A new administration always brings with it the excitement of new political appointees, briefing books and never-ending speculation about forthcoming changes in the direction of various agencies. It also brings the opportunity for meetings with incoming government officials for an airing of the grievances. While Festivus will soon be upon the rest of us (we will save the Feats of Strength for another blogpost), we are referring to the First Amendment: the right of all persons to “petition the government for redress of grievances.”
Companies oftentimes meet with the government entities alone, or under the auspices of a trade association. But similar-minded competitors collaborating on lobbying, advocacy, comments and other types of “petitioning” as part of a formal or ad hoc coalition is also common. Regardless of the form the group takes, if two or more competitors are in a room together with or without government officials, all involved should be aware of the antitrust laws.
The law provides a limited exemption from antitrust liability for certain actions by individuals or groups that are intended to influence government decision-making, called the “Noerr-Pennington doctrine.” The purpose of the Noerr-Pennington doctrine is to protect the fundamental right to petition the government, including filing litigation in the courts. It also seeks to support the flow of information to the government. Noerr-Pennington immunity developed from two cases in the 1960s: Eastern Railroad Conference v. Noerr Motor Freight, 365 U.S. 127 (1961) and United Mine Workers of America v. Pennington, 381 U.S. 657 (1965). But like most immunities from the antitrust laws, Noerr-Pennington is narrowly construed and has its limits—parties can’t just point to some potential future political impact of their actions to benefit from Noerr-Pennington immunity. You can read more about the applicability and limits of the Noerr Pennington doctrine in Federal Trade Commission, Enforcement Perspectives on the Noerr-Pennington Doctrine: An FTC Staff Report (2006).
The bottom line here is any sharing or discussion among competitors regarding pricing, output, business strategies and likely responses to government action can be a minefield unless you carefully establish procedures to prevent the improper use of the information. Before speaking with competitors, consider a few key antitrust guidelines:
- Set the ground rules for any competitor meeting, and clearly define the purpose of the meeting. There are many legitimate and laudable purposes for competitors to work together. Identify them and limit discussion accordingly.
- Involve antitrust counsel at the outset to identify potential competition concerns and develop procedures to mitigate risk. Have in-house or outside counsel for at least one party attend industry meetings to ensure that meetings stay appropriately focused and to document what transpires.
- Ensure that all petitioning efforts are focused on obtaining government relief, and not on how individual firms will behave in the market, either independent of such government actions or in response to them. Prospective government petitioning is generally protected activity but agreeing on how to react to existing laws and regulations is not.
- Avoid exchanging competitively sensitive information. Information exchanges can be pro-competitive and lawful if done correctly. Among other things, data should generally be anonymized, collected by a third party and aggregated.
- Do not have discussions among the competitors about how they will price or compete among each other AFTER they achieve the requested relief from the government.
- Do not use the process of working together as an industry to seek relief from the government as an opportunity to have discussions or enter into agreements that could harm competition that are unrelated, or merely tangentially related, to the requested relief.
When in doubt, talk to your in-house counsel, or give us a call.