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A Fresh Take

Insights on M&A, litigation, and corporate governance in the US.

| 3 minutes read

Safe No More: DOJ Highlights Information Exchange in Withdrawal of Enforcement Policy Statements

On February 2, 2023, Deputy Assistant Attorney General Doha Mekki of the DOJ Antitrust Division previewed the agency’s withdrawal of longstanding healthcare policy relating to information sharing. Although focused on healthcare, the withdrawal, officially announced the following day, serves as a signal for how the US antitrust agencies are considering information sharing practices more broadly. The DOJ and FTC policy, expressed in their Statements of Antitrust Enforcement Policy in Healthcare (1996) (Policy Statement), included a “safety zone” for certain kinds of information exchanges, meaning that the agencies would not take enforcement action against those kinds of exchanges. With the withdrawal, the safety zone no longer applies, raising investigation and enforcement risk for information exchanges including in sectors beyond healthcare.

In explaining the agency’s rationale for withdrawal, Mekki called the safety zone a relic of “a time when information was shared in manila envelopes and through fax machines.” According to the DOJ, the volume of information and the speed with which information is shared today changes the potential risk stemming from its exchange. Importantly, however, information exchanges, even when among competitors, are not automatically unlawful. Nevertheless, this latest in a series of policy changes from one of the US antitrust agencies further signals heightened enforcement risk across a range of conduct.  

A Seemingly Narrow Information Exchange Safety Zone but with Broad Adoption and Applicability

The Policy Statement was healthcare focused, but the agencies’ guidance on information exchanges and the relevant safety zone was long viewed as applying outside of the healthcare sector. Although explained as increasing transparency by eliminating the gap between dated agency policy and current enforcement, the withdrawal of the Policy Statement and two other related guidance documents raises questions about the validity of other policy statements, creating uncertainty for businesses. For example, the safety zone was adopted in the FTC/DOJ Antitrust Guidelines for Collaborations Among Competitors (2000) (Competitor Collaboration Guidelines) and an FTC blog post (2014). Mekki’s statement makes no reference to the Competitor Collaboration Guidelines or whether the Policy Statement remains in place at the FTC.  

The relevant safety zone provided that an information exchange was unlikely to raise substantial concerns if:

  1. The information exchange is managed or facilitated by a third party;
  2. The information provided by participants is more than three months old; and 
  3. At least five participants provided data, where no individual firm’s data represent more than 25% of the shared statistics on a weighted basis, and the shared statistics are sufficiently aggregated that no participant can discern the data of any other participant.

According to the agencies’ prior policy statements, an exchange structured in this way would not have been challenged absent extraordinary circumstances. By withdrawing this guidance, the agencies are signaling that such information exchanges should no longer be considered presumptively legal or raising low enforcement risk. This leaves businesses to re-evaluate existing ongoing exchanges and to analyze more closely future exchanges.

Information Exchanges Have Long Faced Greater Scrutiny by Non-US Enforcers

The United States is not the only jurisdiction taking a closer look at information exchanges, so companies must be careful to implement the appropriate information sharing safeguards regardless of where they are located and operate. Authorities in other jurisdictions, such as Europe, the UK, and Asia, continue to increase their level of scrutiny of information exchanges. For example, information exchanges between banks have been at the heart of the European Commission’s large financial services antitrust cases over the past ten years, including its investigations of alleged cartels in the LIBOR, interest rate derivatives, YIRD, and forex markets. There have also been high-profile examples, such as the Altice cases, of enforcement in the context of information exchanges as part of pre-closing due diligence and integration planning. More recently, China amended its antitrust rules to now include a prohibition on hub-and-spoke information exchanges, where the ‘hub’ is not a member of the cartel but acts as a conduit for information among the cartel members. Fines for this type of ‘facilitation’ violation would be the same as those for parties to anticompetitive agreements.

The Big Picture

The DOJ’s policy change further underscores the increased risk of enforcement against certain practices. In the past few years, the FTC has withdrawn its support of the 2020 Vertical Merger Guidelines, announced an initiative with the DOJ to revise the 2010 DOJ/FTC Horizontal Merger Guidelines, issued a new policy statement outlining their enforcement policy under Section 5 of the FTC Act, and most recently, announced a proposed rule to ban nearly all non-competes. Even if certain business practices have been deemed lower risk for years, it is essential that companies regularly re-evaluate their compliance efforts to keep up with today’s changing enforcement environment.