On February 2, 2023, the Principal Deputy Assistant Attorney General for the U.S. Department of Justice’s (DOJ) Antitrust Division, Doha Mekki, announced that the DOJ was withdrawing three policy statements outlining safe harbors for information sharing in the healthcare industry, and suggested that DOJ’s increased scrutiny of information sharing will extend to other industries. Mekki explained that the DOJ was working with the Federal Trade Commission (FTC) to withdraw all three policy statements, each of which was jointly issued by the agencies, and they followed through with that promise on February 3, 2023.
The three policy statements addressed the scope and different types of information sharing across the healthcare industry, and for years have served as guidance for information exchanges across other industries as well. The first was a 1993 DOJ policy statement describing “antitrust safety zones” in the healthcare industry. The safety zones protected hospitals from antitrust scrutiny for participation in written surveys that are managed by third parties and contain aggregated data that is at least three months old. It also promised that U.S. enforcement agencies would not challenge the exchange of non-price information between physicians and purchasers of healthcare services. The second was a 1996 policy statement that expanded the definition of the safety zones, and the third was a 2011 policy statement outlining safety zones for healthcare practices jointly providing healthcare services to Medicare patients. Any healthcare company that relied on these policy statements as a basis for sharing information with competitors or third parties, or that currently engages in the type of conduct they addressed, must immediately reevaluate those business practices.
Although these three policy statements concern healthcare providers, Mekki made a point of highlighting that several of the DOJ’s recent enforcement actions regarding information sharing were in industries other than healthcare. Indeed, the DOJ and FTC have long taken the position that the safe harbors apply broadly across other industries. However, although the agencies previously advised that certain practices—such as the exchange of aggregated, anonymized, historical data, or the use of third-party intermediaries, like data aggregators—are unlikely to raise antitrust concerns, this announcement has now drawn all of that guidance into question.
To explain this decision, Mekki observed that information sharing can be anticompetitive even when it meets the criteria set forth in the safety zones. She described the policy statements as outdated because they do not account for technology that makes it possible to deduce competitors’ pricing strategies from aggregated data. Mekki urged enforcers to modify their approach toward information sharing to reflect technological and economic advancements.
This policy shift will not be limited to violations of Section 1 of the Sherman Act, which prohibits anticompetitive agreements between competitors. According to Mekki, mergers between companies with a history of sharing competitively sensitive information will face a heighted review, thereby making it more difficult to get approval for a deal. Mekki also advocated for a “whole-of-government approach,” which encourages other government agencies to investigate and report anticompetitive information exchanges.
This announcement marks a significant change in DOJ’s policy and indicates that an uptick in enforcement actions involving information exchanges is likely in the coming months. By revoking these long-standing policies and not replacing them with updated guidance, the agencies have raised questions about where and how they will target information sharing. Companies in all industries should view this announcement as a warning and an opportunity to reevaluate their policies and practices for sharing competitively sensitive information with competitors directly or through third parties. When information sharing is unavoidable, companies should take appropriate steps to identify and mitigate the risks. Among other things, companies should have a firm understanding of which arrangements involve competitors (which may not always be clear, especially in labor markets), the nature of the information being shared, and an established plan for contemporaneously documenting the legitimate, procompetitive reasons for sharing that information. Our MoFo team of experienced antitrust attorneys stands ready to assist companies in assessing and minimizing those risks.