Sign Up for PublicationsU.S. Justice Department and Federal Trade Commission Withdraw Guidance for Collaboration Among Competitors
On December 11, 2024, the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) (collectively, “the Agencies”) withdrew the 2000 Antitrust Guidelines for Collaborations Among Competitors (the “Collaboration Guidelines”). The FTC vote was 3-2, with former Commissioner Lina Kahn and Commissioners Rebecca Slaughter and Alvaro Bedoya voting in favor and Commissioners Andrew Ferguson and Melissa Holyoak voting against. The Collaboration Guidelines were not replaced with any new guidelines. Both Commissioners Ferguson and Holyoak wrote dissents, and both mentioned that (1) the withdraw left businesses without clear guidance on competitor collaborations and (2) the withdraw should have been postponed until the new administration took office.
What Guidance Was Withdrawn?
The Collaboration Guidelines were issued in April 2000, to “provide guidance to business people” regarding the Agencies’ analytical approach to competitor collaboration. Collaboration Guidelines at 1. Although “[n]o set of guidelines can provide specific answers to every antitrust question that might arise from a competitor collaboration,” the purpose of the Collaboration Guidelines was to inform the public of what types of collaborations the Agencies viewed as problematic, and those that it viewed as procompetitive. Id. at 1-2.
In addition to general discussion of the Agencies’ approach, the Collaboration Guidelines offered two “safety zones,” “designed to provide participants in a competitor collaboration with a degree of certainty in those situations in which anticompetitive effects are so unlikely that the Agencies presume the arrangements to be lawful without inquiring into particular circumstances.” Id. at 25. The two safety zones were (1) competitor collaboration where the combined market share of the collaborators did not exceed 20%, and (2) collaboration “in an innovation market where three or more independently controlled research efforts in addition to those of the collaboration possess the required specialized assets or characteristics and the incentive to engage in R&D that is a close substitute for the R&D activity of the collaboration.” Id. at 26-27. In both cases, conduct subject to the per se rule would be exempt from the safety zone. The former safety zone recognizes that, without significant market power, non‑per se collaborations are unlikely to harm competition. The latter safety zone recognizes that efficiency justifications are particularly important in markets where dynamic competition (e.g., competition to innovate) is important, relative to static competition (e.g., competition on price).
Immediate Impact on Competitor Collaborations
Neither Agency has filed an antitrust lawsuit to conduct that the Collaboration Guidelines addressed since those guidelines were withdrawn. Accordingly, the short‑run impact of the Agencies’ decision is unclear. Further, the dissents of both Commissioners Ferguson and Holyoak mention the need for clear guidelines for businesses, suggesting that new Collaboration Guidelines may be forthcoming, or the old Collaboration Guidelines may be reinstated, when a fifth FTC commissioner is selected.
Current State of Competitor Collaboration Law
Although both Commissioners Ferguson and Holyoak stated in their dissents that the withdrawal leaves businesses in the dark about the Agencies’ views, Commissioner Bedoya wrote separately to state that businesses should carefully evaluate existing case law on competitor collaborations, identifying cases such as NCAA v. Alston, 594 U.S. 69 (2021); American Needle Inc. v. NFL, 560 U.S. 183, (2010); Texaco Inc. v. Dagher, 547 U.S. 1 (2006); Deslandes v. McDonald’s USA, LLC, 81 F.4th 699 (7th Cir. 2023); cert. denied, 144 S. Ct. 1057 (2024); and United States v. American Airlines Grp., 121 F.4th 209 (1st Cir. 2024). Given that these cases now represent the clearest guidance on the Agencies’ view of competitor collaborations, the precedent they establish bears emphasis.
In Dagher, the court found that collaboration where competitors pool their resources, share risks, share profits, and jointly control decision‑making should be subject to the rule of reason. 547 U.S. 1, 3-4. Particularly because the FTC had previously approved the form of the collaboration at issue in Dagher, the court found that the price-setting behavior was unitary (rather than concerted) and not subject to the per se rule. Id. at 6-8.
In American Needle, the court promulgated three joint venture rules. First, the court found that a single corporate entity could “agree” within the meaning of Section 1 of the Sherman Act. 560 U.S. 183, 191-92. Second, the court found it possible that conduct was not necessarily concerted, even if it involved multiple entities. Id. at 192. Third, it found that joint ventures like the NFL should be analyzed under the rule of reason. Id. at 202.
In Alston, the Supreme Court rejected the NCAA’s request that it be given “abbreviated deferential review,” given its status as a joint venture. 594 U.S. 69, 87-88. The court reaffirmed its view that joint ventures like the NCAA are subject to rule of reason review, and that although collaborations among competitors in sports leagues can be procompetitive, a detailed analysis of the leagues’ rules was required to evaluate whether those procompetitive effects exist or outweigh any anticompetitive harms. Id. at 87-91. The court also scrutinized the NCAA’s alleged procompetitive justifications heavily, both to determine if they had factual support and to determine if they were legally cognizable. Id. at 96-102.
In Deslandes, the Seventh Circuit confirmed that restraints that are part of a franchise agreements, e.g., a type of competitor collaboration, must be carefully scrutinized to determine whether they are naked (and therefore subject to the per se rule) or ancillary (and therefore subject to the rule of reason). 81 F.4th 699, 702-03. It also put the burden of showing that the restraint was ancillary on the defendant. Id. at 705.
Finally, in American Airlines Grp., the First Circuit affirmed a district court’s finding that collaboration between JetBlue and American Airlines would violate the antitrust laws. 121 F.4th 209, 215. Consistent with Alston, the First Circuit rejected the contention that the mere label of joint venture granted the collaboration lightened scrutiny. Id. at 221-22. And, consistent with Alston, the First Circuit scrutinized and rejected the defendants alleged procompetitive justifications, noting that that several were not legally cognizable. Id. at 225-26.
In sum, the case law cited by the Agencies following the withdraw of the competitor collaborations suggests that whether any collaboration violates the antitrust laws turns on several fact‑intensive questions. Those include (1) whether the restraint is necessary for the operation of the collaboration and (2) whether the justifications for the collaboration are factually supported and legally cognizable. Given the withdraw of the Collaboration Guidelines and their attendant “safety zones,” business should now need to conduct fact‑specific analyses of their joint venture operations, alongside antitrust counsel, to mitigate litigation risk. Because further Collaboration Guidelines may be forthcoming in the near future, businesses should also closely watch for further FTC guidance after a fifth Commissioner is selected.