DOJ Withdraws Policy Statements Including Guidance on Information Sharing Among Competitors

What Happened: The Department of Justice (DOJ) withdrew prior policy statements outlining permissible conduct in the healthcare industry. These policy statements include antitrust “safety zones” that have been in place for decades and have been relied on broadly by businesses in all sectors of the economy for allowing the exchange of information among competitors.

The Full Story: On February 3, the DOJ announced the withdrawal of “outdated antitrust policy statements related to enforcement in healthcare markets” that set out various “safety zones” for mergers, joint ventures, joint purchasing agreements, and joint information exchanges. Specifically, the DOJ has rescinded three policy statements published in 1993, 1996, and 2011. The 1996 and 2011 policy statements were issued jointly with the Federal Trade Commission (FTC), which has also been involved in reviewing the prior guidance, according to remarks by a senior DOJ official at an antitrust conference last week.

While these policy statements–and the announcement of their withdrawal–are specific to the healthcare industry as written, the safety zones established by the 1996 guidance concerning exchanges of price and cost information among competing healthcare providers have been widely interpreted to apply to information sharing arrangements among competitors, in general. Both the FTC and DOJ have cited to the safety zones regarding any contemplated information exchange among competitors and have also incorporated the safety zones into specific guidance in the HR context. The safety zones provided that, in general, the agencies would not challenge an information exchange if:

1. The exchange is managed by a third party, like a trade association;
2. The information provided by participants is more than three months old; and
3. At least five participants provide the data underlying each statistic shared, no single provider’s data contributes more than 25 percent of the “weight” of any statistic shared, and the shared statistics are sufficiently aggregated that no participant can discern the data of any other participant.

Removal of this policy statement signals the withdrawal of protection from antitrust scrutiny for conduct that previously fell within the safety zones. Another widely relied-upon safety zone in the 1996 Policy Statement applied to joint purchasing arrangements, in which the agencies stated they would not challenge arrangements where:

1. The purchases account for less than 35 percent of the total sales of the purchased product or service; and
2. The cost of the products and services purchased jointly accounts for less than 20 percent of the total revenues from all products or services sold by each competing participant in the joint purchasing agreement.

Information exchanges have faced greater scrutiny in recent years, with the DOJ reaching settlements to resolve allegations that slaughterhouses shared wage information in the poultry industry and that television broadcasters exchanged intelligence on local advertising in violation of antitrust law.

The DOJ pointed to advances in technology as the rationale for rescinding this guidance. The DOJ official said in her remarks that it was necessary to reconsider the approach to information sharing now that competitors have access to information and tools that allow them to de-anonymize raw data and use computer algorithms to reverse engineer the pricing strategies of their rivals.

Why This Matters: Without safety zones to rely on, there is greater uncertainty and potential antitrust risk created by engaging in an information exchange with competitors. Businesses should review their current practices regarding information exchanges and consult with antitrust counsel to take into account the likely anticompetitive effects and any procompetitive justifications of any exchange they may be involved in or considering.