Overview
The Biden Administration antitrust enforcement agencies have withdrawn policy statements and guidelines deemed obsolete or inconsistent with their current perspectives. In their most recent action, the Department of Justice's (DOJ) Antitrust Division withdrew three antitrust policy statements released in the context of the health care sector, but of much broader application, describing them as "outdated" and "overly permissive." Withdrawing these policy statements will potentially have significant repercussions that may impact information sharing and benchmarking activities in every industry.
While the DOJ has not replaced the withdrawn policy statements with specific updated guidance, it has warned that the old statements were too permissive, especially as it pertained to information sharing. Companies should reassess risk associated with information sharing practices (especially competitive intelligence services that aggregate competitors' data) and joint purchasing arrangements, as without the safe-harbor provision those activities entail more risk. Expect more aggressive enforcement, as the DOJ seeks to develop new standards case-by-case, particularly in the industries on which it is placing primary focus. And expect additional withdrawals of bright-line safe harbors, as the DOJ and FTC continue to scrutinize existing guidance and rescind or revise those statements that conflict with their ambitious antitrust enforcement agenda.
The DOJ's Withdraw of Health Care Policy Statements
On February 3, 2023, the DOJ announced the withdrawal of the following policy statements:
- Antitrust Enforcement Policy Statements Issued for the Health Care Industry (Sept. 15, 1993). The policy statements provided "antitrust safety zones" (often referred to as "safe harbors") under which the DOJ and Federal Trade Commission (FTC) would not challenge hospital mergers and joint ventures, physicians providing information to purchasers of health care services, price and cost information exchanges, joint purchasing arrangements, and physician joint ventures. These statements also first established a "safety zone" allowing participation in surveys of prices, wages, salaries, or benefits.
- Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996). These statements revised and elaborated on the subjects found in the 1993 policy statements and included more comprehensive descriptions of the joint purchasing and information sharing safety zones.
- Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program(Oct. 20, 2011). This statement provided antitrust guidance, including establishing an "antitrust safety zone" relating certain activities of Accountable Care Organizations (which allow groups of providers to work together to manage and coordinate care for Medicare fee-for-service beneficiaries).
Of particular note, the rescinded guidance carved out a "safety zone" for information sharing arrangements where: (1) the collection is managed by a third party; (2) any information shared is more than three months old; and (3) the data are aggregated and anonymized, and based on at least five participants (where no one participant accounts for more than 25% of the input into any statistic).
The policy statements also established a "safety zone" for joint purchasing agreements among hospitals and other health care providers where: (1) the purchasers account for less than 35 percent of the total sales of the purchases product; and (2) the cost of the products and services jointly purchased accounts for less than 20 percent of total revenues of each competing participant.
The DOJ's Explanation
While the DOJ's withdrawal announcement simply stated that "the statements are overly permissive on certain subjects, such as information sharing, and no longer serve their intended purpose of providing encompassing guidance to the public," Principal Deputy Assistant Attorney General (PDAAG) Doha Mekki delivered public remarks that elaborated on the DOJ’s rationale. She stated that the information sharing safety zone has been "misinterpreted" and "misapplied to other contexts or industries that were never contemplated by the guidance." More specifically, with regard to the three prongs of the "safety zone" for information sharing:
- She questioned why the use of a third party to manage the exchange should be a factor, stating "exchanges facilitated by intermediaries can have the same anticompetitive effect as direct exchanges among competitors;"
- She observed that even data that are at least three-months old may be competitively-sensitive because of "the rise of data aggregation, machine learning, and pricing algorithms that can increase the competitive value of historical data for some products or services;" and
- She noted that the DOJ's enforcement actions and the case law suggest that having five or more participants in the information exchange "is no guarantee that the exchange will not harm competition, especially in situations where the companies exchanging the information collectively have significant shares of the relevant market."
The DOJ's announcement did not provide specifics as to how its approach to these issues and other issues addressed in the rescinded policy statements would change. The DOJ instead stated that "[r]ecent enforcement actions and competition advocacy in healthcare provide guidance to the public, and a case-by-case enforcement approach will allow the Division to better evaluate mergers and conduct in healthcare markets that may harm competition."
The FTC and the DOJ have historically recognized that participating in price or wage surveys can, in some circumstances, be both permissible and procompetitive; while in other circumstances, information exchanges can have an anticompetitive effect, or even be used as evidence of an agreement to fix prices, rig bids, allocate markets, or engage in other criminal conspiracies that are per se illegal. To distinguish the legitimate from the unlawful, PDAAG Mekki's remarks discussed the existing case law framework for analyzing information exchanges, citing to the two factors identified by the Supreme Court in United States v. Gypsum to help detect anticompetitive information exchanges: "the structure of the industry involved and the nature of the information exchanged." With regard to the first factor, PDAAG Mekki noted that the degree of concentration in the industry is relevant to the lawfulness of the information exchange. And with regard to the second factor, she noted the relevance of the relative freshness or staleness of the data, and the degree to which the data has been aggregated and anonymized. While these considerations were also reflected in the now-rescinded guidelines, the main difference is that with the withdrawal of the guidelines, businesses can no longer rely on the stated safety harbors that PDAAG Mekki criticized as "overly formalistic."
The Impact of the DOJ's Action
There can be little doubt that the scope of the withdrawal has impacts beyond the health care industry. The DOJ's withdrawal of these policy statements is consistent with the recent focus by the DOJ and FTC on information sharing arrangements, including the DOJ's significant settlements with poultry processers, who used a third party to disseminate sensitive wage information. It also suggests the potential demise of the Antitrust Guidance for Human Resources Professionals and the Antitrust Guidelines for Collaborations Among Competitors, which contain similar information-sharing safe harbors and expressly reference the now-withdrawn health care policy statements. PDAAG Mekki's public remarks regarding the withdrawal were not limited to the health care industry, calling for a "whole-government approach to anticompetitive information exchanges." And in light of the reliance previously given to the health care policy statements' safe harbor provision by all industries, the DOJ's action leaves businesses with more uncertainty than before last week.
While not explicitly mentioned in the DOJ's announcement, the DOJ also withdrew the statements establishing a joint purchasing safe harbor. There is little doubt that the considerations reflected in that safe harbor—the relative importance of the joint purchases to the seller and the relative importance of the joint purchases to the finished products of the purchasers—will continue to be critical considerations in assessing the lawfulness of joint purchasing agreements. Nevertheless, the withdrawal of the guidance means that businesses (including not only hospitals and health care providers, but also all businesses) can no longer rely on the certainty of their safe harbors in structuring their joint purchasing agreements.
It is noteworthy that the DOJ appears to have taken this action unilaterally. The DOJ and FTC jointly issued the three policy statements the DOJ is now withdrawing. However, the FTC has yet to issue a parallel statement indicating that they will no longer rely on this guidance. While it would be prudent to assume that these statements are withdrawn for all purposes, it is curious that the DOJ and FTC are not publicly aligned or coordinated on the current status of their jointly-issued policy statements.
