Joint FTC / DOJ Guidance: Hurricanes Harvey and Irma
Businesses and individuals in Texas, Florida, the Southeast, Puerto Rico and the Virgin Islands are preparing for a massive recovery and reconstruction effort in the wake of Hurricanes Harvey and Irma. The Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have issued antitrust guidance that reiterates key principles of permissible and impermissible competitor collaboration and provides useful examples related to disaster recovery.
As before, the DOJ will criminally prosecute businesses involved in naked price-fixing, bid-rigging or market-allocation agreements. The FTC and DOJ will investigate and take action against civil violations of the antitrust laws.
At the same time, the federal antitrust laws are sufficiently flexible to allow pro-competitive collaborations that benefit consumers as set forth in the FTC/DOJ Antitrust Guidelines for Collaborations Among Competitors. Joint ventures and other collaborations can in some cases bring goods or services to market more quickly or at lower cost than the firms could do on their own.
As the agencies explained, “[T]he recovery from Hurricanes Harvey and Irma may require a range of collaborative efforts among competing firms — including joint ventures, joint licensing and other similar contractual arrangements. Such collaborative efforts are subject to review under the antitrust laws, however, joint efforts of limited duration by businesses to restore […] services more effectively and to assist the affected communities in recovering from the devastation may be beneficial and should not generally raise antitrust concerns. For example, hospitals or other health care facilities temporarily may need to combine certain resources or services to meet the health care needs of affected communities. Similarly, two or more firms might combine their distribution networks to better or more quickly bring needed products or services to their customers. These collaborations can be accomplished in a manner consistent with the antitrust laws rather than in conflict with them.”
WHAT THIS MEANS:
The Agencies’ analytical framework for judging competitor collaborations remains in force: traditionally per se illegal offenses such as price fixing, bid rigging, and market allocation will be subject to prosecution. However, competitor collaborations that serve a pro-competitive purpose will be analyzed flexibly under the rule of reason with due regard for the competitive conditions created by the devastation. In particular, the agencies will be mindful of the consumer benefits of temporary collaborations designed to speed the restoration of essential services.