By Anna Konradi Behrmann, Andrew Dettmer & Kathy Osborn (Faegre Drinker Biddle & Reath LLP)
Businesses are taking drastic measures to protect consumers and employees during the COVID-19 (commonly referred to as the coronavirus) outbreak, and they are utilizing trade associations and other meetings with competitors to learn about best practices and strategies for protecting their businesses, their employees and their customers. However, businesses must remember that there is no “emergency” exception to the federal, state and international antitrust laws, and companies must take care to avoid anticompetitive conduct that could have dire legal consequences as they navigate this pressing global health threat.
Antitrust Implications of Trade Association and Competitor Meetings During COVID-19 Outbreak
In recent days, trade association and competitor meetings have convened to discuss competitors’ responses to the COVID-19 health crisis. Such meetings are important, procompetitive opportunities to identify best practices relating to safety, technology and logistics for remote working and other important strategies, and, therefore, are extremely beneficial to consumers and employees. These meetings also take the procompetitive form of webinars or other training formats for employers to learn the laws applicable to, e.g., requiring employees to work remotely and compensating them for the same. That said, these competitor meetings also can pose significant antitrust risks to businesses to the extent participants exchange competitively sensitive information or form anticompetitive agreements relating to topics such as prices, wages, benefits and business strategy.
As a reminder, under the federal and state antitrust laws, agreements between competitors and potential competitors regarding competitively sensitive topics are “per se” illegal, meaning that such agreements are deemed unlawful regardless of any procompetitive benefits that might exist. Such “per se” violations of the antitrust laws are punishable with criminal fines for businesses, and in severe situations, criminal fines and prison sentences of up to 10 years for culpable individuals. While merely exchanging competitively sensitive information (and not forming agreements with respect to it) is subject to the comparatively relaxed “rule of reason” standard (where procompetitive benefits are weighed against any potential anticompetitive effects), such exchanges still pose significant antitrust risks to the extent they can facilitate implicit agreements among competitors.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have advised that there is no exception to these rules for emergency situations. In fact, in recent days the DOJ and the FTC both have issued statements warning businesses against engaging in anticompetitive practices (specifically, price gouging and false advertising) in the wake of the COVID-19 crisis. Businesses that engage in anticompetitive conduct at this time should expect a swift reaction from the federal enforcement agencies, particularly if their conduct exploits vulnerable workers or consumers.