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Antitrust Enforcers Target Coronavirus-related Violations

As businesses across the globe grapple with the changing realities presented by the COVID-19 pandemic, U.S. and international antitrust enforcers have warned that business should continue to mind the antitrust laws. Global enforcers are also focusing on the role competition laws play as industries – both essential and hard-hit – grapple with the new environment.

On March 9, 2020, the U.S. Department of Justice (“DOJ”) announced its intention to continue to hold businesses accountable for per se criminal violations of antitrust laws during the Coronavirus outbreak. On the supply chain and consumer-facing side, for example, DOJ vowed to prosecute “[i]ndividuals or companies that fix prices or rig bids for personal health protection equipment such as sterile gloves and face masks.” DOJ also warned that “competitors who agree to allocate among themselves consumers of public health products could also be prosecuted.” In a departure from typical practice, DOJ’s announcement also included a call to action — inviting potential whistleblowers and would-be informants to come forward with information concerning price-fixing, bid-rigging, or market allocation schemes during the Coronavirus outbreak. DOJ’s public warning is the latest directive in furtherance of its recent formation of the Procurement Collusion Strike Force—an interagency partnership of the Antitrust Division, federal attorneys general, the FBI, OIG, Department of Defense, and the U.S. Postal Service Office of the Inspector General – focused on deterring, investigating, and detecting bid rigging and other schemes in the context of government procurement.

Whereas DOJ’s recent pronouncements reflect a focus on investigating traditional violations of Section 1 of the Sherman Act, the Federal Trade Commission (“FTC”) took swift action in furtherance of its consumer protection mission. In February 2020, the FTC issued guidance to consumers for detecting and avoiding Coronavirus-related scams. On March 9, 2020, the FTC announced that, in a joint effort with the FDA, it had issued warning letters to seven sellers of sham products that falsely claimed they could treat or prevent Coronavirus. In addition to outlining the various violations of the Federal Food, Drug, and Cosmetic Act (FD&C Act), 21 U.S.C. § 355(a), the letters warned that such false claims were unlawful under the FTC Act absent appropriate substantiation and scientific testing. Offending products included lozenges that supposedly “killed” the Coronavirus, frankincense that “decreased” risk of infection, and essential oils that “protected” against Coronavirus. In addition to sending the specific warning letters, the FTC more broadly warned businesses that any claims relating to Coronavirus will be subject to “exacting scrutiny” and the FTC will take a close look at myriad methods that companies can suggest or imply claims to consumers, including through URLs, hashtags, and suggestively named products.

Outside of the U.S., various international governments and authorities have temporarily relaxed certain competition law provisions to facilitate the provision of essential services. By way of example, large grocery chains in the United Kingdom will be allowed to exchange data on stock levels, share warehouse space and delivery vans, and team up to serve consumers in this time of crisis, after the UK government temporarily relaxed elements of UK competition law. The European Commission has also relaxed state aid rules to allow for exceptional support from member state governments to relevant sectors and businesses impacted by the virus or otherwise providing essential services to combat its spread. Despite the exceptional circumstances, international competition authorities have made clear, however, that the current situation does not provide immunity to businesses from competition/antitrust law infringements, including unlawful collusion, information exchange and/or excessive pricing, even if the relevant government encourages competitors to cooperate for COVID-related purposes.

The recent announcements and activity from the DOJ, FTC, and other global competition enforcers serve as a reminder to businesses that antitrust regulators will apply increased scrutiny to conduct during times of crisis. Companies, particularly those in the health care space, should keep antitrust policies current and closely monitor bidding, pricing, and any issues bearing on market allocation. These concerns are particularly heightened where competitors may be engaging in joint ventures, information sharing arrangements, collective government petitioning, or other collective action designed at responding to the Coronavirus crisis. In addition, consumer-facing companies must continue to ensure that products marketed, particularly those on social media, are not interpreted as implying false or misleading claims to customers.

© 2020 Proskauer Rose LLP.

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About this Author

Stephen Chuk, Antitrust Litigator, Proskauer Rose Law FIrm
Associate

Stephen Chuk is an associate in the Antitrust Group. He represents companies in complex antitrust litigation and provides counseling on mergers and acquisitions and regulatory compliance. Stephen also counsels individuals and companies facing criminal and regulatory investigations by the U.S. Department of Justice and the Federal Trade Commission.

The antitrust matters on which Stephen advises involve alleged claims of monopolization, group boycott, bid rigging and price-fixing across a wide range of industries, including financial services,...

202.416.6697
Jade-Alexandra Fearns Antitrust and competition Lawyer Proskauer London, England
Special Antitrust & Regulatory Counsel

Jade-Alexandra focuses her practice on antitrust and competition law along with international sanctions and other regulatory and compliance related advice across a number of sectors including financial services and banking, sports, automotive, media, manufacturing, consumer goods and telecommunications. She is recommended in the Legal 500 for the following practice areas: EU and Competition; Trade, WTO Anti-Dumping and Customs; and Sport. According to Legal 500, "competition expert Jade-Alexandra Fearns is … recommended for [sports related] regulatory and disciplinary matters."

Jade is active in the Firm’s pro bono program, and spearheads the London office’s efforts to provide assistance to individual clients and nonprofit organizations in litigation and transactional matters. She graduated from the University of Cambridge where she was president of the University Law Society.

Practices

Litigation, European Regulation, Antitrust

Industries

Sports, Financial Services

44-20-7280-2215
Colin Kass, Antitrust LItigation Attorney, Proskauer Rose Law Firm
Partner

Colin Kass is a partner in the Litigation Department and vice-chair of the Antitrust Group. An experienced antitrust and commercial litigation lawyer, Colin has litigated cases before federal and state courts throughout the United States and before administrative agencies. His practice involves a wide range of industries and spans the full-range of antitrust and unfair competition-related litigation, including class actions, competitor suits, dealer/distributor termination suits, price discrimination cases, criminal price-fixing investigations, and merger injunctions.

202.416.6890
Christopher Ondeck, Antitrust Litigator, Proskauer Rose, law firm
Partner

Chris Ondeck is a partner in the Litigation Department and vice-chair of the Antitrust Group. He focuses his practice on representing clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, defense, medical devices, metals,...

202-416-5865