State Attorneys General Signal Enforcement Priorities For Competitor Collaborations

A group of state Attorneys General have shed light on certain key enforcement priorities as part of a joint public inquiry to update federal guidance for collaborations among competitors. The U.S. Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) issued the inquiry in February, seeking input after withdrawing their 2000 guidance in December 2024. The DOJ and FTC and indicated that new guidance could address developments in law, technology, and business practices while giving businesses clearer rules of the road.

While the agencies received numerous comments, one particularly notable submission came from the Attorneys General (AG) of 11 states and the District of Columbia (the “States”)¹. The AGs’ joint comment provides insight into how state Attorneys General – who are increasingly active antitrust enforcers – may approach high-profile competition issues.

Three themes stand out. First, the States favor flexible, fact-specific analyses over categorical rules. Second, they oppose carveouts and industry-specific exceptions that, they fear, could shield certain practices from antitrust scrutiny. Finally, the AGs identify several areas that warrant particular attention, in their view, including information-sharing arrangements, common pricing algorithms, and collaborations that function as mergers.

The States’ Analytical Framework: Preserving a Flexible, Fact-Specific Rule-of-Reason Analysis

The States largely endorsed the basic framework of the 2000 Guidelines, recognizing that competitor collaborations can be procompetitive and efficiency enhancing. At the same time, they emphasized the need to protect markets from collaborations that either (1) impose restraints that do not meaningfully further a legitimate procompetitive benefit, or (2) create or exacerbate asymmetrical access to information between buyers and sellers.

Accordingly, the States emphasized that the rule of reason should remain the principal framework for evaluating competitor collaborations that are necessary to achieve a procompetitive purpose and do not consist solely of naked restraints. They opposed categorical or industry-specific exceptions and urged an analysis tailored to the circumstances. Citing American Needle, Inc. v. National Football League, 560 U.S. 183 (2010), the States advocated a fact-specific assessment of competitive realities to determine whether a joint venture should be treated as a single entity or as a collaboration subject to Section 1 of the Sherman Act. And citing NCAA v. Alston, 594 U.S. 69 (2021), they also argued that a venture’s form should not dictate the level of scrutiny: Depending on the circumstances, either a quick-look or a more fulsome rule-of-reason analysis may apply.

The Ancillary Restraints Doctrine: Clarifying When Restraints Are Necessary to a Procompetitive Collaboration

The States also urged the DOJ and FTC to provide more detailed guidance on the ancillary restraints doctrine, which permits certain restraints that might otherwise be unlawful if they are “subordinate” and “reasonably necessary” to a legitimate, procompetitive collaboration. While this doctrine received only limited attention in the original 2000 Guidelines, the States advocated guidance making clear that a restraint is not ancillary merely because it accompanies or facilitates a lawful, procompetitive arrangement. Rather, in their view, it must be subordinate and collateral to a legitimate transaction, reasonably necessary to achieve that transaction’s procompetitive purpose, and an “essential or at least an important part” of an arrangement with potentially redeeming virtues.

Distinguishing Collaborations from Mergers: Preventing Merger-Like Collaborations from Escaping Merger Scrutiny

Additionally, the States criticized the 2000 Guidelines’ framework for treating competitor collaborations as horizontal mergers only when “the integration eliminates all competition among the participants in the relevant market” and the collaboration does not terminate within a “sufficiently limited period,” typically 10 years. The States viewed this framework as too limiting and warned that sophisticated parties should not be able to avoid scrutiny by structuring collaborations to operate as “mergers in all but name.” They therefore encouraged the DOJ and FTC to adopt a more flexible test for applying merger-analysis tools when a collaboration or agreement effectively operates like a merger.

Algorithmic Pricing: Identifying When Common Pricing Algorithms Constitute Concerted Action

The States also called for the DOJ and FTC to explain when competitors’ use of the same pricing algorithm, including through a common vendor, constitutes concerted action and may be subject to the per se rule against price fixing. They highlighted circumstances in which courts have found plausible concerted action, including when an algorithm pools competitors’ nonpublic, competitively sensitive information; competitors delegate pricing or supply decisions to the same algorithm; or a price increase would be contrary to each competitor’s unilateral interest absent an understanding that rivals would also raise prices. The States cautioned that simultaneous adoption is not required.

The States further noted empirical research suggesting that pricing algorithms may soften competition or learn tacitly collusive strategies. But they distinguished tacit coordination from an actionable agreement: The States urged strong enforcement in circumstances where, as they put it, “higher prices are the result of concerted action” (i.e., competitors’ conduct “crosses the line from tacit collusion to agreement”). In those circumstances, they recommended that future guidance make clear that the per se rule may apply to competitors’ use of common pricing algorithms or formulas.

Information-Sharing Agreements: Rejecting Bright-Line Safe Harbors in Favor of Holistic Review

The States also requested clearer DOJ and FTC guidance on when information-sharing practices may violate the antitrust laws and outlined an assertive approach to information exchange arrangements. Specifically, they argued that under certain, fact-specific circumstances, information exchanges could support a stand-alone antitrust violation.

The States also stressed that information exchanges should be analyzed holistically under the rule of reason and should not receive categorical protection merely because they involve aggregated or backward-looking data, pass through an intermediary, or include a relatively large number of sellers. In their view, these features may be relevant, but none is dispositive; courts should examine market structure, the nature of the information exchanged, and the restraint’s actual competitive effects.

Bottom Line for Organizations and Associations

Whether DOJ and FTC ultimately adopt the States’ suggestions, and how they handle the many other responses to their public inquiry, remains to be seen. In particular, it will be important to watch how the agencies reconcile calls for flexible, fact-specific antitrust enforcement with their stated desire to provide businesses with predictable and clear rules of the road.

Nonetheless, the AGs’ comment offers valuable insight into how several active state antitrust enforcers are approaching emerging issues involving competitor collaborations. Companies, trade associations, and other organizations should monitor these developments closely. As the DOJ and FTC develop new guidance and state Attorneys General continue to prioritize algorithmic pricing, information sharing, and other forms of competitor coordination, engaging antitrust counsel can help organizations assess and mitigate risk amid evolving enforcement priorities.

Footnote

1. Signatories include the Attorneys General of California, Colorado, Delaware, Illinois, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Tennessee, and Virginia.