The US DoJ publishes a statement cautioning that the antitrust laws remain in effect and agreements among competitors that set commercial terms may be illegal

Antitrust-Related Considerations

Collaborations With Competitors

Companies seeking to collaborate with competitors in response to the COVID-19 crisis must keep in mind, as the Department of Justice has recently cautioned, that the antitrust laws remain in effect, and agreements among competitors that set commercial terms may be illegal. Nevertheless, companies may collaborate in order to promote important public and commercial interests under certain circumstances. For example, information sharing and collaborations between companies to improve virus response, minimize supply chain disruption, or promote health and safety benefit the public and are thus unlikely to violate the antitrust laws, provided the companies continue to otherwise compete and do not also agree to set commercial terms. Companies also have the right, under the Noerr-Pennington doctrine, to collectively petition the government, including in connection with lawmaking and policy changes contemplated in response to the crisis. Finally, as federal agencies have stated following previous natural disasters, collaborations to combine critical resources or services to meet consumer needs or to combine distribution networks to bring goods to consumers in a more efficient or speedy fashion can be procompetitive as long as they are narrowly focused and limited in scope. Companies that are considering collaborations with competitors in response to the COVID-19 crisis should consult with legal counsel before proceeding.

Anti-Price-Gouging Statutes

Companies considering even small price increases in response to changes in supply and demand in the wake of the COVID-19 outbreak should be aware of anti-price-gouging (APG) statutes. While no U.S. federal statute is specifically designed to combat price gouging, at least 34 states and the District of Columbia have explicitly enacted APG statutes or regulations that generally prohibit excessive price increases on certain categories of goods and services upon the occurrence of a triggering event, typically a declared state of emergency. COVID-19 has raised significant concerns among state attorneys general about the practice of price gouging. For example, New York Attorney General Letitia James recently issued numerous cease-and-desist letters to merchants charging exorbitant prices for hand sanitizer and disinfectant spray and emphasized her office would continue to investigate reports of price gouging throughout the state. In some states (e.g., California) price increases on essential goods of as little as 10% can and will trigger enforcement, punishable by significant per-violation civil or criminal monetary penalties or even imprisonment. Companies that operate marketplaces on which third parties sell their goods also should ensure that price gouging is not occurring on their platforms. In Europe, antitrust agencies are closely monitoring potential price changes in the context of COVID-19. For example, some companies are under investigation by Italian antitrust regulators after prices for products such as hand sanitizer and disinfectant skyrocketed as the coronavirus outbreak intensified.

US Merger Control

Both the Department of Justice and the Federal Trade Commission have instituted temporary procedures for the electronic filing of Hart-Scott-Rodino forms, with the FTC prohibiting hard-copy filings altogether. The FTC also has announced that it will cease granting early termination of the HSR waiting period for all transactions. Both agencies also announced other changes to merger processes. The DOJ will temporarily: (i) request that merging parties subject to in-depth investigations agree to certain timing agreement revisions, including adding an additional 30 days to complete the DOJ’s review; (ii) conduct all meetings by phone or video conference, absent extenuating circumstances; and (iii) postpone depositions and reschedule using secure videoconferencing capabilities. The FTC likely will implement similar changes and has announced that most personnel will be working remotely and prohibited from traveling, and that almost all internal and external meetings will be done via telephone or videoconference.

EU Merger Control and State Aid

The European Commission is encouraging companies to delay merger notifications until further notice, where possible. The Commission is adopting every measure to ensure business continuity but, at this stage, is likely to prioritize its resources on the open, ongoing merger investigations. Other antitrust authorities have issued similar statements, imposing or recommending a delay in merger notifications, and review periods are impacted as a result of constraints in remote working capabilities by a number of agencies. In parallel, the Commission has pledged to fast-track the state aid review of support measures by EU national governments to help companies affected by the COVID-19 crisis access vital liquidity and ensure their commercial viability. The first COVID-19-related state aid package, presented by Denmark, was approved on March 12, 2020, in just 24 hours, and many more are expected to follow. Dedicated guidelines for COVID-19-related state aid are expected to be released in the coming days to cover direct subsidies and tax cuts to companies up to a certain amount. Such guidelines are also expected to cover state guarantees for loans taken by companies from banks, subsidized public loans to companies and specific rules allowing banks to channel state aid directly to companies in need. For additional information, see our March 16, 2020, client alert “European Commission Delays Merger Notifications Until Further Notice, Develops Emergency State Aid Response to COVID-19 Outbreak.”

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Auteurs

  • Skadden, Arps, Slate, Meagher & Flom (New York)
  • Skadden, Arps, Slate, Meagher & Flom (Brussels)
  • Skadden, Arps, Slate, Meagher & Flom (Washington DC)
  • Skadden, Arps, Slate, Meagher & Flom (New York)
  • Skadden, Arps, Slate, Meagher & Flom (Washington DC)
  • Skadden, Arps, Slate, Meagher & Flom (Washington DC)

Citation

Karen M. Lent, Giorgio Motta, Tara L. Reinhart, Clifford H. Aronson, Steven C. Sunshine, David P. Wales, The US DoJ publishes a statement cautioning that the antitrust laws remain in effect and agreements among competitors that set commercial terms may be illegal, 9 mars 2020, e-Competitions March 2020, Art. N° 93897

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