The Department of Justice and Federal Trade Commission recently issued a joint press release announcing the withdrawal of guidance for competitors engaging in collaborations. The move, which eliminates “safe harbors” for joint ventures and other competitor agreements based on changes in the law, sends a clear message to the marketplace: there are no safe harbors when competitors collaborate.
On December 11, 2024, the FTC and DOJ jointly announced the withdrawal of the agencies’ prior guidance for competitor collaborations. The Guidelines, like other non-binding guidance from the agencies, were designed to explain how the enforcers might analyze potential violations of the antitrust laws, to assist the business community and promote compliance. The enforcers’ joint statement withdrawing the prior guidance asserts that “the Collaboration Guidelines no longer provide reliable guidance to the public about how enforcers assess the legality of collaborations involving competitors,” regardless of whether some aspects of Guidelines remain consistent with the law. The agencies emphasized, as a rationale for the change, a gradual shift in the antitrust laws in favor of broader enforcement of Section 1 of the Sherman Act, the main statutory vehicle for challenging potentially collusive conduct—including agreements among competitors, or “horizontal agreements,” which receive the most severe scrutiny under the law.
This “evolution,” per the statement, was borne of court decisions issued over the last two decades that have shifted the terrain of Section 1. The agencies’ statement cites several decisions embodying those developments, all of which addressed important questions regarding agreements among horizontal competitors, including:
- Whether joint venture polices are subject to Section 1, including amateur collegiate athletic rules (NCAA v. Alston) and joint licensing arrangements among professional sports teams (American Needle v. NFL).
- What level of scrutiny is appropriate when assessing joint venture policies, including pricing policies of a gasoline venture (Texaco v. Dagher), employee “no-poach” agreements among fast food franchises (Deslandes v. McDonald’s), and information-sharing and other policies of an airline alliance (United States v. American Airlines).
The agencies assert that these decisions and others, issued over the last 24 years since the Guidelines were first promulgated, have rendered the Guidelines obsolete.
The Guidelines, according to the agencies’ statement, have also not kept up with technological advancements and the ability of enforcers to assess anticompetitive effects, including using analytics and other disciplines. The joint statement calls out, in particular, that the Guidelines are inadequate to the evaluation of new technologies—most notably, “artificial intelligence”—and fail to confront antitrust violations at the frontier of businesses’ competition-reducing strategies—including specifically, “algorithmic pricing models, vertical integration, and roll ups.”
The withdrawal of the Guidelines is representative of the agencies’ relatively more aggressive enforcement posture in recent years, but it is also consistent with the agencies’ priorities. The enforcers have devoted significant attention in recent years to competitors’ use of algorithms and data-sharing to restrict competition, and have maintained intense scrutiny of developing markets incorporating new AI tools and technologies. The agencies’ have repeatedly identified these areas as significant priorities, both in lawsuits and public statements, including “statements of interests” in private litigation.
Notably, the agencies’ withdrawal of the two-decades-old Guidelines eliminates certain zones of protected conduct, or “safe harbors,” previously available to joint ventures and other competitor collaborations. The Guidelines included two such safe harbors—(1) where collaborators possessed no more than 20 percent of the relevant market and the agreement was not “per se” illegal and (2) for collaborations in “innovation markets” (R&D markets) with 3 or more participants outside the collaboration. By withdrawing prior guidance, the agencies have eliminated these “safety zones” (a change also consistent with the DOJ’s and the FTC’s withdrawal in 2023 of certain safe harbors for collaborations in healthcare markets).
The enforcers’ withdrawal of the Guidelines means these safe harbors no longer can be relied upon by agency targets. While legal and economic rationales for the safe harbors may still exist (e.g., that some forms of collaboration in diffuse markets pose less of a competitive threat), elimination of the “safety zones” means that any agreement among competitors could be subject to investigation or suit, depending on the specific facts of the case and the application of the law. Meanwhile, the elimination of the safe harbor for “innovation markets” is representative of a continued shift away from the use of that term and a more lenient treatment of companies in innovative fields: the DOJ similarly removed that term and a related analysis from its guidelines for mergers, issued in 2023, and its guidelines for the licensing of intellectual property, issued in 2017. This significant policy reversal likely is a response to patterns in rapidly changing technology markets—including specifically in AI-related and other markets of significant consequence—where entrenched companies have often sought to partner with emerging rivals, potentially inhibiting healthy competition and innovation in developing technology.
The FTC and DOJ’s withdrawal of the competitor-collaboration guidelines marks yet another step towards more aggressive enforcement against collusive agreements among competitors, and one in sync with the enforcers’ current priorities regarding nascent and developing technology. Businesses and the public should expect the agencies to continue to press those priorities in the coming years, scrutinizing any competitor agreements that raise concerns under the law.
