DOJ Antitrust Division Announces Increased Scrutiny of Information Sharing

February 3, 2023

RELATED UPDATE: DOJ Withdraws ‘Out of Date’ Antitrust Enforcement Guidance Relating to Healthcare Providers (February 8, 2023)

On Feb. 2, 2023, Doha Mekki, a senior leader of the Department of Justice’s Antitrust Division, announced wholesale changes to the Antitrust Division’s review of companies’ information-sharing practices. The Antitrust Division is “revisiting or withdrawing” policies that had established a “safe harbor” for certain forms of information sharing. The changes will reduce certainty regarding information-sharing best practices and likely will lead to increased litigation — from enforcers and the plaintiffs’ bar.

What was DOJ’s prior policy on information sharing?

Information sharing is widespread in many industries, and the Antitrust Division and Federal Trade Commission traditionally have acknowledged that many forms of information sharing can be pro-competitive. For example, information sharing can help companies compete more effectively by identifying industry standards or benchmarks that the companies try to meet or beat. Recognizing this, the U.S. Supreme Court has stated that information exchanges “can in certain circumstances increase economic efficiency and render markets more, rather than less, competitive.”

The Antitrust Division’s policy, dating back to 1993, acknowledged this reality by identifying those situations in which information sharing was unlikely to result in competitive harm. In a series of documents focused on the healthcare industry, the DOJ and FTC established an “Antitrust Safety Zone” in which they announced their intention not to challenge or prosecute certain forms of information sharing. Most prominently, they made it clear that industry surveys concerning prices, wages, salaries or benefits did not violate the antitrust laws so long as they satisfied three conditions:

  • The survey was managed by a third party (such as a trade association, consultancy or academic institution).
  • The information shared was more than three months old.
  • The information was aggregated (and could not easily be disaggregated).

These policies came to establish general rules of the road for information sharing that have stretched beyond the particulars of the healthcare industry and surveys.

What did the DOJ change?

Principal Deputy Assistant Attorney General Mekki’s announcement shakes the foundations of this regime. According to Mekki, the policy statements that established the “Antitrust Safety Zone” were “outdated” and “no longer reflective of the market realities.” The Antitrust Division would be “revisit[ing] or withdraw[ing]” the policy statements, she promised, with “no immediate plans to replace them.”

In other words, the Antitrust Division has eliminated a crucial “Antitrust Safety Zone” around which the business community has long developed practices.

What does this mean going forward?

This announcement was unexpected, at least in its breadth, and the fallout will be long-lasting and wide-ranging. To be sure, the seeds of a shift on information sharing have been sown in recent years. Just last year, the DOJ entered into a consent decree with companies allegedly exchanging information in violation of the antitrust laws, coupling it with a fine of more than $84 million. And several high-profile civil suits of late have put information sharing in the crosshairs.

Yet the Antitrust Division’s policy change is likely to usher in an era of even higher scrutiny. The antitrust enforcers and the plaintiffs’ bar likely will bring more challenges to information sharing, seizing on the eradication of the Antitrust Division’s “safe harbor.” Businesses involved in or reliant on information sharing should reevaluate their practices now that they can no longer rely on the safety rails of the prior Antitrust Division policies.

These increased risks should be tempered by the reality that the law itself has not changed (at least not yet) — only the Antitrust Division’s enforcement priorities. Put differently, the Antitrust Division can change its policies, but the courts are the ultimate arbiters of what the antitrust laws prohibit. And the Supreme Court, along with a number of lower courts, consistently has held that information sharing can be pro-competitive.

Importantly, courts also have held that information sharing is subject to the rule of reason — meaning that analysis of whether information sharing violates antitrust laws requires an involved balancing of the pro-competitive and anti-competitive effects of the specific exchange at issue. The Antitrust Division has a longstanding policy statement indicating that it will not criminally prosecute violations that would be subject to the rule of reason. Likewise, civil plaintiffs have a much more difficult time proving rule-of-reason violations in litigation.

So, while the Antitrust Division has changed its position, it is yet to be seen whether the law will follow or whether enforcers and private plaintiffs will have any more luck challenging the information-sharing practices that the Antitrust Division historically blessed.

McGuireWoods’ team of experienced antitrust attorneys counsel and defend clients on information-exchange issues. The team is available to respond to your questions about the effect of these announcements on your business.