#2 Competitor Collaboration: Top 5 Antitrust Issues Facing Companies in U.S. Today
Antitrust law has always been concerned about certain types of collaboration among competitors – but it has at times acknowledged that benchmarking, joint ventures, and information exchanges can promote competition if done properly. Defining that line and communicating it to companies has always been a counseling challenge, and will require continuing vigilance in 2017.
New Guidance from the DOJ and FTC Regarding Competition for Employees
In late 2016, the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) released the Antitrust Guidance for Human Resource Professionals, as well as a handy pocket-sized list of potential antitrust red flags.
Anticompetitive employment practices have kept the antitrust enforcers busy over the last few years. The no-poaching agreements in Silicon Valley, where companies like Google, Pixar and others were accused of agreeing not to cold call each other’s employees, have received the most attention, but the new guidance lists several other enforcement actions taken in the healthcare and fashion industry, alleging that employers had attempted to reduce competition for employees.
The new guidance focuses on two main points. First, agreements among employers not to recruit certain employees or not to compete on terms of compensation are illegal, and the DOJ intends to proceed criminally against naked wage-fixing or no-poaching agreements. If its investigation reveals such an agreement, it may bring felony charges against the participants.
Second, companies should avoid sharing sensitive information about the terms and conditions of employment with competitors. If companies do want to reveal information to each other, the guidance states such exchanges may be lawful if a neutral third party manages the exchange; the information exchanged is relatively old; the information is aggregated to protect the identity of the underlying sources; and enough sources are aggregated to prevent competitors from linking particular data to an individual source. The guidance therefore largely restates the DOJ and FTC advice about information exchanges provided in the 1996 Statements of Antitrust Enforcement Policy in Health Care.
Trade associations and joint lobbying have always kept antitrust counsel busy, but now counselors might need to advise on industry-wide meetings called by top politicians. The last few months have seen industry-wide meetings of American auto companies and American technology companies convened at President Trump’s request.
While antitrust counsel typically advise competitor collaborations to adopt an antitrust policy before engaging in substantive work, such considerations may not be top of mind for politicians. And while the Noerr-Pennington doctrine does protect certain communications to the government from antitrust enforcement, it’s far from certain that it would cover anticompetitive agreements simply because they were made at a meeting initiated by the government. This is an area that will merit close attention for those companies that are invited to participate.
Chickens Come Home to Roost
As technology changes, antitrust lawyers must be careful to update their advice about competitor collaborations and information exchanges. In Maplevale Farms, Inc. v. Koch Foods, Inc., for example, producers of broiler chickens are alleged to have conspired to raise prices by limiting supply of chicken via an information exchange company called Agri Stats. According to media reports, Agri Stats started collecting data from poultry producers in the 1980s, going farm to farm to ask poultry farmers to provide information about key performance metrics. Agri Stats allegedly consulted with an antitrust lawyer at the time of its founding, who advised that exchanging historical data was permissible. But in the intervening decades, the speed of this exchange has increased dramatically. Agri Stats now allegedly receives data in real time, recording sales of chicken as they happen and allegedly sharing that data with its subscribers.
Maplevale Farms is a reminder that antitrust compliance is not a one-time inquiry. Information that once was logged on a paper form, sent through the physical mails, and entered by hand into a database can now be instantaneously transmitted to an infinite number of destinations. As technology speeds our ability to track and share information, it increases the antitrust risk of sharing such information.
Innovations in Price-Fixing
Technology can also provide new ways for competitors to coordinate their anticompetitive activity. In a recent DOJ investigation, two online poster companies and their executives were charged with price-fixing via an algorithm. The posters were sold online, and the poster companies allegedly used the algorithm to carry out their agreement to fix the price of certain posters. According to the indictment, the algorithm coordinated changes to the prices for the posters and made sure that the conspirators stuck to their price-fixing agreement.