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DOJ and FTC Update Antitrust Guidelines

February 28, 2017

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The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have recently updated their antitrust guidelines for intellectual property licensing, as well as international antitrust enforcement. These revised guidelines collectively provide greater flexibility for the regulating agencies on various issues. They are also consistent with a more expansive application of U.S. antitrust laws in the area of international and cross-border conduct. 

The area of antitrust and merger law has evolved tremendously, and these new updates are welcomed; the previous guidelines had not been updated since 1995. While some comments suggest that these new guidelines are somewhat broad and unspecific, as with any guidelines and measures, the true test will be how the new administration will enforce the updates. 

Department of Justice Releases Updated IP Licensing Guidelines

The DOJ and the FTC recently issued updated Antitrust Guidelines for the Licensing of Intellectual Property (“IP Licensing Guidelines”). These new guidelines provide clarifications on how federal antitrust agencies will evaluate licensing activities involving intellectual property such as patents, copyrights, trade secrets, and other forms. The updates modernize the previous IP Licensing Guidelines, which were issued in 1995.

The new IP Licensing Guidelines do not propose any significant changes to the overall approach of the antitrust agencies. The new updates do, however, account for:

  • New enforcement experience and policy expertise gained in the past two decades
  • Some changes in statutory and case law (some unrelated to licensing of intellectual property)

In particular, specific changes in antitrust law include:

  • Replacing per se illegality for vertical price agreements with an application of the rule of reason
  • Additional developments with regard to a monopolist’s refusal to deal with competitors

The agencies omitted discussion of contentious issues such as reverse payments and standard-essential pensions (SEPs). This indicates that the IP Licensing Guidelines are still focused on broad principles rather than highly specific issues. 

Public Comments on the IP Licensing Guidelines

The antitrust agencies received 24 sets of comments following release of the draft IP Licensing Guidelines. Many of the comments reiterated the main principles by which the agencies operate:

  • Intellectual property should generally be treated in a similar manner to other property
  • Possession of intellectual property does not automatically translate into market power
  • In general, IP licensing is considered procompetitive

Many of the other comments sought greater clarity in certain sections of the guidelines, and urged the agencies to provide greater precision for some of the issues.

DOJ Releases New Guidelines for International Antitrust Enforcement

Similarly, the DOJ and FTC have also released revised Antitrust Guidelines for International Enforcement and Cooperation (“International Guidelines”). These guidelines update the previous 1995 Antitrust Enforcement Guidelines for International Operations. The revisions reflect the increasing importance of antitrust enforcement for the global economy. They also reiterate the agencies’ commitment to working with foreign authorities on various policy and investigative issues. 

The revised International Guidelines are composed of three main sections: 

  • Circumstances wherein U.S. antitrust laws may reach conduct occurring outside the U.S.
  • Circumstances in which U.S. agencies may refrain from applying U.S. antitrust laws to international trade conduct
  • Cooperation of U.S. agencies with foreign competition authorities in investigations involving conduct occurring outside the U.S.

As with the IP Licensing Guidelines, the International Guidelines do not necessarily introduce any major new concepts or broad legal interpretations. While a large portion of the 2017 guidelines are the same as the 1995 guidelines, the new update highlights some important developments. Most notably, there is an added chapter on international cooperation. The chapter addresses issues such as:

  • Investigative tools used by the agencies
  • Confidentiality safeguards
  • Legal bases for cooperation
  • Types of information exchanged and confidentiality waivers
  • Remedies and other special considerations in criminal investigations

In addition, the International Guidelines provide updates regarding the application of key U.S. antitrust laws in areas involving: 

Lastly, the International Guidelines provide revised examples which illustrate the types of issues most commonly encountered. Overall, the International Guidelines favor a growth in the agencies’ discretion in future investigations. That is, the guidelines emphasize broad policy statements while avoiding standards that might unnecessarily limit the agencies’ ability to remain flexible in foreign enforcement efforts.  

Comments on the International Guidelines

The agencies received a total of eight comments in response to the new International Guideline updates. The comments mainly addressed issues pertaining to enforcement concerns or the cooperation provisions of the Guidelines.

With regards to enforcement, public comments were largely focused on clarity regarding the agencies’ standards for determining when U.S. antitrust laws would apply in situations involving only non-import foreign commerce. Other issues touched upon applications of the Sherman Act and the Federal Trade Commission Act to foreign conduct. 

In terms of cooperation concerns, comments mostly addressed how the agencies would engage with governments that do not share similar fundamental antitrust principles as the U.S. Specific concerns included due process, adherence to rule of law, and a focus on consumer welfare. Some comments suggested specific steps that the agencies might take to ensure ideal antitrust enforcement. 

Antitrust Regulation in the News

Antitrust regulation remains an important but frequently overlooked area of consideration for physicians. For instance, a recent FTC complaint reminds physicians that antitrust laws place definite limitations on the extent to which competitors can act in a joint fashion. Thus, a failure to consider such limitations can expose physicians to the risk and costs associated with a federal government enforcement action. 

In other news, the recent appointment of Maureen K. Ohlhausen as acting chair of the FTC may signal future changes to come with regards to antitrust enforcement. While her role as acting chair is temporary, she has indicated that FTC policy changes may be forthcoming, especially within the areas of regulatory action.

Competitive markets remain the heart of the U.S. economy. The new sets of antitrust guidelines reinforce the approach of evaluating harm to competition, rather than a focus on harm to any individual competitor. Procompetitive practices and stances help protect competition from those seeking to control prices or who otherwise curtail choices and interfere with fair markets. 

Antitrust issues and trends can be complex. If you have any legal issues or need representation regarding any complex antitrust claim, contact us today at Kessler Topaz. Courts throughout the entire country appoint us on a regular basis to acting leadership positions in cases involving anticompetitive conduct in key industries.