’s Guidelines for Collaborations Among Competitors and the Statement of Antitrust Enforcement Policy in Health Care, the agencies underscore that:
- Research and development collaborations are “typically procompetitive”;
- The sharing of “technical know-how” (as opposed to pricing information, for example) may be “necessary” to achieve certain “procompetitive benefits”;
- “[M]ost joint purchasing arrangements among healthcare providers . . . do not raise antitrust concerns”; and
- The antitrust laws “generally permit private lobbying.”
At the same time, the FTC and DOJ remain wary of the threat that some businesses “may use” the crisis situation “as an opportunity to subvert competition or prey on vulnerable Americans.” Echoing the Attorney General’s prior admonitions, the FTC and DOJ state that they will be vigorously policing the marketplace for civil and criminal violations of the antitrust laws and “will not hesitate” to initiate a prosecution.
The FTC and DOJ’s statement includes step-by-step directions from the FTC that explain (1) how to submit a request for an expedited advisory opinion and (2) the required contents and structure of any such request. Sheppard Mullin has extensive experience before the FTC and DOJ and is preparing to assist clients in obtaining an accelerated determination regarding a proposed collaboration to address the coronavirus pandemic.
Sheppard Mullin has been closely monitoring the effects of COVID-19 on various aspect of our clients’ businesses, and has created a multi-disciplinary taskforce to advise clients on the multitude of legal issues that will arise as the situation progresses. The Sheppard Mullin COVID-19 insights page is located at https://www.sheppardmullin.com/coronavirus-insights. For further information on specific issues related to the COVID-19 pandemic, feel free to reach out to any member of the Sheppard Mullin antitrust practice group. Several of our attorneys, listed below, have been focused on staying up-to-date on the ever-changing landscape surrounding this crisis, and are available to help:
As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules. This is not an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand. This article does not address the potential impacts of the numerous other local, state and federal orders that have been issued in response to the Covid-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay and other issues.
*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*
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