April 23, 2020

DOJ Provides Further Guidance to Competitor Collaborations in Second Business Review Letter

In response to the COVID-19 pandemic, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) committed to providing the DOJ’s Business Review Letters (BRLs) and the FTC’s Advisory Opinions (AOs) on an expedited basis if the requests relate to business responses to the COVID-19 pandemic. The DOJ now has published the second of these expedited letters, which provide helpful insights into the ways businesses are working with federal government agencies to fashion creative solutions to supply challenges, and also cautions businesses against relaxing their antitrust compliance practices and procedures during this time. The DOJ previously issued its first BRL related to coronavirus response efforts on April 4, 2020.

The Proposed Collaboration

The requesting party for the letter, Amerisource Bergen (Bergen), is a leading distributor of pharmaceuticals and other health care products. While Bergen is similarly situated to the parties producing personal protective equipment (PPE) that requested the DOJ’s first COVID-19 BRL, Bergen is focused more on sourcing, producing, and supplying medications and other kinds of health care supplies to respond to the ongoing pandemic. In its request, Bergen acknowledged the advice given by the DOJ in the first COVID-19 BRL, and it requested additional guidance regarding its “collaborative efforts to identify global supply opportunities, ensure product quality, and facilitate product distribution to the most imperiled communities.” Bergen sought “the certainty it needs to move as swiftly as possible to protect the health of Americans.”

In particular, Bergen’s request notes that it plans to work with the Federal Emergency Management Agency (FEMA), the Department of Health and Human Services (HHS) and other federal agencies to combat COVID-19. This collaboration will include:

  • Helping FEMA, HHS and foreign governments address bottlenecks with existing foreign suppliers
  • Helping FEMA and HHS identify and qualify new sources of supply
  • Helping FEMA and HHS identify and monitor areas of increased demand for, and potential shortages of, medications and other health care supplies
  • Helping expedite distribution of medications and other health care supplies, including medications from the Strategic National Stockpile, to FEMA-designated COVID-19 hotspots
  • Providing FEMA and HHS with data necessary to do the above, as well as claims data and other data the agencies may request
  • Engaging in related activities to source and distribute medications and other health care supplies as directed by FEMA, HHS or other government agencies

Unlike the activities described in the previous request, this conduct involves far more direct collaboration with the government than with other private partners. Significantly, the DOJ described the proposed conduct as Bergen and others acting as “agents” of the federal government, rather than as independent actors pursuing their own independent business interests (“Bergen is simply an instrumentality transporting products owned by the U.S. Government to locations designated by the U.S. Government on terms dictated by the U.S. Government.”).

In deciding that the proposed conduct would not likely violate the antitrust laws, the DOJ pointed to the following factors:

  • The proposed conduct likely is immune from antitrust scrutiny under the so-called state action doctrine because Bergen and other collaborators are “compelled by an agreement with a federal agency” and “supervise[d] by [that] federal agency.”
  • In addition, elements of the proposed conduct are immune under the so-called Noerr-Pennington doctrine, which gives private businesses petitioning immunity relating to the collaborators’ efforts to influence governmental actions.
  • The proposed conduct also may benefit from implied immunity under the antitrust laws to the extent application of traditional antitrust principles would “disrupt” or be “repugnant” to FEMA’s and HHS’s respective regulatory schemes (which allow those agencies to coordinate disaster relief with private organizations).
  • Bergen has committed to upholding good antitrust compliance practices, including not exchanging competitively sensitive information with competitors that also are participating in the collaboration (such information may be shared with the agencies themselves).
  • The proposed conduct is limited to the time period necessary to assist FEMA, HHS and other government agencies in responding to COVID-19-related medication shortages. Upon resolution of the COVID-19-related disruptions and the disbanding of the related government response initiatives, the collaborating businesses will formally dissolve their collaboration and immediately notify the DOJ, in writing.

As the DOJ and FTC continue to publish guidance to address COVID-19 and the numerous challenges caused by the global pandemic, it is important to remember that the antitrust laws are nuanced and complex, and their application to particular circumstances is highly fact-sensitive. The DOJ has repeatedly said that any guidance issued under this program is narrowly limited to responses to COVID-19 and will only be effective for one year. We strongly recommend that businesses consult with antitrust counsel before engaging in any collaborative conduct with a competitor that might implicate federal, state or international competition laws.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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