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DOJ Issues First Business Review Letter Approving Competitor Collaboration In Response To COVID-19

On April 4, 2020,  the Department of Justice issued a business review letter allowing collaboration among five distributors of personal-protective equipment (“PPE”), oxygen, and medications. This is the first business review letter issued under the expedited review procedure for streamlining pandemic-related public health efforts issued jointly by the Federal Trade Commission and DOJ on March 24, 2020 (as previously reported here and here). The DOJ turned the request for review around in only five days, but offered few new insights into how the agencies might weigh public-health considerations against potential competitive harms.

The parties sought guidance regarding a proposed collaboration in connection with Project Airbridge, a project established by the federal government as a partnership among medical supplies distributors and logistics companies under the direction of FEMA and HHS. Project Airbridge’s purpose is to quickly source and airlift PPE, including masks, gowns, gloves, and other equipment designed to protect against infection, as well as to distribute Covid-19 treatment-related medication to areas of greatest need across the country. The Business Review Letter notes that potential harm to competition from the distributors’ collaboration is minimal because (1) the parties would be acting only pursuant to agreements with the federal government; (2) the federal government and its agencies, including DOJ Antitrust Division staff attorneys would be actively directing and supervising the parties’ conduct and participating in meetings; and (3) the parties would not be sharing any competitively sensitive information directly, but only through “bilateral communications” with the relevant federal agency. The DOJ concluded that it “is satisfied that this and similar conduct – pursuant to an agreement with FEMA or another federal government agency, supervised by the agency, and in furtherance of the agency’s defined policy goals – should not raise any concerns under the antitrust laws.”

Although the collaboration would be conducted under the explicit direction of U.S. government agencies, the Business Review Letter noted that the parties would engage in direct communications without oversight in the interest of time and efficiency. In order to alleviate competitive concerns, the parties set forth a number of safeguards, including “not using any collaboration to increase prices, reduce output, reduce quality, or otherwise engage in COVID-19 profiteering,” limiting the scope and duration of the collaboration to the time needed to respond to the pandemic, and sequestering competitively sensitive information. The DOJ concluded that the “procompetitive aspects of any arrangement far outweigh any potential harm,” which would be limited by such safeguards. DOJ further acknowledged that immunity doctrines, such as Noerr-Pennington (protecting joint conduct to petition government action) or State-Action Immunity likely also would apply to the conduct under review.

The DOJ confirmed that it does not intend to challenge the conduct for one year, after which the parties may apply again if there is still a need for such a collaboration.

The DOJ’s first business review letter allowing a competitor collaboration to help battle the COVID-19 pandemic comes just a few weeks after the DOJ announced the expedited procedure. The eleven page decision lays out the DOJ’s analysis and demonstrates the agency’s commitment to responding immediately to such requests. If you are considering participating in a collaborative effort to address the pandemic, and could benefit from the comfort of antitrust review, the process seems to be working well. Although this particular request raised few, if any real competitive concerns, the business review letter provides some insight for companies considering seeking the Agency’s input regarding a potential competitor collaboration.

Companies seeking expedited review should:

  • Demonstrate that the collaboration is limited in scope and duration to the pandemic response;

  • Articulate why joint conduct is needed to contribute effectively to the COVID-19 effort; and

  • Commit to safeguarding competitively sensitive information by utilizing firewalls and robust compliance policies.

As you are aware, things are changing quickly and the interpretations described here may change.  This blog post represents our best understanding and interpretation based on where things currently stand.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 108

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About this Author

David Garcia Sheppard Mullin complex civil litigation attorneyantitrust law
Partner

David Garcia is a partner in Sheppard, Mullin, Richter & Hampton LLP's Century City office, where he is also the Office Managing Partner. He is a litigator with a broad background in complex civil litigation for major U.S. companies, including extensive class action and multidistrict litigation experience. His practice focuses  principally on antitrust litigation and counseling with particular emphasis on the entertainment industry, provider side healthcare mergers and the intersection between antitrust and intellectual property in litigation and joint ventures.

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Bevin M.B. Newman Antitrust Lawyer Sheppard Mullin Law Firm
Partner

Bevin Newman is a partner in the Antitrust and Competition Practice Group in the firm's Washington, D.C. office.

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Bevin is a strategic adviser to clients in cutting edge affiliations and collaborative arrangements. She focuses much of her practice in the healthcare industry bringing over twenty years of experience advising and defending globally renowned health systems, academic medical centers, providers, payers, and pharmaceuticals companies undertaking significant transactions, including mergers and acquisitions, joint ventures, intellectual property licenses, and a variety of innovative alliances, as well as on conduct matters. She represents clients before the Federal Trade Commission, the Department of Justice and state attorneys general on complex antitrust matters. Bevin also has extensive experience coordinating the merger-control, foreign direct investment (CFIUS) and regulatory reviews of multijurisdictional transactions for U.S. and foreign clients in the pharmaceutical, medical device, technology and energy industries. She is one of the most experienced Hart-Scott-Rodino Act (HSR Act) practitioners in the country.

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Nadezhda Nikonova, Antitrust and Trade Regulation Attorney, Sheppard Mullin
Associate

Nadezhda Nikonova is an associate in the Antitrust and Trade Regulation Practice Group in the firm's San Francisco office. Her practice focuses on high-technology cartel and monopolization cases. She has special experience working with expert witnesses and applying sophisticated economic analysis to antitrust law.

Ms. Nikonova earned her J.D. from the University of California, Berkeley School of Law (Boalt Hall), where she was awarded the Certificate in Business Law. During law school, she was the Editor-in-Chief of the...

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