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DOJ Issues Business Review Letter in Support of COVID-19 PPE Collaboration
Practical Law Legal Update w-024-8808 (Approx. 3 pages)
DOJ Issues Business Review Letter in Support of COVID-19 PPE Collaboration
by Practical Law Antitrust
| Published on 06 Apr 2020 • USA (National/Federal) |
The Department of Justice (DOJ) issued a business review letter indicating that it does not intend to challenge a collaboration between McKesson Corporation, Owens & Minor, Inc., Cardinal Health, Inc., Medline Industries, Ind., and Henry Schein, Inc. to source, manufacture, and distribute personal protective equipment (PPE) in response to government direction related to the COVID-19 pandemic.
On April 4, 2020, the DOJ issued a business review letter indicating that it does not intend to challenge a collaboration between McKesson Corporation, Owens & Minor, Inc., Cardinal Health, Inc., Medline Industries, Ind., and Henry Schein, Inc. to source, manufacture, and distribute personal protective equipment (PPE) in response to government direction related to the COVID-19 pandemic. The request for a business review letter was made under the expedited temporary business review process introduced by the DOJ and FTC in the March 2020 Joint Antitrust Statement Regarding COVID-19.
The DOJ stated that the battle to contain and treat COVID-19 infections will require, for a limited time, unprecedented cooperation among private businesses and the government, in compliance with Executive Order 13909, “Prioritizing and Allocating Health and Medical Resources to Respond to the Spread of COVID–19,” and the Defense Production Act.
The DOJ stated that the collaboration is not likely to raise antitrust concerns, and that the procompetitive benefits outweigh any potential anticompetitive harm. The DOJ noted that the requesting parties' collaboration is undertaken at the request of, and under the supervision of, FEMA, HHS, and other governmental entities. The proposed conduct includes helping FEMA and HHS with:
- Addressing foreign supplier bottlenecks.
- Identifying new sources of supply and demand for PPE products.
- Expediting PPE distribution to COVID-19 hotspots.
- Understanding and negotiating prices for PPE products.
For example, the requesting parties and the government, with other US health care distributors, are collaborating on Project Airbridge, a series of flights to transport large quantities of COVID-19 supplies into the US.
The requesting parties provided that, in the absence of direct governmental supervision, safeguards will be in place to protect competition, including that:
- The collaboration will:
- specifically relate to US government policy and efforts; and
- not be used to increase prices, reduce output or quality, or profit from the COVID-19 crisis.
- The requesting parties will make all reasonable efforts to ensure that any competitively sensitive information requested by the government is not shared with any other requesting party, and that any shared competitively sensitive information is sequestered.
- The collaboration duration is limited to the time necessary to help FEMA and other agencies with COVID-19 shortages and will dissolve immediately thereafter.
The DOJ also noted that the requesting parties' conduct may be protected by:
- The Noerr-Pennington doctrine, to the extent that the requesting parties' conduct is viewed as petitioning the government to influence its decisions to expedite the manufacture of health and medical resources.
- Implied immunity, if application of the antitrust laws would be repugnant to, or disrupt, the regulatory scheme.
For more on DOJ business review letters, see Practice Note, Seeking DOJ Business Review Letters and FTC Advisory Opinions. For more COVID-19 resources, see Global Coronavirus Toolkit.