In a press release announcing the withdrawal, the FTC calls the statements “outdated,” arguing that they “no longer serve their intended purpose of providing accurate guidance to market participants.” Unfortunately, the FTC did not explain what was “outdated” about the prior statements or why those statements did not provide accurate guidance to participants. Nor did the FTC issue a new set of policies to fill the advisory gap. Instead, the FTC advises the public to consider the “Commission’s extensive record of enforcement actions, policy statements, and competition advocacy in health care” as sources of more up-to-date guidance on health care competition matters.

The FTC’s announcement comes five months after the Department of Justice (DOJ)’s decision to rescind these same statements1 in February 2023.

FTC joins DOJ in rejection of automatic safe harbors for certain health care transactions

The FTC’s withdrawal of the policy statements is particularly significant since the FTC is typically the antitrust agency that reviews proposed provider mergers and joint ventures. Should the agency no longer follow the guidance provided in the withdrawn guidance, it could lead to the elimination of a safe harbor for hospital mergers where one of the hospitals has less than 100 beds and an inpatient census of less than 40 patients. In addition, the withdrawn guidance also provided a safe harbor for group purchasing organizations (GPOs) where (1) its purchases account for less than 35 percent of the total sales of the products or services relevant market; and (2) the cost of the products or services purchased jointly accounts for less than 20 percent of the revenues from all products or services sold by each competing participant in the GPO. The decision to withdraw the policy statements also indicates that regulators will likely treat this safe harbor with skepticism.

FTC announcement signals lack of clarity in how antitrust agencies will review information exchanges

The FTC’s announcement makes clear that the agency is now on the same page as DOJ regarding how it will enforce the antitrust laws with respect to information exchanges. Left unclear, however, is what the agencies’ current enforcement policy is. The now-rescinded 1996 policy statement outlined that a “reasonable” exchange of information among competitors would exist in a “safety zone,” meaning that the agencies would not consider the exchange to be illegal under the antitrust laws if:

• the exchange is managed by a third-party, like a trade association;

• the information provided by participants is more than three months old; and

• at least five participants provide the data underlying each statistic shared, no single provider’s data contributes more than 25% of the “weight” of any statistic shared, and the shared statistics are sufficiently aggregated that no participant can discern the data of any other participant.

In short, since the publication of this policy statement in 1996, the antitrust agencies generally considered information exchanges legal so long as they were anonymized (by a third party), the information was historical, and the information was aggregated. While the policy statements at issue are focused on the health care industry, the decision to withdraw has impacts beyond health care, since antitrust practitioners have relied upon the guidance in other industries as well. In withdrawing the policy statement governing information exchanges—with no indication if or when the agency intends to replace it—there is currently no guidance from the agencies on what kind of information exchanges they would consider presumptively legal (if any).

While the antitrust agencies cannot unilaterally change the law as applied by the courts—and exchanges of aggregated data are in many cases pro-competitive—the elimination of this safe harbor could meaningfully change the risk calculus for companies involved in the exchange of aggregated data. Among other things, it will result in increased uncertainty as to how to structure information exchanges so as to minimize the risk of the information exchange. The decision will affect all industries that utilize information-sharing exchanges, such as real estate, advertising, meatpacking, and transportation.

It is important to note that the agencies’ policy position cannot make unlawful compulsory disclosure of rate information, such as disclosures required under the transparency rules governing hospitals and health care plans.

Looking Ahead

The agencies’ decision to withdraw the policy statements does not change the law and does not determine what is, or is not, legal. That is left to the courts. The withdrawn policy statements, however, were often viewed as informational, if not influential, by judges, and both agencies’ affirmative withdrawal may be something that a judge considers in analyzing the legality of health care mergers or joint ventures, joint purchasing agreements, or information exchanges.

These developments have created heightened risk and uncertainty across industries. It remains to be seen if the agencies’ long anticipated revised draft merger guidelines—hopefully to be released soon–will provide new guidance to fill the gap left by the rescission of the health care policy statements. You should contact experienced antitrust counsel if you have any questions about how these changed policies, particularly the information exchange policies, may affect your business.

References

1 The FTC’s July 2023 announcement states that it has rescinded the Department of Justice and Federal Trade Commission “Statements of Antitrust Enforcement Policy in Health Care” (August 1996) as well as the agencies’ “Statement of Antitrust Enforcement policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program” (20 October 2011). In February 2023, DOJ announced the rescission of these two policies as well as a prior version of the 1996 Statements of Antitrust Enforcement that was published in 1993. DOJ’s decision was similarly based on the agency’s assessment of the policy statements as “outdated” with no further explanation.