Authors: Jim Lerner and Luis Blanquez
Both of the U.S. government agencies responsible for antitrust enforcement (the Department of Justice– “DOJ” and Federal Trade Commission – “FTC”) have review mechanisms available for companies seeking guidance on whether they are likely to take antitrust enforcement action against a proposed agreement or course of conduct: the DOJ has a Business Review process and the FTC has an Advisory Opinion process.
From a practical perspective (and putting aside mandatory Hart-Scott-Rodino merger filings), it is uncommon in the U.S. for parties to submit their agreements to the competition authorities for review before entering the agreement or undertaking the proposed conduct. Except in particular circumstances—such as with complex antitrust and intellectual property issues—most parties decide that the potential antitrust-enforcer guidance is not worth the time and effort involved in seeking such review.
But there are instances in which it does make sense to seek antitrust agency review, so we describe the processes here.
With respect to the DOJ Business Review process, while there has been expedited treatment for collaborations directly related to COVID, the “traditional” Business Review process tends to be lengthy (it can regularly take up to 6 months or more to get through the entire process) and complicated. Applicants for a Business Review letter must make a complete disclosure of all the necessary information about the agreement or collaboration for which a review is requested. This requires background information about the parties and industry, copies of any/all operative documents, detailed statements of any/all collateral oral understandings, and any additional information the Division requests. Depending on how the Division responds, it doesn’t necessarily result in any guarantees about what the Division will or will not do if the described conduct/collaboration goes forward. One other big downside is that the process is truly prospective––that is, it requires that the parties not start their proposed activities until after the Division responds.
The use of FTC Advisory Opinion process is similarly infrequent, also due to narrow set of conditions under which the Commission or the Commission Staff will actually consider such a request. At the linked document set out, the Commission will only consider an Advisory Opinion when (1) the matter involves a substantial or novel question of fact or law and there is no clear Commission or court precedent, or (2) the subject matter of the request and consequent publication of Commission advice is of significant public interest. The request for an advisory opinion must concern a course of action that the requesting party proposes to pursue. That is, the requesting party must intend to engage in the proposed conduct; hypothetical questions or questions about conduct that is already ongoing will not be answered. Furthermore, a proposed course of action must be sufficiently developed for the Commission or its staff to conclude that it is an actual proposal rather than a mere possibility, and to evaluate the proposal based on the description and supporting information provided with the request. At the same time, however, the parties cannot have started their requested conduct. As you can tell, the scope of this tool is very limited.