Client Alert
Antitrust in the Time of COVID-19
April 7, 2020
By:
A lot has changed in the business world since the COVID-19 pandemic began sweeping across the United States and the rest of the world. Social distancing requirements, lockdown orders, travel restrictions, mass layoffs, and disrupted supply chains have businesses scrambling to deal not only with a variety of human resource issues caused by a frightening public health crisis, but also with an economy that appears to be in danger of slowly grinding to a halt. Industry trade associations are stepping up to provide members with important advice and guidance on a variety of issues arising from the COVID-19 pandemic. In many cases, these communications are serving as a forum for the exchange of information and discussions of best practices in addressing the current crisis.
Collaborative discussions and cooperation among competitors in the context of trade association meetings can provide significant benefits to members, the industry at large and the public on matters such as health, safety, and legal compliance – particularly in an unprecedented crisis like the current pandemic. It is important to remember, however, that the COVID-19 pandemic provides no justification or defense for anticompetitive behavior. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) have made abundantly clear that the antitrust laws of the United States remain fully in effect during the COVID-19, and both agencies stand ready to sanction businesses that engage in anticompetitive conduct during this time of crisis.
Trade associations and their members should be particularly vigilant to avoid discussions or agreements on topics considered “per se” illegal – i.e., conduct for which the courts will consider no excuse or defense. Agreements relating to (1) the prices that should be charged for products or services (or the wages, benefits or severance arrangements that will be provided to employees); (2) allocation of customers or markets; or (3) restrictions on output are all considered per se illegal conduct. For example, agreements among competitors to set prices, close or restrict the scope of their operations, furlough or limit the hours or wages of their employees, or refrain from hiring one another’s employees during the crisis would all be considered illegal per se violations of the antitrust laws.
In recognition of the unprecedented nature and scope of the COVID-19 crisis, however, DOJ and the FTC recently announced expedited procedures for businesses seeking guidance about collaborative efforts to protect the health and safety of Americans during the COVID-19 pandemic. On April 4, 2020, DOJ issued the first business review letter under the expedited procedures, allowing certain competitors to collaborate in providing medical supplies to federal agencies. The DOJ guidance was issued only five days after the affected companies requested guidance.
Trade associations and their members should consult with antitrust counsel before engaging in discussions between or among competitors on competitively sensitive matters, including those relating to the COVID-19 crisis.
GKG Law has successfully obtained Business Review Letters from DOJ on behalf of both trade associations and corporate clients. If you have questions about antitrust or other matters, please contact David Monroe, Steven Fellman, or another member of our Trade & Professional Associations team.