FTC and DOJ Withdraw Guidelines for Collaboration Among Competitors

The Federal Trade Commission (FTC) and US Department of Justice’s (DOJ’s) Antitrust Division have announced the withdrawal of the Antitrust Guidelines for Collaborations Among Competitors (the Collaboration Guidelines). While the FTC and DOJ have cautioned that the withdrawal should not be taken as a change to how antitrust issues raised by collaborations will be scrutinized moving forward, the withdrawal signals the agencies’ intent to review competitor collaborations on a case-by-case basis.

As such, businesses should consult with legal counsel when contemplating a collaboration with a potential competitor to assess potential antitrust risk.

The Collaboration Guidelines were jointly issued by the FTC and DOJ (collectively, the Agencies) in April 2000 to provide guidance to companies about how the Agencies analyze antitrust issues raised by horizontal agreements, or collaborations by competitors, and the likelihood that certain conduct may be challenged by the Agencies. The Collaboration Guidelines covered agreements between actual or potential competitors to collaborate on such activities as research and development, production, marketing, distribution, sales, purchasing, information sharing, and various trade association activities.

The Collaboration Guidelines described general principles to help parties contemplating collaborations understand when activities were less likely to raise antitrust concerns, including the following:

• Minimal Market Share: If collaborations among competitors do not significantly increase market power, or if the market share of the parties involved is relatively low, the collaboration likely has low antitrust risk.
• Efficiency Enhancements: If collaborations aim to create efficiencies, such as lower costs or creating innovation, they are generally more likely to be low antitrust risk.
• Complementary Participants: If the participants in a collaboration have complementary, rather than directly competing, positions in the market, the collaboration is likely to be low antitrust risk.

THE WITHDRAWAL

According to the Agencies’ Joint Withdrawal Statement, there were several reasons as to why they believe the Collaboration Guidelines no longer offer reliable guidance on how enforcers assess collaborations by competitors:

• The guidelines have not kept in step with the evolution of 24 years of jurisprudence interpreting Section 1 of the Sherman Act
• The guidelines reflect outdated and withdrawn policy statements
• The guidelines rely on “outdated analytical methods that fail to capture advances in technology, business strategy, and economic disciplines” that have changed how enforcers assess the implications of modern corporate collaborations
• The guidelines fail to address “the competitive implications of modern business combinations and rapidly changing technologies such as artificial intelligence, algorithmic pricing models, vertical integrations, and roll ups”

GROWING UNCERTAINTY AMID VARIOUS WITHDRAWN GUIDELINES

The withdrawal of the Collaboration Guidelines follows the Agencies’ 2023 withdrawal of three antitrust enforcement policy statements, which had previously provided “safe harbors” for the exchange of certain categories and types of information and had been interpreted to apply generally across various industries. With the withdrawal of both the “safe harbors” and the Collaboration Guidelines without the provision of additional guidance, the Agencies have made it clear that they intend to enforce the antitrust laws on a case-specific basis. Moreover, these changes may also signal increased scrutiny from federal enforcers going forward.

Of note, the FTC’s vote to withdraw the guidelines was 3-2, with Commissioners Andrew Ferguson—President-elect Trump’s pick to chair the FTC—and Melissa Holyoak casting votes against the withdrawal. Commissioner Holyoak criticized the Commission’s decision to withdraw the guidelines without also providing replacement guidance and “leav[ing] businesses grasping in the dark.” Both commissioners criticized the withdrawal after an administration-changing election.  

WHAT’S NEXT?

Considering this development occurred in the final days of the current administration, it remains to be seen whether the incoming leadership at the FTC and DOJ will make further changes to existing guidelines, reinstate the withdrawn guidelines, and/or introduce new updated guidelines. 

In the interim, businesses considering collaborations with competitors should exercise caution and engage counsel early to analyze the antitrust risk of certain business activities under existing statutes and caselaw.