Virus-Spurred Joint Ventures Pose Post-Pandemic Antitrust Risks

Corporate competitors working together to confront the coronavirus, such as joint ventures between hospitals, may present future antitrust risks because these collaborations may be difficult to unwind once the pandemic ends, state enforcers said.

“I think the challenge for antitrust is not so much now but in six months to a year from now we are going to have to unwind all of this, which will be hard,” Paula Blizzard, a deputy attorney general within the office of the California Attorney General, said Tuesday during an American Bar Association conference.

Since the coronavirus outbreak, multiple companies have entered into joint ventures and other collaborations to mass produce and distribute vaccines, face masks, and other critical supplies.

Medical suppliers McKesson Corp., Owens & Minor Inc., Cardinal Health Inc., Medline Industries Inc., and Henry Schein Inc., for example, are working together to increase manufacturing and distribution of personal protective equipment.

General Motors Co. has formed a partnership with Ventec Life Systems Inc. to increase the production of ventilators.

Once the pandemic ends, companies may want to continue to collaborate, especially if working together has provided the firms benefits such as increased production efficiency and decreased costs, Blizzard said.

The concern is “how do you stop it later, how do you go back to the competitive world,” Blizzard said, speaking via webcast.

Federal antitrust enforcers at the Justice Department and Federal Trade Commission have been reviewing joint venture proposals by companies on an expedited basis to ensure they don’t pose competition problems. Both antitrust agencies have said they won’t tolerate efforts by corporations to act anticompetitively through such joint ventures, such as coordinating on prices.

Companies may argue that these joint ventures should continue even after the pandemic ends because they provide benefits to consumers, said Gwendolyn Cooley, assistant attorney general with the office of the Wisconsin Attorney General.

Hearing such arguments by companies will be “an iterative process, the answer will be along the lines where companies have to demonstrate that there is some pro-competitive benefit,” Cooley said during the webcast.

“How we unwind things like that I’m trying to take it one day at a time,” she said.

For additional legal resources, visit Bloomberg Law In Focus: Coronavirus.