The US Department of Justice (DOJ) Antitrust Division is withdrawing three enforcement policy statements that provided important guidance on the exchange of competitively sensitive information through third parties. The guidance previously created a safe harbor for market benchmarking surveys that were (1) administered through a third party, (2) historical, and (3) anonymous. The withdrawal of this guidance creates uncertainty regarding how companies should approach market research and benchmarking activities and may signal increased scrutiny from federal enforcers going forward.
Principal Deputy Attorney General Doha Mekki announced the recission at a February 2 conference in Miami. She stated that the Antitrust Division does not have current plans to replace the policy statements.
The Antitrust Division rescinded three DOJ and Federal Trade Commission (FTC) enforcement policy statements (collectively, the Guidance) regarding the exchange of competitively sensitive information in healthcare markets:
While each of these statements relates by its terms to the healthcare markets, practitioners have long viewed the Guidance as broadly addressing the exchange of information through third parties. Indeed, the FTC has described the Guidance as providing a “safety zone” for data exchanges (regardless of industry) if
In a February 3 press release, the Antitrust Division explained that the “withdrawal of the three statements is the best course of action for promoting competition and transparency. . . . [T]he statements are overly permissive on certain subjects, such as information sharing, and no longer serve their intended purposes of providing encompassing guidance to the public.”[5] Rather than replacing these statements, DOJ stated that “[r]ecent enforcement actions and competition advocacy in healthcare provide guidance to the public, and a case-by-case enforcement approach will allow the [Antitrust] Division to better evaluate mergers and conduct in healthcare markets that may harm competition.”[6]
DOJ’s withdrawal of the Guidance does not itself change the law on information exchanges. Generally speaking, under Section 1 of the Sherman Act, the exchange of competitively sensitive information is not per se illegal unless the exchange is predicated on an agreement to fix prices, rig bids, or allocate customers (or any other per se unlawful activity). All other exchanges of information among market participants are evaluated under the rule of reason.[7]
The rule of reason framework entails evaluating the procompetitive benefits of the information exchange against any anticompetitive effects stemming from the exchange. Sharing competitively sensitive information among competitors, including unit prices, price floors, costs, output, customers, compensation to workers, or strategic planning is more likely to give rise to increased antitrust scrutiny.[8] By contrast, FTC and DOJ had previously opined that “highly technical” information exchanges, such as information containing cybersecurity threats, is not as likely to raise anticompetitive concerns when shared among competitors because it could improve the security, availability, integrity, and efficiency of the United States’ information systems.[9]
Prior to DOJ’s recission of the Guidance, market participants were generally free to respond to third-party surveys regarding market conditions provided that the survey was sufficiently anonymized and historical. In addition, companies have commonly participated in third-party surveys regarding historical labor conditions including wage and hiring surveys. In light of the withdrawal of the Guidance, there is no longer a clearly delineated “safety zone” that exempts such surveys from antitrust enforcement.
DOJ’s withdrawal of the Guidance signals potential increased federal scrutiny of competitors sharing data with one another through intermediaries. In addition, state law enforcement agencies, which frequently align with the agenda of federal law enforcement, could further subject information sharing agreements to an additional layer of review at the state level.
At this early stage, the extent to which the DOJ will ramp up its review of information sharing practices is unknown. But in light of the DOJ’s actions, companies that participate in certain types of market benchmarking activities—which may include, among other things, the use of artificial intelligence, pricing algorithms, or other advanced marketing tools—should evaluate with antitrust counsel whether, and to what extent it is advisable, to continue sharing information through third-party data aggregators.
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[1] DOJ’s and FTC’s 1993 policy statement defined a “safety zone” for hospitals that were sharing information on the cost of services and employee wages. The “safety zone” was limited to data that was more than three months old, managed independently, and aggregated to anonymize the individual hospitals involved (with no individual provider’s information representing more than 25% of the data). The 1993 policy statement also established an expedited review process for companies that wanted to seek guidance on proposed information sharing arrangements. See U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement Policy Statements Issued for Health Care Industry (Sept. 15, 1993), at 5.
[2] In 1996, DOJ and FTC published an updated policy statement that explained that information exchanges involving certain types of data, such as medical outcome information, historic fees, and/or methods of reimbursement, did not raise anticompetitive concerns “absent extraordinary circumstances.” See U.S. Dep’t of Justice & Fed. Trade Comm’n, Statements of Antitrust Enforcement Policy in Health Care (Aug. 1, 1996), at 41, 44. DOJ and FTC further explained that the “safety zone” did not provide safe harbor for “negotiations between unintegrated providers and purchasers” that sought to reach agreements on fee structures and related terms. Id. at 45. The 1996 policy statement also clarified that while surveys initiated by nonproviders “may not raise competitive concerns,” exchanges of future pricing data are generally considered anticompetitive. Id. at 46-47, 51. Per DOJ and FTC, these information sharing agreements would be evaluated on a case-by-case basis, when the subject information was provided to healthcare purchasers. Id.
[3] In 2011, DOJ and FTC cautioned account care organizations (ACOs) that were participating in certain information sharing arrangements because they could “facilitate collusion among ACO participants.” See U.S. Dep’t of Justice & Fed. Trade Comm’n, Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (Oct. 20, 2011), at 10.
[4] Michael Bloom, FTC Bureau of Competition, Information Exchange: Be Reasonable (Dec. 11, 2014).
[5] Press Release, U.S. Dep’t of Justice, Antitrust Division, Justice Department Withdraws Outdated Enforcement Policy Statements: The Withdrawal Best Serves the Interests of Healthcare Competition (Feb. 3, 2023).
[6] Id.
[7] See United States v. United States Gypsum Co., 438 U.S. 422, 441 n.16 (1978) (“The exchange of price data and other information among competitors does not invariably have anticompetitive effects; indeed such practices can in certain circumstances increase economic efficiency and render markets more, rather than less, competitive. For this reason, we have held that such exchanges of information do not constitute a per se violation of the Sherman Act.”).
[8] See Todd v. Exxon Corp., 275 F.3d 191, 198-99 (2d. Cir. 2001).
[9] Press Release, Fed. Trade Comm’n, FTC, DOJ Issue Antitrust Policy Statement on Sharing Cybersecurity Information: Sharing Cyber Threat Information Can Help Secure Nation’s Networks and Improve Efficiency; Properly Designed Sharing Not Likely to Raise Antitrust Concerns (Apr. 10, 2014).