As Attorney General William Barr has correctly noted, antitrust laws—which prohibit agreements that harm competition—are an important tool to protect consumers in crises like the Covid-19 pandemic. At the same time, however, uncertainty over antitrust laws must not deter legitimate private cooperation.
Federal and state antitrust enforcers and the private antitrust bar can help ensure they do not. This is important because, in addition to governmental responses, surmounting the health and economic crises we face will require innovation and collaboration by private businesses—big and small.
Cooperation Between Competitors Can Speed Recovery
For example, pharmaceutical and medical companies are rushing to develop vaccines, therapies, and better testing. Hospitals and other health-care providers are addressing current cases and preparing for many potential new ones. And firms as diverse as technology companies, telecommunications providers, restaurants, and retailers are working to limit the economic and personal disruptions caused by necessary “social distancing” at national and local levels.
One potential barrier to increased legitimate private cooperation, however, is confusion over what the antitrust laws prohibit. For example, the bar on agreements that unduly restrain competition restrict companies’ ability to share competitively sensitive information on strategy, production, prices, or new product development. But not all agreements and information sharing, even among competitors, harm consumers.
Collaboration among firms can often be pro-competitive and pro-consumer, especially where it leads to delivery of products or services that one firm could not effectively produce on its own. In emergency situations, cooperation between competitors can be important to a speedy recovery.
In other prior emergencies, the Department of Justice Antitrust Division and Federal Trade Commission have taken steps to facilitate legitimate cooperation and provide additional guidance. For example, in the aftermath of Hurricanes Harvey and Irma in 2017, the Antitrust Division and FTC issued a letter advising that hospitals could combine resources to meet the health care needs of affected communities and firms could combine distribution networks to ensure goods and services were available.
After Hurricanes Katrina and Rita in 2005, the agencies issued a letter outlining protocols for an expedited five-day business review process of joint projects aimed at relief and reconstruction.
The DOJ and FTC have now taken similar steps in response to the Covid-19 pandemic. For example, the agencies have announced an expedited business review process using the Hurricane Katrina/Rita model. The agencies are implementing an e-filing system for required merger review filings under the Hart–Scott–Rodino Antitrust Improvements Act of 1976, rather than requiring physical productions. And the agencies have pointed to past guidance on information sharing, joint purchasing, and lobbying.
But the Covid-19 crisis is different from previous recent domestic emergencies in both kind and scale. The antitrust agencies, and the private antitrust bar, will need to do more to be part of the solution. For example, the European Commission or member states have already taken steps to relax certain competition law limitations on information sharing, “state aid” to struggling sectors, and some distribution restrictions.
Mitigating, and eventually stopping, the spread of Covid-19 will require novel approaches and a focus on efficient allocation of resources, sharing of information, and coordinated actions. The DOJ and FTC should provide specific, proactive guidance, in coordination with federal and state health and economic regulators, to facilitate necessary cooperation over identified supply or service disruptions.
Although illegitimate and anticompetitive efforts to coordinate must continue to be aggressively policed, in uncertain times, when the entire nation must unify to overcome a common threat, we need clear guidelines and expeditious treatment for companies seeking to cooperate for everyone’s benefit.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Perry Lange is a partner, and David Katz is an associate, in the antitrust group at WilmerHale in Washington, D.C.