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COVID-19: The Defense Production Act and Antitrust Immunity
Practical Law Legal Update w-024-5607 (Approx. 3 pages)
COVID-19: The Defense Production Act and Antitrust Immunity
by Practical Law Antitrust
| Published on 19 Mar 2020 • USA (National/Federal) |
On March 18, 2020, President Trump invoked the Defense Production Act to aid in the fight against the novel coronavirus (COVID-19). Because it makes industry coordination likely, the Act provides antitrust immunity for covered conduct.
On March 18, 2020, President Trump invoked the Defense Production Act (50 U.S.C. § 4501 et seq.) to aid in the fight against COVID-19. The Defense Production Act allows President Trump to direct industries to produce and distribute critical health care and medical resources, including personal protective equipment and ventilators, to coordinate the country's response. President Trump delegated to the Secretary of Health and Human Services the power to require private industry to:
- Fill contracts and orders ahead of any other orders.
- Allocate materials, services, and facilities as necessary.
The Act anticipates that industry coordination and agreements may be beneficial in responding for the national defense and provides for civil and criminal antitrust immunity from federal and state antitrust laws. Recognizing the potential for antitrust risks, the Act calls on the Attorney General and the Federal Trade Commission to:
- Consult with the presidential delegates that will coordinate the industry response.
- Form plans of action and advisory committees.
- Monitor agreements.
- Promulgate rules deemed necessary.
The Act immunizes conduct from federal and state antitrust liability if:
- The actions were taken to:
- develop an agreement or plan initiated by the president; or
- carry out an agreement or plan approved by the president.
- The person or company involved:
- complied with the Act and any applicable regulations; and
- did not exceed the scope of the approved agreement.
For more on affirmative defenses in antitrust cases involving government activity, including in connection with national defense, see Practice Note, Government-Related Antitrust Defenses. For more on competitor collaborations generally, see Practice Note, Competitor Collaborations in the US.