DOJ Withdraws Longstanding Policy Statements on Information Sharing and Eliminates Safe Harbors
February 7, 2023
On February 3, 2023, the Department of Justice (“DOJ”) withdrew three policy statements: Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (Sept. 15, 1993); Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996); and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011) (the “Withdrawn Statements”).1 Although DOJ initially directed the trio of statements at the health care industry, companies across a wide range of industries2 rely on the Statements to assess the legality and risk of collaborative conduct, particularly information exchanges and joint purchasing.
DOJ’s withdrawal of the “overly permissive” and “out of date” Statements3 puts an end to a suite of “safe harbors” vis-à-vis DOJ enforcement: those safe harbors assured companies that if they met set criteria when engaging in certain types of joint conduct, DOJ would (absent exceptional circumstances) view the conduct as legitimate and pro-competitive. DOJ has emphasized, in particular, the abrogation of the information-sharing safe harbor, which many companies throughout the economy have used to define the scope of their conduct. Those companies have long viewed information-sharing as “safe” if (1) an independent third party aggregated information (2) that was at least three months old (3) in a way that prevented identification of any single company’s competitively sensitive data.
In the speech announcing the withdrawal, DOJ did not issue new policy statements. Companies who have relied on these criteria therefore must re-examine their conduct under traditional antitrust principles and re-assess the risk of government enforcement. More broadly, companies should be aware both that (1) DOJ appears to be scrutinizing information exchanges among competitors more closely in both conduct and merger investigations, and (2) other forms of collaborative conduct, such as joint purchasing agreements and certain types of joint ventures, have also lost “safe harbor” protection.
The Withdrawn Policy Statements
When DOJ and FTC issued the Withdrawn Statements, they did so with the stated goal of making healthcare more accessible and affordable. And, at the time, the agencies apparently saw the collaborative conduct described in the statements as likely to facilitate that goal. Hence, they carved out the safety zones to make it easier and more likely that competitors would engage in procompetitive collaborative conduct such as certain types of information exchanges, joint ventures, and joint purchasing agreements. As to each safety zone, the statements explain why the conduct would not, in the agencies’ view, violate the antitrust laws—either because it was unlikely to cause anticompetitive harm or because the procompetitive effects would be so great that they almost always would outweigh any anticompetitive harm. Specifically:
- The 1993 Statement. The first policy “statement” to offer safe harbors was, in fact, made up of six separate statements, addressing mergers, joint ventures involving high technology, information-sharing,4 and joint purchasing arrangements5. In 1994, the agencies expanded the scope of the Statement to include joint ventures involving expensive services.
- 1996 Policy Statement. In 1996, the agencies updated their guidance, emphasizing that they intentionally defined the safety zones using criteria that are “relatively easy to apply” and provide “a high degree of confidence that arrangements falling within them are unlikely to raise substantial competitive concerns.”6
- 2011 Policy Statement.7 Following the passage of the Affordable Care Act, the agencies released guidance explicitly directed to Accountable Care Organizations (“ACOs”).
The Statements signaled the agencies’ view that a lack of collective market power typically meant that there was only minor risk of anticompetitive harm. Notably, companies that used information-sharing to lower costs, drive innovation, or otherwise benefit consumers were engaging in procompetitive conduct, and using third parties to aggregate individual companies’ data into an index could effectively minimize the risk that the information would be used for anticompetitive purposes. Absent extraordinary circumstances, the agencies would not bring an enforcement action because the procompetitive effects of such conduct would almost always outweigh any anticompetitive harm.
In each iteration, the agencies confirmed conduct falling outside the safety zone “may be procompetitive and lawful,”8 but to determine the risk of exposure to government enforcement, companies would have to rely on traditional antitrust principles.
Assessing the Risk of DOJ Enforcement
With the information exchange safe harbor withdrawn, traditional antitrust principles will drive the analysis of whether information sharing faces risk of government or private-plaintiff action. Information exchanges facilitating a conspiracy to fix prices or wages or allocate markets are per se illegal, and may also be prosecuted criminally.9 Other information exchanges are subject to the rule of reason analysis that involves weighing of procompetitive benefits and anticompetitive risks to determine if the conduct is on balance procompetitive or anticompetitive. In announcing the withdrawal of the safe harbor, DOJ Principal Deputy Assistant Attorney General Doha Mekki explained that DOJ’s analysis of information exchanges under traditional rule of reason principles is also evolving:
- Industry Concentration. Traditionally, the risk of anticompetitive effects was considered significantly lower in unconcentrated industries.10 Ms. Mekki indicated DOJ has “observed anticompetitive information exchanges in industries that are not characterized by a small number of firms,”11 suggesting that lack of industry concentration is less likely to protect information exchanges from scrutiny going forward.
- Age of Information. Traditionally, exchanges involving current or future information were considered particularly risky, while exchanges involving older data were not seen as posing serious anticompetitive risks. Ms. Mekki noted, however, that “the rise of data aggregation, machine learning, and pricing algorithms  can increase the competitive value of historical data for some products or services.”12 In other words, DOJ now views backward-looking data as potentially competitively sensitive.
- Aggregation and Use of Third-Party Intermediaries. Traditionally, relying on a third party to aggregate individual companies’ data into an industry average was seen as a safeguard against potential anticompetitive effects. But Ms. Mekki noted that algorithms may now “glean insights about the strategies of a competitor” even from aggregated data, and “exchanges facilitated by intermediaries can have the same anticompetitive effect as direct exchanges among competitors.”13
Ms. Mekki noted two specific situations that may particularly heighten risks of DOJ enforcement:
- Competitors adopting the same pricing algorithms; and
- Mergers involving firms in industries where participants have engaged in anticompetitive information exchanges, which will face a particularly tough review from DOJ even if the merger does not significantly increase market concentration.
DOJ guidance is not the law, and courts will continue to assess the anticompetitive potential of information sharing based largely on (1) the “industry involved,” with industries involving homogeneous goods or fewer participants posing higher risk; and (2) “the nature of the information exchanged,” with information pertaining to prices, output, costs, or other competitively sensitive variables more likely to lead to antitrust concerns.14 But the withdrawal of the safe harbor and the associated announcement mark a shift in DOJ policy, suggesting that lack of industry concentration, staleness of exchanged information, and use of third-party intermediaries to aggregate data are now less likely to ward off agency scrutiny.
DOJ’s announcement signals heightened scrutiny and greater skepticism of information exchanges. Companies should:
- Examine the extent of their reliance on the safe-harbor criteria. Companies that relied on now-withdrawn safe harbors to engage in information exchanges (including industry indexes or benchmarks) involving old, aggregated data should reassess antitrust risk using traditional rule of reason criteria. Companies that relied on the now-withdrawn joint purchasing safe harbor also should reassess risk, even though DOJ did not specifically signal greater emphasis on enforcement in this area.
- Re-assess their antitrust risk of information sharing even if the company did not rely on the safe harbor. DOJ’s announcement signals that it will be more skeptical of some factors that traditionally were seen to decrease the antitrust risk of information exchanges, including lack of industry concentration, use of old data, and use of third parties to aggregate data. To the extent a company’s analysis or antitrust policies relied on these factors, a reassessment is recommended.
- Review and revise policies. Companies should periodically review their compliance policies and employee training to ensure that they reflect DOJ’s emerging guidance on information exchanges.
O‘Melveny lawyers regularly counsel clients on issues involving information exchanges and other competitor collaborations, and stand ready to assist with any of the issues discussed in this alert. Please contact the attorneys listed on this article or your O’Melveny counsel to help you navigate this swiftly moving area of law.
1 Dep’t of Justice, Justice Department Withdraws Outdated Enforcement Policy Statements | The Withdrawal Best Serves the Interests of Healthcare Competition (Feb. 3, 2023) (hereinafter, “Withdrawal Notice”).
2 Based on DOJ’s representations that it did not intend to treat health care any “more strictly or more leniently” than other industries, companies across the U.S. economy understandably also relied on these guideposts for limiting their participation to “safe” conduct. See, e.g., Department of Justice & Federal Trade Commission, Statements of Antitrust Enforcement Policy in Health Care, at 3 (Aug. 1, 1996), available at https://www.justice.gov/atr/page/file/1197731/download (the “1996 Statement”).
3 See Withdrawal Notice, supra note 1.
4 Fee-related information exchanges were covered by the safe harbor if: (1) the collection was managed by an independent third party; (2) information shared among competitors was more than three months old; and (3) the data was based on submissions from at least five providers, with no provider accounting for more than 25 percent of the input for a given statistic, and sufficiently aggregated to prevent identification of the prices charged by a single provider. 1996 Statement, at 45.
5 Joint purchasing arrangements were covered by the safe harbor if: (1) the group’s purchases account for less than 35 percent of the total purchases of the relevant product or service, and (2) the cost of the product or service being jointly purchased accounted for less than 20 percent of the total revenues from all products or services sold by each participant in the joint purchasing arrangement. 1996 Statement, at 54-55.
6 1996 Statement, at 6.
7 The 2011 Policy Statement references the 2000 Competitor Collaboration Guidelines summarized below and states that the agencies will consider factors in their rule of reason analysis as described in the 2000 Guidelines.
8 2011 Statement, at 9.
9 See, e.g., United States v. Aiyer, 33 F.4th 97 (2d Cir. 2022).
10 Todd v. Exxon Corp., 275 F.3d 191, 208 (2d Cir. 2001).
11 Dep’t of Justice, Principal Deputy Assistant Attorney General Doha Mekki of the Antitrust Division Delivers Remarks at GCR Live: Law Leaders Global 2023 (Feb. 2, 2023).
14United States v. U.S. Gypsum Co., 438 U.S. 422, 441 n.16 (1978); Todd, 275 F.3d at 211-12.
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