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May 08, 2020
Health Law Weekly

Antitrust for Collaborations and Transactions in the Time of COVID-19

This Featured Article is contributed by AHLA's Business Law and Governance Practice Group.
  • May 08, 2020
  • Alexis J. Gilman , Crowell & Moring LLP
  • Alexis V. DeBernardis , Crowell & Moring LLP , Washington, DC

COVID-19 has caused devastation and uncertainty across the country, and America’s health care industry, particularly providers, are uniquely impacted. Their facilities are essential in every sense of the term, and they are fighting a battle on multiple fronts: treating patients and keeping their staffs healthy while navigating new operational and financial challenges.

Despite this disruption of extraordinary scale and scope, the antitrust agencies remain steadfast in their commitment to maintaining competition. The antitrust laws still apply, and neither the Federal Trade Commission (FTC) nor the Department of Justice (DOJ) is demonstrating any easing of enforcement standards. In fact, the antitrust agencies seemingly have taken every opportunity to underscore their commitment to investigate and prosecute anticompetitive conduct and challenge anticompetitive transactions.

For example, since the emergence of the crisis, the FTC has published multiple blog posts emphasizing that its standards have not been, and will not be, relaxed. In early April, the FTC Bureau of Competition Director Ian Conner reminded readers that the antitrust laws are “flexible enough” to weather uncertain economic periods and that special exceptions to the antitrust laws are unnecessary.[1] Conner stated that Commission staff is committed to carefully assessing potential anticompetitive conduct and transactions, promising its “usual rigorous approach” in investigating and remedying anticompetitive harm.

While antitrust standards and approach remain vigorous, antitrust laws do offer a fairly wide scope for certain conduct and transactions, even among competitors, that may offer health care providers and others an important lifeline during these difficult times.


Amid the crisis, supply chains and distribution avenues have been strained, disrupted, and perhaps even halted. These disruptions have put the onus on businesses large and small to get creative about how to secure supplies and provide services and deliver goods to consumers. Many, including health care providers, are interested in exploring to what extent they can collaborate with others in their industry and community to quickly respond to the crisis. These collaborations could include, for example, identifying and implementing best practices, conducting research and development, performing industry and peer group benchmarking, sharing technical expertise, engaging in joint purchasing, and collectively lobbying federal, state, and local governments, but competitor collaborations can raise antitrust risks.

Antitrust Primer for Competitor Collaborations

Collaborations among competitors are often procompetitive, or at least competitively benign, but they can also raise competitive concerns under Section 1 of the Sherman Act if such activities or agreements unreasonably restrain competition. Competitor collaborations may do so by increasing the opportunity or ability for firms to make agreements or engage in activities that raise prices, reduce output, quality, or innovation, or share competitively sensitive information.

Competitor collaborations are generally analyzed under one of two primary analytical antitrust frameworks: the per se rule and the rule of reason. Some agreements, for example those to fix prices or allocate markets, are so inherently anticompetitive that they are considered per se illegal without regard to any purported procompetitive benefits. These agreements can carry criminal penalties. All other agreements are typically analyzed under the rule of reason, weighing the potential anticompetitive harm against the procompetitive benefits. Rule of reason analysis is highly fact specific and accounts for a range of factors, including the industry at issue, degree of concentration, and other competitive dynamics.

DOJ-FTC Joint Statement and Guidance on COVID-Related Collaborations

The antitrust agencies recognize the potential importance (if not necessity) of competitors working together to respond to urgent health and safety issues caused by COVID-19, and early in the crisis issued a joint statement providing guidance on how competitors can collaborate while staying on the right side of antitrust laws.[2] In the joint statement, the agencies acknowledged that to effectively respond to the spread of COVID-19, businesses need to cooperate at an “unprecedented” level. Particularly relevant to health care providers, the joint statement also said that “[m]any types of collaborative activities designed to improve the health and safety response to the pandemic would be consistent with the antitrust laws,” and recognized that health care facilities may need to “work together [to deliver] resources and services to communities without immediate access to personal protective equipment, medical supplies, or health care.”

Specifically, to facilitate this cooperation response to COVID-19, the antitrust agencies committed to provide expedited review of proposed partnerships and other collaborations. Though the antitrust laws do not require advance approval of competitor collaborations, each agency has a process in place to provide businesses with advance assurance that a proposed activity is unlikely to be challenged. While not always necessary or the best course of action in all cases, seeking and receiving a statement of an agency’s enforcement views can offer businesses meaningful comfort that a collaboration will not be challenged by the agencies. The DOJ’s Business Review Letter (BRL) and the FTC’s Advisory Opinion processes, however, typically last several months and require a great deal of engagement with the petitioned agency. But, for COVID-related efforts, the DOJ and the FTC pledged in the joint statement to deliver a response within seven calendar days of receiving the information needed to assess a proposed collaboration.

Since releasing the joint statement, the DOJ has issued two expedited BRLs related to COVID-19 efforts among competing firms. The first responded to a request by various medical supply distributors seeking DOJ’s enforcement intentions regarding the collaborators’ proposed “efforts to expedite and increase manufacturing, sourcing, and distribution of” personal protective equipment and medication to treat patients affected by COVID-19.[3] The consortium represented to DOJ that their objective is to “expand existing capacity and bring goods to communities in need.”

Citing President Trump’s executive orders authorized by the Defense Production Act and the federal government’s power to implement those orders via the Federal Emergency Management Agency (FEMA) and the Department of Health and Human Services, DOJ Assistant Attorney General Delrahim’s BRL stated that the proposed conduct was unlikely to harm competition based on the information and assurances provided by the requesting parties. In particular, the collaboration was “specifically intended to further U.S. government policy and efforts”; the collaboration would largely occur at the direction of, and in the presence of, federal agencies and agents; and it would be “limited to the ‘time period necessary to assist FEMA and other government agencies in responding to COVID-19 shortages’[.]” The BRL also noted that the requesting parties would implement safeguards to avoid activities that could “increase prices, reduce output, reduce quality, or otherwise engage in COVID-19 profiteering,” or result in the improper sharing of competitively sensitive information. Importantly, the BRL concluded that the collaboration would offer significant consumer benefit by bringing “life-saving goods faster to market than would be possible absent the collaboration.”

The second letter, issued a couple weeks later, blessed another firm’s request to work with the consortium of medical supply companies referenced above, to “identify global supply opportunities, ensure product quality, and facilitate product distribution” of medication and other health care supplies to communities hit hard by the COVID-19 crisis.[4] For similar reasons as set forth in the first BRL, including the presence of similar safeguards, the DOJ said that the collaboration was unlikely to result in competitive harm.

Labor Collusion Warning

Between the two BRLs issued by the DOJ, the DOJ and FTC issued a joint statement in mid-April warning employers about potential collusion in labor markets during the COVID crisis.[5] While again recognizing the need for firms to collaborate, the agencies reiterated that they were “on alert for employers, staffing companies, and recruiters who might engage in collusion or other anticompetitive conduct that harms workers.” In particular, the agencies noted that agreements among employers or recruiters that depress or eliminate competition relating to compensation, benefits, hours worked, terms of employment, hiring, employment solicitations, recruiting, and retention of workers could violate the antitrust laws. The statement noted concern for collusion, as well as the exchanges of competitively sensitive employee information, that harmed payroll and non-payroll workers, including doctors, nurses, first responders, and other essential workers.

The agencies have challenged employers’ naked wage-fixing and “no-poaching” agreements affecting employees for years under their civil enforcement authority. Since issuing Antitrust Guidance for Human Resource Professionals in 2016,[6] however, the DOJ has warned that it will begin to prosecute such per se antitrust violations criminally. In the joint statement in mid-April, the DOJ reiterated its threat of criminal prosecution for employment-related collusion in the time of COVID-19.

Key Practical Guidance for Collaborations

Even without the comfort of a BRL or Advisory Opinion, the antitrust laws provide latitude for partnerships among competitors to address COVID-19 health and safety challenges. But potential collaborations should be appropriately limited in scope and include certain guardrails. The following are among the most important considerations and safeguards for collaborations among competitors:

  • No Agreements on Price or Output. Most critically, avoid per se illegal coordination or agreements with competitors to set prices and output levels, both on the products and services provided, as well as the compensation and terms of employment paid to employees. While joint price setting might be permissible in connection with some joint ventures or joint purchasing arrangements, price-related arrangements should be reasonably necessary and related to an otherwise procompetitive collaboration—and reviewed by antitrust counsel in advance.
  • Don’t Divvy Up Markets. Agreements among competitors to allocate or not to compete as to certain consumers, geographic areas, or service lines are also per se illegal, so it is critical to avoid any appearance of agreement on these elements. Again, certain operational coordination might be feasible if reasonably necessary and related to an otherwise procompetitive joint venture, but careful consideration and review must be taken before any agreement is reached.
  • Limit the Scope and Duration. The overall risk of a competitor collaboration is reduced when it is limited to only those activities and the duration necessary to respond to the COVID-19 crisis and to achieve the procompetitive benefits of the collaboration. For example, certain COVID-related exigencies might arise that could compel—and justify—health care providers (and others) to coordinate how they provide services or source supplies in certain areas, but such coordination should be limited to that which is necessary to address the exigency, and the collaborators should continue to compete in all other respects.
  • Limit Information Sharing. As a general rule, health care providers and other industry participants should not share competitively sensitive information, such as physician and staff compensation, contract terms with health plans, and prices paid for supplies. Certain collaborations may justify limited information exchanges if necessary to support an otherwise procompetitive collaboration to respond to health and safety issues arising from the COVID-19 crisis, but like joint activity itself, the information exchange should be limited in scope and duration to that which is necessary to undertake the procompetitive collaboration, shared on an aggregated or redacted basis to the extent possible, shared directly with and aggregated by an outside third party if possible, and collaborators’ information should be returned or destroyed at the end of the collaboration.
  • Engage with the Government. Collaborations among competitors to respond to the COVID-19 crisis that come in response to federal, state, or local government requests, especially if government officials supervise or continue to regularly engage with the collaboration, reduce potential antitrust risks. Antitrust immunity also exists for legitimate government petitioning and lobbying efforts, even if competition is lessened, as long as any competitive harm stems from the government’s action and not from the competitors’ joint lobbying itself or an abuse of government processes.
  • Find an Antitrust Safety Zone. Existing agency guidelines provide safety zones and immunities for various types of collaborative conduct, whether in response to COVID-19 or outside of these exigent circumstances. For example, the agencies’ Statement of Antitrust Enforcement Policy in Health Care[7] provides safety zones for hospital joint ventures involving high tech or other expensive equipment, joint provisions of fee and non-fee-related information to payers, participation in information exchanges, and joint purchasing arrangements, under certain conditions.


Like competitor collaborations, mergers can yield significant procompetitive benefits for consumers. And as health care providers face the stark reality of increasing costs related to COVID-stricken patients and decreasing revenue from higher-margin elective procedures, a strategic transaction between providers, or other industry participants, can mean the difference between operating in the black and not operating at all.

Antitrust Primer for Mergers

The antitrust laws, primarily section 7 of the Clayton Act, prohibit mergers that may substantially lessen competition or tend to create a monopoly. Effectively, antitrust law prohibits mergers that may result in higher prices, lower quality, and less innovation.

The FTC and DOJ review transactions among competitors in the health care industry under the framework set out in the agencies’ Horizontal Merger Guidelines.[8] The antitrust agencies look at documents, data, and information from the merging parties and industry participants—such as providers, payers, and employers purchasing health care products and services—to conduct their analysis of a transaction’s likely effect on competition. Mergers resulting in high market share and market concentration above certain thresholds can result in presumptions that the transaction is unlawful. Such a presumption can be rebutted by evidence of transaction-specific efficiencies, evidence of impending entry by new competitors, and other countervailing factors.

Under this framework, the FTC and DOJ have been very active in bringing enforcement actions—both suits to block transactions and consent orders requiring divestitures—in health care industry mergers and acquisitions. And they have won all fully litigated health care merger cases for about the past decade. The COVID-19 crisis has not changed the agencies’ aggressive stance, and the crisis has even resulted in various members of Congress calling for more drastic measures.

Continuing Merger Scrutiny and Calls for Merger Moratorium

COVID-19 has not changed the agencies’ resolve to scrutinize potentially anticompetitive health care mergers and acquisitions. For example, in late March, the FTC issued a blog post stating that “scrutiny of anticompetitive transactions and practices will not be relaxed, notwithstanding the difficult circumstances caused by the coronavirus pandemic.” A blog post a month later said that the FTC would continue to “analyze carefully the potential effects of proposed transactions and business conduct,” and despite claims that the acquired hospital system was in poor financial condition even before the pandemic hit, the FTC—along with the Commonwealth of Pennsylvania—continues to pursue litigation to block the merger of Jefferson Health and Albert Einstein Healthcare Network. For its part, the DOJ issued a statement in March affirming that it continues to review transactions “efficiently and effectively.”[9]

Now, some lawmakers are arguing that mergers are merely a tool for larger companies and private funds to eliminate smaller, weaker competitors, and are planning to introduce legislation halting certain transactions during the pandemic. For example, Senator Elizabeth Warren is calling for legislation that would impose a moratorium on all mergers involving companies with over $100 million in revenues, private equity funds, or companies with patents for COVID-related products (e.g., PPE), and all other transactions that would otherwise be reportable to the FTC under current law.[10] The moratorium would continue until all five FTC Commissioners unanimously agree that small businesses, workers, and consumers are no longer “under severe financial distress”—notwithstanding that the FTC normally acts by majority vote and that the DOJ also shares jurisdiction for merger reviews.

Representative David Cicilline, the Chairman of the House Judiciary’s Subcommittee on Antitrust, is reportedly looking to add legislation to the next COVID-relief bill that would put a moratorium on all transactions that do not involve a failing or bankrupt firm, until the end of the pandemic. He said the moratorium would help conserve antitrust agency resources so that enforcers can concentrate on other antitrust violations, such as wage-fixing.

Critics of these proposals counter that mergers and acquisitions during difficult economic periods allow for continued operation and job retention rather than shuttered businesses. In response to Representative Cicilline’s proposal, FTC Commissioner Noah Phillips rebuffed the need for a formal moratorium, noting that the number of proposed transactions reported to the agencies in recent weeks is down approximately 60% from the historical average.[11] He emphasized that the FTC’s merger reviews still continue uninterrupted—even as staff are working from home and navigating the associated challenges faced by many other Americans. Far from being overwhelmed, Commissioner Phillips confirmed that, despite the challenges of new work environments and media, the “thoroughness of [their] investigations” is not being compromised. In short, anticompetitive transactions are not sneaking through the cracks.

Silver Lining to Being in the Red?

COVID-19 has been financially debilitating, if not devastating, for many in the health care industry. Providers have been particularly hard hit. Hospitals have announced closures or significant staff furloughs and layoffs. One report estimated that, even before COVID-19, a quarter of all rural hospitals in the United States were at risk of closing unless their financial situation improved. Certainly, COVID-19 did not improve their conditions.

One potential, small silver lining is that antitrust law provides some relief for mergers involving a “failing firm.” Formal guidance by the antitrust agencies provides that a merger is unlikely to be anticompetitive “if imminent failure . . . of one of the merging firms would cause the assets of that firm to exit the relevant market.” In other words, if a merger or acquisition is the only way to keep a failing firm in business, the agencies will tolerate an otherwise anticompetitive transaction rather than have a distressed firm exit the market.

But the agencies are strict in applying the conditions to successfully make out a “failing firm defense.” Specifically, the merging parties must show that the company to be acquired (1) is unable to meet its obligations in the near future, (2) would not be able to reorganize successfully in bankruptcy, and (3) has attempted in good faith, but unsuccessfully, to find an alternative merger partner that would result in “a less severe danger to competition than does the proposed merger.” In short, the failing firm must be in dire financial condition and it must have no practical alternative that would be less anticompetitive than the proposed merger.

The agencies carefully assess failing firm defenses, and one FTC Commissioner has recently stated that the Commission has seen several unconvincing failing firm claims since the COVID-19 crisis began, but the defense is worth considering in appropriate circumstances, and the agencies’ careful assessment must also weigh the risk that rejecting the defense and causing a transaction to crater could result in a hospital’s closure, exacerbating the health and safety challenges in a local community.

Key Practical Guidance for Mergers

At the outset of a strategic transaction, health care providers can preliminarily assess antitrust risks and prepare for potential agency scrutiny by undertaking certain key steps:

  • Identify Overlaps and Assess Competition. Consider whether the merging parties provide the same services or products and are serving the same geographic areas and customers. After identifying any overlaps in service/product lines and geographic areas, identify whether any other significant competitors are also providing the same services/products in that area, and assess the merged firm’s market share, subject to the document-creation caveat below.
  • Audit Internal Documents. Review and analyze internal strategic and competitive files to determine how the business calculates market shares and which other providers it includes in those calculations. Though internal assessments are not dispositive of how the antitrust agencies will define markets and related shares, how the parties view competition will be a starting point and can make it more challenging to make arguments that are not supported by ordinary course documents.
  • Anticipate Customer Reaction. Consider how both customers and competitors would react to the proposed merger. Would they see the transaction as combining complementary services, improving quality, and filling gaps in much-needed care? Or might they complain to the agencies that the transaction would result in increased leverage for the combined entity to demand higher prices and lessen the merged firm’s need to improve quality, add services, or innovate?
  • Practice Disciplined Document Creation. Most importantly, do not speculate on the effect of a transaction on prices—unless the merging parties can credibly claim that prices will decrease post-merger—and avoid provocative language about becoming “dominant” or “must-have.” Resist the temptation to define “markets”—whether that is a geographic area or a service—and instead focus on the broader industry and competitiveness of the industry. And do not just avoid creating “bad” documents; focus on documenting the benefits of the transaction—such as synergies created by the merger, particularly those benefits that will directly impact consumers—and how and when those benefits will be achieved and passed through to customers and consumers.
  • Assess a Failing Firm Defense. One unfortunate consequence of the COVID-19 crisis is that firms may find themselves in dire financial condition, in which case they can avail themselves of a failing firm defense. To assess whether that defense might succeed, identify all the operational and financial metrics that are pointing in the wrong direction. Preferably, engage a banker or consultant to conduct a thorough search for a merger or acquisition partner. Ensure that the sale process is on a level playing field and provides an opportunity for diligence for all bidders, rather than a process where the winner is all but predetermined.


The COVID-19 crisis is putting incredible strain on America’s health care system, and health care providers and others in the health care industry have options available to maximize their ability to deliver high-quality health care to communities in need. The antitrust laws do not prevent strategic solutions that have the overall result of better, more innovative services or delivery of those services at lower prices. To the contrary, joint efforts and transactions among health care service providers may be exactly what are required to navigate through the crisis.


Alexis Gilman is a Partner in Crowell & Moring’s Antitrust Group in Washington, DC, and he previously served as head of the Mergers IV Division of the Federal Trade Commissions, which investigates and litigates health care provider mergers. Alexis DeBernardis is a Counsel in Crowell & Moring’s Antitrust Group in Washington, DC. Both their practices focus on representing and counseling health care clients in transactions and other collaborations.

[1] Connor, Ian, Fed. Trade Comm., Antitrust review at the FTC: staying the course during uncertain times (Apr. 8, 2020),
[3] M. Delrahim, McKesson Corporation, Owens & Minor, Inc., Cardinal Health, Inc., Medline Industries, Inc., and Henry Schein, Inc. Business Review Request Pursuant to COVID-19 Expedited Procedure (Apr. 4, 2020),
[4] M. Delrahim, Response to AmerisourceBergen Corp. Business Review Request Pursuant to COVID-19 Expedited Procedure (Apr. 20, 2020),
[5] See Press Release, Justice Department and Federal Trade Commission Jointly Issue Statement on COVID-19 and Competition in U.S. Labor Markets (Apr. 13, 2020),
[6] See Dep’t of Justice and Fed. Trade Comm., Antitrust Guidance for Human Resource Professionals (Oct. 2016),
[7] See Dep’t of Justice and Fed. Trade Comm., Statements of Antitrust Enforcement Policy in Health Care (Aug. 1996),
[8] See Fed. Trade Comm. and Dep’t of Justice, Horizontal Merger Guidelines (Aug. 19, 2010), The agencies also have recently issued draft guidelines regarding vertical mergers, such as integration among health plans and providers, or different types of providers.
[9] Press Release, Dep’t of Justice, Justice Department Announces Antitrust Civil Process Changes for Pendency of COVID-19 Event (Mar. 17, 2020),
[10] See Press Release, Sen. Elizabeth Warren, Pandemic Anti-Monopoly Act (Apr. 28, 2020),