The Department of Justice (DOJ) Antitrust Division recently withdrew three sets of policy statements regarding the US antitrust agencies' enforcement approach to conduct in the healthcare industry that may have broader implications for treatment of information sharing agreements under US antitrust law. The policy statements included a safety zone framework for sharing competitively sensitive information without risk of antitrust liability that the agencies have extended beyond healthcare sectors.
DOJ's withdrawal statement, and a contemporaneous speech by the Principal Deputy Assistant Attorney General of DOJ's Antitrust Division, Doha Mekki, highlight concerns about the guidance on exchange of nonpublic information among competitors. With the withdrawal, information sharing arrangements both inside and outside of the healthcare industry may be subject to increased government scrutiny. Companies that have shared or are continuing to share industry information based on the now withdrawn guidance should be prepared to review current information sharing practices and evaluate the potential risks given this development.
Background: Information Sharing Safety Zone Framework
In 1993, 1996 and 2011, DOJ and the Federal Trade Commission (FTC) issued a series of policy statements regarding antitrust enforcement in healthcare.1 The policy statements provided guidance for various conduct, including participation in exchanges of price and cost information.2 The August 1996 policy statements established a safety zone framework that permitted healthcare providers to participate in surveys on prices for healthcare services and personnel compensation details.3
According to the policy statement, this safety zone would apply where (1) the survey was managed by a third party, (2) the information collected for the survey was more than three months old, (3) there were at least five providers reporting data for each statistic, and none of the participating providers' data constituted more than 25 percent of that statistic on a weighted basis, and (4) information was sufficiently aggregated to prevent recipients from identifying the source of any specific information on pricing.4
The safety zone framework on information sharing was eventually expanded beyond healthcare. In 2014, the FTC issued a public statement applying this safety zone framework generally,5 and DOJ cited the framework in its guidance to other industries, including in its guidance to human resource professionals.6
DOJ Withdraws Policy Statements on Information Sharing
On February 2, one day before DOJ officially withdrew the policy statements, Doha Mekki, the Principal Deputy Assistant Attorney General of DOJ's Antitrust Division, gave a speech on the agency's shifting views on information sharing.7 Mekki announced that DOJ would withdraw several policy statements regarding healthcare, including the 1993 and 1996 statements defining the safety zone framework for information sharing. She said that DOJ "does not have immediate plans to replace them."8
Mekki stated that DOJ was "no longer confident that the documents fully reflect market realities, the risk of serious competitive harm, or the full scope of liability under the antitrust laws."9 She said that "new technologies or other changes in market realities have altered the competitive value of different types of data," making DOJ's "traditional guide posts . . . unhelpful in answering . . . [whether] competition [is] likely to diminish" as a result of exchanging certain types of information.10
Mekki explained that DOJ no longer believes that using third-party intermediaries to aggregate data is necessarily sufficient to protect competition because "exchanges facilitated by intermediaries can have the same anticompetitive effect as direct exchanges among competitors. In some instances, data intermediaries can enhance—rather than reduce—anticompetitive effects."11 She continued that "the distinctions between past and current or aggregated versus disaggregated data may be eroded" by "high-speed, complex algorithms."12 Finally, Mekki said that DOJ's concern is heightened "[w]here competitors adopt the same pricing algorithms," which she said may "lead to tacit or express collusion."13
On February 3, DOJ issued a press release formalizing the withdrawal of the healthcare policy statements, observing that "the statements are overly permissive on certain subjects, such as information sharing," and that going forward, DOJ plans to adopt a "case-by-case" enforcement approach and not apply a blanket safety zone.14 It remains unclear whether the FTC will follow suit and withdraw the policy statements.
Reevaluating Information Sharing Practices and Policies
With DOJ's withdrawal of the policy statements, companies should be prepared to re-evaluate existing and future information sharing policies and practices. Companies may need to reconsider their participation in programs that collect and distribute non-public industry data through third-party intermediaries. They should carefully scrutinize algorithmic software that compiles pricing or other data from industry participants to drive business decisions, especially when the algorithm includes data from a small set of competitors.
Moving forward, antitrust enforcers may investigate or challenge as unlawful a broader array of agreements to share information —even if the arrangement is not in furtherance of any price-fixing agreement. As a result, companies should coordinate closely with antitrust counsel before sharing any non-public information regarding pricing, capacity, salaries, costs, or other competitively- sensitive business information with third parties that could be considered competitors or that may distribute the information among competitors. These sorts of arrangements might include, for instance, surveys regarding industry prices, capacity, or wages that have long existed, for which antitrust-related safeguards have been in place, and that have not traditionally been considered controversial.
Footnotes
1. Department of Justice, Press Release "Antitrust Enforcement Policy Statements Issued for Health Care Industry" (Sept. 15, 1993), https://www.justice.gov/archive/atr/public/press_releases/1993/211661.htm; Department of Justice and FTC, Statements of Antitrust Enforcement Policy in Health Care (1996), https://www.justice.gov/atr/page/file/1197731/download; Department of Justice and FTC, Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011), https://www.justice.gov/sites/default/files/atr/legacy/2011/10/20/276458.pdf.
2. The policy statements also address certain health care industry mergers, joint ventures, and accountable care organizations.
3. Department of Justice and FTC, Statements of Antitrust Enforcement Policy in Health Care (1996), https://www.justice.gov/atr/page/file/1197731/download.
4. Id.
5. Michael Bloom, Information Exchange: Be Reasonable, FTC Bureau of Competition (Dec. 11, 2014). https://www.ftc.gov/enforcement/competition-matters/2014/12/information-exchange-be-reasonable.
6. See Department of Justice and FTC, Antitrust Guidance for Human Resource Professionals, 5 (2016); see also Department of Justice and FTC, Antitrust Guidelines for Collaborations Among Competitors, 26 n. 53 (2000).
7. Doha Mekki, Principal Deputy Assistant Attorney General, Antitrust Division, Remarks at GCR Live: Law Leaders Global 2023 (Feb. 2, 2023), https://www.justice.gov/opa/speech/principal-deputy-assistant-attorney-general-doha-mekki-antitrust-division-delivers-0.
8. Id.
9. Id.
10. Id.
11. Id.
12. Id.
13. Id.
14. Department of Justice, Press Release, "Justice Department Withdraws Outdated Enforcement Policy Statements" (Feb. 3, 2023), https://www.justice.gov/opa/pr/justice-department-withdraws-outdated-enforcement-policy-statements.
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