Fast Tracks Now & Hard Looks Down the Road: Antitrust in a Pandemic
Maureen K. Ohlhausen
Partner, Baker Botts LLP
Given its impact on the economy and government overall, it is not surprising that COVID-19 has, at least temporarily, affected the work of the U.S. federal antitrust enforcement agencies. Although the agencies have had to slow some efforts, they have sped up others, and have focused their attention on how the pandemic may trigger both procompetitive and anticompetitive activity.
As it adjusts to the new normal, the U.S. Department of Justice Antitrust Division (DOJ) has requested voluntary extensions of time to review pending deals from merging parties, while the Federal Trade Commission (FTC) has stated that it will consider matters on a case by case basis.
Reflecting their refocused priorities, the FTC and the DOJ issued a joint statement on March 24 that details an expedited antitrust review procedure and provides guidance to businesses looking to cooperate in the fight against the COVID-19 pandemic. The expedited review is limited to requests for approvals of temporary collaborations in response to the pandemic, and thus does not apply to mergers.
The statement recognizes the unprecedented cooperation between federal, state, and local governments and among private businesses required to address the spread of COVID-19. For example:
● Health care facilities may need to work together in providing resources and services to communities without immediate access to protective equipment, medical supplies, or health care.
● Businesses may need to temporarily combine production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies.
“These sorts of joint efforts, limited in duration and necessary to assist patients, consumers, and communities affected by COVID-19 and its aftermath, may be a necessary response to exigent circumstances that provide Americans with products or services that might not be available otherwise,” the agencies emphasized in the statement.
Under the expedited procedure, the agencies will aim to respond to COVID-19-related requests within seven calendar days of receiving all necessary information – significantly faster than the several months one would ordinarily expect.
A quick decision
In the first decision under the expedited process, the DOJ issued a rare Saturday announcement, on April 4, stating it will not challenge collaborative efforts of four major medical supplies distributors to expedite and increase manufacturing, sourcing, and distribution of personal-protective equipment (PPE) and coronavirus-treatment-related medication. The companies’ effort is part of an emergency response led by the Federal Emergency Management Agency and the U.S. Department of Health and Human Services to address supply needs arising from the pandemic.
In approving the collaboration, Assistant Attorney General Makan Delrahim stated, “These Medical Supplies Distributors should be applauded for their efforts to both assist the United States in responding to the COVID-19 pandemic and stay within the bounds of antitrust law.”
In addition to approving beneficial collaborations expeditiously, the agencies also warn in the joint statement that they will not hesitate to hold accountable those who try to use the pandemic to engage in antitrust violations. They state they stand ready to pursue civil violations of the antitrust laws, including agreements to restrain competition through increased prices, lower wages, decreased output, or reduced quality as well as efforts by monopolists to use their market power to engage in exclusionary conduct.
The Division will also prosecute any criminal violations of the antitrust laws, which typically involve agreements or conspiracies between individuals or businesses to fix prices or wages, rig bids, or allocate markets. Indeed, it is likely the agencies will receive complaints about anticompetitive behavior driving prices higher for in-demand goods through collusion or exclusionary conduct.
At this writing, it is still unclear how long the pandemic and its myriad effects on all institutions, including the antitrust agencies, will last. The wheels of commerce that drive mergers and the government merger review process will eventually return to normal speed, however. It is likely that the antitrust enforcement fall-out from any anticompetitive behavior under the cover of pandemic conditions will continue long after.
Maureen K. Ohlhausen is a partner at Baker Botts LLP and a former Acting Chairman and Commissioner of the FTC