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Effecting M&A Diligence When Competitors Are Involved

Increased scrutiny of the healthcare industry from antitrust agencies such as the Federal Trade Commission and US Department of Justice emphasize the necessity of compliance measures to mitigate antitrust risk that can negatively impact the closing of transactions. This article explores the critical role of clean team agreements (CTAs) in managing anti­trust risks during the due diligence process of healthcare transactions. The paper provides a comprehensive analysis of how CTAs can be structured to securely handle competitively sensitive information, ensuring that such documents are only accessed by designated personnel under strict guidelines. Through a variety of hy­pothetical scenarios, the article demonstrates the application of CTAs in situations involving direct competitors, labor competition, and different geographic markets. These examples underscore the importance of tailoring CTAs to the specific com­petitive dynamics and regulatory environments of each transaction, ensuring both legal compliance and transactional efficiency in the healthcare sector.

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New DOJ Task Force to Target ‘Multisided Giants’ in Healthcare

The US Department of Justice’s (DOJ) announcement of the formation of a new healthcare task force signals an even stronger emphasis on addressing competition issues in the healthcare industry. Large, multisided platforms involved in multiple sectors (e.g., insurance companies acquiring physician practices and/or essential healthcare IT and data services) are a key target for enforcement.

WHAT HAPPENED:

  • On May 9, 2024, the DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). The HCMC will be tasked with guiding and developing policy advocacy and conducting investigations – and ultimately civil and criminal enforcement actions –in healthcare markets.
  • US Assistant Attorney General Jonathan Kanter stated that the HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.” The press release specifically identified the following non-exhaustive set of issues that will be priority areas for the HCMC: payer-provider consolidation, serial acquisitions, labor, quality of care, medical billing, healthcare IT services, and the access to and misuse of healthcare data.
  • In announcing the formation of the task force at a Washington Post Live event, Kanter highlighted the changing nature of the healthcare marketplace. In what he coined the “platformization of healthcare,” patients and consumers now interact with “multisided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks” which have become the “gatekeepers of our healthcare system.” According to Kanter, it is crucial that the Antitrust Division adapt its enforcement policies and strategies in healthcare to reflect these new market realities.
  • The HCMC will be led by Katrina Rouse, an antitrust prosecutor at the DOJ since 2011 who previously served as chief of the Defense, Industrials, and Aerospace Section and a trial attorney in the Healthcare and Consumer Products Section. Rouse will oversee a team of civil and criminal prosecutors, economists, experts in healthcare and technology, data scientists, investigators and policy advisors.

WHAT THIS MEANS:

  • The antitrust enforcement agencies have used similar task forces in the past to focus resources and accumulate subject matter expertise. For example, the DOJ’s Procurement Collusion Strike Force has been successful at investigating and pursuing government contracting cases.
  • The launch of the HCMC reflects the antitrust enforcement agencies’ increasing efforts to respond to changing dynamics in the healthcare space and address the potential harmful results of these changes on patients, healthcare workers and communities. In March 2024, the DOJ, Federal Trade Commission (FTC) and US Department of Health and Human Services (HHS) jointly launched a cross-government inquiry into the increasing role of private equity firms in healthcare transactions and whether such firms prioritize maximizing profits at the expense of healthcare quality and affordability.
  • Of note, the DOJ, rather than the FTC, typically investigates mergers involving health plans and contracting issues among health plans and providers. Therefore, healthcare industry participants, [...]

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Antitrust M&A Snapshot | Q1 2024

Topics covered in this edition:

  • The Federal Trade Commission (FTC) and US Department of Justice have begun implementing the 2023 Merger Guidelines in their enforcement actions
  • During a virtual workshop, the FTC highlighted its focus on private equity (PE) acquisitions of healthcare service providers and expressed concerns about PE in healthcare
  • Artificial intelligence’s antitrust implications continue to draw FTC scrutiny
  • The European Commission (EC) used its super-simplified procedure in about one-third of all merger decisions in Q1 2024
  • EC regulators are taking an increasingly vigilant approach to merger control review to ensure market dynamics remain pro-competitive and pro-consumer

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Blocked JetBlue-Spirit Deal Illustrates New Antitrust Approach

As reflected in the December 2023 merger guidelines, the Federal Trade Commission and the US Department of Justice have changed the way they think about out-of-market effects, i.e., competitive effects that arise outside the relevant market.

In this Law360 article, Lisa Rumin and Anthony Ferrara unpack this new approach, which was prominently demonstrated during the JetBlue Airways-Spirit Airlines merger, and provide practical considerations on the implications for firms contemplating mergers and acquisitions.

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Heard at the 2024 Antitrust Law Section Spring Meeting: Part II

The American Bar Association Antitrust Law Section’s annual Spring Meeting concluded on April 12. The annual Spring Meeting featured updates from federal, state and international antitrust enforcers and extensive discussion on priority antitrust issues affecting various industries. In this article, we highlight takeaways from the final two days of the Spring Meeting.

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Heard at the 2024 Antitrust Law Section Spring Meeting: Part I

The American Bar Association Antitrust Law Section’s annual Spring Meeting is underway in Washington, DC. The annual Spring Meeting features updates from federal, state and international antitrust enforcers and extensive discussion on priority antitrust issues affecting various industries. In this article, we highlight the key takeaways from the first portion of the Spring Meeting.

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Year in Review: Criminal Enforcement by the DOJ Antitrust Division in 2023

When it comes to antitrust criminal enforcement, 2023 will be remembered as the year when the US Department of Justice’s (DOJ) Antitrust Division redefined and tested the outer boundaries of its authority. This report looks back at the key events from the DOJ’s year in criminal antitrust enforcement.

Here’s a glimpse of what’s inside:

  • Despite four straight losses and a voluntary dismissal in labor market cases, the DOJ remains undeterred in bringing additional criminal wage-fixing and no-poach suits.
  • DOJ’s Procurement Collusion Strike Force secured several guilty pleas and stiff penalties in 2023 and will most likely continue pursuing aggressive investigative and litigation strategies moving forward.
  • The nearly decade-long investigation of the generic drug industry appears to be ending after the DOJ recently resolved and dismissed the remaining cases.
  • Deputy Attorney General Lisa Monaco highlighted cybersecurity, tech and national security as areas of heightened risk and thus heightened scrutiny, so corporations in these markets should take heed of the DOJ’s emphasis on corporate compliance in 2024.

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FTC and DOJ: Preserve Your Chats!

  • The Federal Trade Commission (FTC) and the US Department of Justice (DOJ) are updating their standard preservation notices and instructions for responding to all manner of discovery (e.g., second requests, voluntary access letters, compulsory process, etc.). The update will alert parties to the steps that must be taken to preserve communication from popular business collaboration tools and “ephemeral messaging platforms” like Slack, Microsoft Teams and Signal.
  • These platforms are typically set to delete communication data automatically and may lack appropriate capabilities for preserving and extracting data even when a preservation notice is issued. While these tools have become central features in the modern business landscape, the Agencies’ announcement is designed to clearly set out the expectation that companies and individuals will adhere to preservation requirements. Parties could be subject to criminal obstruction of justice charges if they fail to comply.
  • Highlighting the very serious concern these tools raise in the DOJ’s view, Manish Kumar, Deputy Assistant Attorney General for the DOJ’s Antitrust Division, asserted that ephemeral messaging platforms are “designed to hide evidence.”

WHAT HAPPENED

  • On January 26, 2024, the DOJ and FTC (the Agencies) announced an update to their preservation notices and instructions for responding to all manner of discovery to “address the increased use of collaboration tools and ephemeral messaging platforms in the modern workplace” and “reinforce longstanding obligations requiring companies to preserve materials during the pendency of government investigations and litigation.”
  • The Agencies recognize that ephemeral chat messaging is becoming an increasingly important feature of the modern business landscape, and they have sought to collect ephemeral messaging data in the past. However, because these platforms are typically set to delete messages automatically and may lack clear solutions for preserving data, the Agencies have run into dead ends trying to collect such data in prior cases. Indeed, Manish Kumar, Deputy Assistant Attorney General for the DOJ’s Antitrust Division stated that “these updates to our legal process will ensure that neither opposing counsel nor their clients can feign ignorance when their clients or companies choose to conduct business through ephemeral messages.”
  • This new preservation language will be included in all DOJ and FTC preservation letters, second request specifications, voluntary access letters, compulsory legal process and grand jury subpoenas going forward.
  • While the new language changes are a continuation of the Agencies’ existing preservation policies, they will highlight parties’ obligations with respect to ephemeral messaging data specifically, potentially making it easier for the Agencies to seek sanctions and other recourse against companies who fail to preserve such data.
  • Indeed, the Agencies’ announcement cites a prior case where civil spoliation sanctions resulted from a target’s failure to properly preserve ephemeral messaging data. Likewise, the FTC has also signaled its willingness to refer cases to the DOJ Antitrust Division’s Criminal Liaison Unit for criminal obstruction charges in certain cases.

WHAT THIS MEANS

  • The Agencies have recognized in recent cases that relevant business communications that used to happen over email are [...]

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Antitrust M&A Snapshot | Q2 2023

Topics covered in this edition:

  • FTC Unveils Proposal Detailing Significant Changes to Hart-Scott-Rodino Act Merger Notifications
  • Assa Abloy Settlement Raises Questions on Litigating the Fix and DOJ Consent Decrees
  • Pharmaceutical Industry Remains in Regulators’ Crosshairs
  • “Whole of Government” Competition Mandate Can Impact Deals the FTC and DOJ Do Not Challenge
  • FTC’s Constitutionality Comes Under Fire—Again
  • Divergent Viewpoints in Video Games Sector: Microsoft’s Takeover of Activision Blizzard
  • New Merger Simplification Package from the EC

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Proposed Merger Guidelines Outline Fundamental Change of Approach to Merger Investigation and Enforcement

Mergers and acquisitions will continue to face strong headwinds at the Federal Trade Commission and the US Department of Justice under new proposed Merger Guidelines released on July 19, 2023. The Proposed Guidelines embody the antitrust agencies’ aggressive posture toward merger enforcement under the Biden administration. This On the Subject highlights the most significant changes in the Proposed Guidelines and what steps companies contemplating mergers and other transactions should take in the face of these changes.

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