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Antitrust Enforcement During the COVID-19

Pandemic: Frequently Asked Questions

May 18, 2020
Although the COVID-19 coronavirus has shuttered wide swaths of the U.S. economy, it has also spurred a
flurry of activity by some of the country's largest firms. To respond to the virus, major medical-supply
companies have announced collaborative efforts to manufacture, source, and distribute medical
equipment. Large pharmaceutical companies and tech firms have likewise partnered with rivals to
develop new products to treat and track the virus. And while economic uncertainty has led to sharp
declines in mergers, some commentators predict that dominant, cash-rich firms will ultimately benefit
from virus-induced financial turmoil by acquiring smaller, less secure competitors at bargain prices.
These developments potentially implicate federal antitrust law, which prohibits anticompetitive
agreements between firms and mergers and acquisitions that threaten to substantially lessen
competition. This Legal Sidebar responds to certain frequently asked questions involving the intersection
of antitrust enforcement and COVID- 19.
Will companies that collaborate with one another in response to COVID-19 face antitrust liability?
Under Section 1 of the Sherman Antitrust Act, courts evaluate most types of inter-firm cooperation using
the Rule of Reason, which condemns anticompetitive agreements as unlawful but permits other types of
collaboration. Because this inquiry is highly fact-intensive, it is difficult to draw categorical conclusions
about the boundaries of permissible inter-firm cooperation. But collaboration on research and
development (R&D), the sharing of technical know-how, and joint-purchasing agreements among firms
that lack market power ordinarily survive Rule-of-Reason scrutiny. In contrast, agreements between
competitors to share their internal information about prices, wages, costs, and output are more likely to
violate antitrust law.
In March, the Department of Justice (DOJ) and Federal Trade Commission (FTC)-the agencies charged
with enforcing federal antitrust law-released a Joint Statement Regarding COVID- 19 reiterating these
principles. In their Joint Statement, the agencies identified several examples of virus-related collaboration
that are likely to be permissible, including joint ventures involving the production or distribution of
medical supplies, joint-purchasing arrangements among healthcare providers, and collaborative R&D
efforts. To provide greater certainty to companies seeking to enter into such arrangements, the antitrust
regulators also announced plans to expedite COVID-19-related requests under the DOJ's Business

                                                                 Congressional Research Service

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