Recent DOJ Action Creates Uncertainty for Information-Sharing Programs

The DOJ announcement creates uncertainty for information-sharing programs because the antitrust safety zone set forth in the policy statements, although on its face limited to the health care field, had been applied by DOJ to areas outside of health care and had been relied upon by parties—including many associations, professional societies and other nonprofits—when establishing their information-sharing programs.

DOJ did not issue new guidance but instead stated that it would be using “a case-by-case enforcement approach” going forward, making it likely that it will take some time before we know whether information-sharing programs that operate within the antitrust safety zone that had been relied upon for years could be subject to legal challenge.

The “Antitrust Safety Zone” Relied upon for Years

The DOJ/FTC policy statements included an “antitrust safety zone” that made the exchange of price and cost information by health care providers presumptively legal if three criteria were met:

1. The information was collected, aggregated and disseminated by a third party;
2. The exchanged information was more than three months old; and
3. At least five providers supplied the exchanged information, no single provider accounted for more than 25 percent of the exchanged information, and the disseminated information was sufficiently aggregated to protect the identity of the underlying sources of the information.[3]

This safety zone permitted competitors to participate in information-sharing programs, which the government recognizes can have significant consumer benefits, but sought to ensure that participating competitors did not gain access to actionable competitively sensitive information that would allow them to expressly or tacitly engage in anticompetitive conduct that is prohibited by the antitrust laws, such as conspiring to fix prices.

DOJ and FTC[4] applied the antitrust safety zone to approve information exchanges outside of the health care industry,[5] and associations in particular relied on this safety zone when administering information exchanges.

And it worked. Beneficial information exchanges have proliferated and have only been challenged when participating competitors have strayed far from the safety zone, in particular by communicating directly with each other to discuss competitively sensitive matters.

Most recently, in a case that was part of DOJ’s larger criminal antitrust cases but perhaps little-noticed by associations and companies participating in information exchanges, DOJ obtained an $84.8 million settlement with three major poultry processors, their data consulting firm and the firm’s president. DOJ alleged that the poultry processors had used the consulting firm to set up an information exchange that appeared to be legitimate but in fact was a cover to permit competing poultry producers to directly share competitively sensitive information on current and future wages for workers in order to suppress wage competition.[6] As part of the settlement, the consulting firm and its president agreed not to provide information-exchange services in any industry for 10 years.[7]

Similarly, more than 10 years ago, Detroit-area nurses brought a private antitrust suit against Detroit-area hospitals, alleging that the hospitals used their information exchange, which used third-party surveys, to have improper discussions of compensation-related information to conspire to suppress nurses’ wages.[8] The hospitals eventually agreed to settle and pay the nurses in total $90 million.

DOJ Withdrawal Leaves Information-Exchange Programs in the Dark

DOJ’s announcement withdrawing from the health care antitrust policy statements provided no guidance on what conduct would be permissible going forward, whether in the health care field or elsewhere. Likewise, in a speech the day before DOJ’s announcement, Principal Deputy Assistant Attorney General Doha Mekki explained that the antitrust policy statements were “based on the characteristics of a particular industry at a particular period” and that “when market realities change such that [the statements] no longer serve their intended purpose or fail to accurately reflect [DOJ’s] enforcement posture,” the guidance should be revisited. Ms. Mekki, however, provided no guidance on what DOJ’s present enforcement position is regarding information exchanges—or other matters addressed in the withdrawn statements—or if DOJ ever will provide such guidance.

Instead, DOJ has stated that it will take a “case-by-case enforcement approach” and that parties should look at DOJ’s “[r]ecent enforcement actions and competition advocacy in healthcare.”[9]

However, DOJ’s most recent enforcement action against an information exchange tells us nothing about whether information exchanges within the safety zone are now at risk because that action challenged activity that was clearly not within the safety zone—the use of an information exchange by competitors to communicate directly to suppress workers’ wages and benefits. And nothing in DOJ’s recent competition advocacy addresses the information-exchange safety zone.

So, what to do? DOJ’s withdrawal of the guidelines does not require that established information-sharing programs in competitive fields that have operated for years—without any suggestion that they have reduced competition—need to be dismantled or significantly changed. However, program managers and participants should consider reexamining such programs to confirm they are operating to achieve a legitimate business purpose that does not restrain competition. Associations and other program managers may want to periodically remind participants of the following prudent antitrust guardrails for information exchanges.

An information sharing arrangement should not violate the antitrust laws if it does not unreasonably limit competition and is not used by competitors to enter into or enforce an anticompetitive agreement. Participants in an information exchange should share sensitive information only with the association (or outside firm) that is operating the information exchange. Participants should never discuss with any other participant the confidential information they provide or aggregated information circulated as part of the information exchange, if it concerns competitively sensitive matters such as prices or wages. Rather, each participant should decide independently whether and how to use the information provided by the information exchange.

In the meantime, information-exchange programs should carefully monitor the government’s future policy statements and enforcement actions relating to information sharing.

^{[1] Department of Justice and FTC Antitrust Enforcement Policy Statements in the Health Care Area (1993); Statements of Antitrust Enforcement Policy in Health Care (1996); Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011).}

^{[2] Press Release, Justice Department Withdraws Outdated Enforcement Policy Statements (Feb. 3, 2023).}

^{[3] Statements of Antitrust Enforcement Policy in Health Care, Statement 6 (Aug. 1996).}

^{[4] Information exchange: be reasonable, Federal Trade Commission (Dec. 11, 2014).}

^{[5] See e.g., Response To National Association Of Small Trucking Companies (NASTC) And Bell & Company’s Request For Business Review Letter, U.S. DOJ Antitrust Division (Apr. 9, 2007); Response To Woodwork Institute Of California's Request For Business Review Letter, U.S. DOJ Antitrust Division (Aug. 20, 2003); Response To Foss Maritime Company Request For Business Review Letter, U.S. DOJ Antitrust Division (Oct. 25, 2001).}

^{[6] Complaint, United States v. Cargill Meat Solutions Corp., et al., 1:22-cv-01821 (D. Md. 2022). See State v. 3M Co., Case No. 2022-CV-001795 (Dane Cnty. Ct.) (2022); See Press Release.}

^{[7] [Proposed] Final Judgement, United States v. Cargill Meat Solutions Corp., et al., 1:22-cv-01821, Doc. No 3-2 (D. Md. 2022).}

^{[8] Cason-Merenda v. Detroit Medical Center, 862 F. Supp. 2d 603, 612 (E.D. Mich. 2012).}

^{[9] Press Release, Justice Department Withdraws Outdated Enforcement Policy Statements (Feb. 3, 2023).}