Today, the Sabin Center for Climate Change Law and the Columbia Center on Sustainable Investment jointly published a new report: Recommendations to Update the FTC and DOJ’s Guidelines for Collaboration Among Competitors. The guidelines help firms understand the antitrust principles and boundaries of any collaborations they may undertake with other firms, including standard setting, joint procurement, information sharing, and so forth. The existing guidelines, “Antitrust Guidelines for Collaborations Among Competitors,” were written in 2000, and are currently out of step with the agencies’ focus on market power considerations and protecting the competitive process. Meanwhile, many international antitrust regulators have updated their collaboration guidelines, with a particular focus on sustainability-related collaborations. We think the agencies could help clarify the boundaries of permissible collaboration on pressing societal challenges like climate change using sustainability-related examples in updated guidance. Our new report provides a rationale for, and suggested revisions to, the guidelines, to better align them with the agencies’ current enforcement approaches and modern market realities.
Modern Antitrust Enforcement
The Biden Administration has reinvigorated antitrust enforcement at a scale and pace not seen in decades. In July 2021, President Biden signed Executive Order Number 14036: “Promoting Competition in the American Economy,” affirming his Administration’s commitment to enforcing the Sherman Antitrust Act and Clayton Antitrust Act. Since then, enforcers at the Department of Justice (“DOJ”) Antitrust Division and the Federal Trade Commission (“FTC”) (together, the “Agencies”), have been working diligently to increase enforcement actions aligned with these priorities. The DOJ has focused on enforcing Section 2 of the Sherman Act, which prohibits monopolization and unlawful trade restraints, and which includes both civil and criminal penalties. Notably, between January 2022 and September 2023, in criminal antitrust enforcement the Agencies achieved 11 corporate guilty pleas, 22 individual guilty pleas, and seven convictions of individuals at trial. In fiscal year 2022, the Agencies also brought fifty merger enforcement actions, the highest number seen since the US began requiring pre-merger antitrust review in the 1970’s.
The Agencies have also worked to update outdated antitrust guidance. In 2023, the Agencies jointly released revised Merger Guidelines, reflecting the Administration’s modernized view of how competition works in markets, and a renewed adherence to statutory text in guiding enforcement. And the Agencies have been active in other rulemaking proceedings as well, including a new rule to prohibit noncompete clauses in employment contracts as an unfair method of competition. The Agencies have also repealed guidance that is unresponsive to modern market realities, such as two previous policy statements regarding enforcement in healthcare markets.
The Existing Competitor Collaboration Guidelines
One topic that has received less attention from the Agencies is the area of competitor collaborations. Since the existing guidelines were released in 2000, dramatic technological, economic, social, and environmental changes have reshaped market circumstances considerably.
The existing guidelines no longer serve the Agencies well, both because of these new market considerations and because the guidelines are ideologically misaligned with the current enforcement approach. For example, the existing guidelines rely heavily on efficiency defenses for anti-competitive collaborations, which is now disfavored by the Agencies and by regulators in other international jurisdictions.
Many other jurisdictions, including the EU, UK, Japan, and The Netherlands, have updated their competitor collaboration guidelines over the last few years, particularly in response to calls from the private sector to more clearly articulate what forms of sustainability-related collaborations are permissible under the law. And while the US Agencies have remained silent, the anti-ESG movement has attempted to co-opt antitrust law to dissuade collaborative private sector efforts around climate change and sustainability. This has created confusion for many players, some of whom have received subpoenas or civil investigative demands alleging antitrust violations.
Sustainability Considerations
In developing the report’s recommendations, we considered examples in other jurisdictions, particularly with respect to their treatment of sustainability-related collaborations, as many guidelines have been updated with these considerations in mind.
Sustainable development must incorporate socially inclusive, and environmentally sustainable, economic development. This means protecting the planet’s natural resources (water, air, land, biodiversity), as well as sustainably provisioning critical social needs and services, like decent jobs, living wages, food security, affordable housing, peace and security, education, gender and racial equity, healthcare, and so on. This implicates a near infinite set of “sustainability” considerations, though some regulators in other jurisdictions have defined the mandate more narrowly with regards to climate or environmental collaborations only.
Importantly, we do not recommend that the Agencies’ updated guidelines follow international examples in creating explicit sustainability-related carve outs, safe harbors, or exemptions. Due to the complex and expansive definition of sustainability-related private sector activity, we believe exemptions at this time could lead to obfuscation or abuse.
With that said, private-sector firms regularly collaborate in ways which do not impact the main parameters of competition and should be free to proceed without undue concerns about violating antitrust. The private sector is indispensable to achieving global goals related to climate change, such as those set out in the Paris Agreement. The threat of antitrust enforcement is stifling progress in some instances, and clarification would be helpful in discouraging the politicized weaponization of core antitrust arguments. Updated guidance would also benefit from including sustainability-related examples of permissible collaborations to better align with modern market realities and the increasing pressure that firms face from consumers, workers, and some investors to address societal challenges.
Guiding Principles
Our report sets forth several “guiding principles” that inform our approach. We hope these foundational propositions clarify our perspective on this complex intersection and contextualize our recommendations:
- We believe that strong regulatory and legislative regimes are the most effective form of market governance. Still, the private sector maintains an important role in standard-setting and in meeting the terms of international goals and treaties like the Paris Agreement.
- “Sustainability” is too broad and imprecise a concept to warrant special exemptions or safe harbors in antitrust law at this time. Given the enormous range of markets and goals, and the breadth of firm activities which fall under these wide definitions, we believe that special accommodation for “sustainability related” firm activity has the potential for abuse or obfuscation.
- However, firm collaboration regularly occurs and should be able to proceed when it does not harm the main parameters of competition. Firms frequently collaborate with industry partners or other competitors in ways that can advance prosocial benefits to stakeholders. As detailed in our July 2023 report, “Antitrust and Sustainability: A Landscape Analysis,” it is our position that much of the current sustainability collaboration activity that has been accused of violating antitrust laws (industry associations, standard setting, benchmarking, shareholder engagement, etc.) falls safely within long-standing antitrust precedent and presents minimal antitrust risk.
- Updated guidance should remain focused on the behavior of firm collaborations, not the intent of such collaborations.
- As antitrust scholar Sanjukta Paul has emphasized, antitrust is fundamentally an allocator of economic coordination rights, and private-firm collaboration does not preclude or supersede other economic stakeholders from collaborating, particularly workers or smaller suppliers.
- “Competitors” are not defined by industry. Today, firms often occupy many product verticals and have ecosystems of financial, tangible, and intangible assets that combine to reinforce a company’s strategic market position. Any project that involves and impacts parameters of competition should be subject to antitrust scrutiny.
Recommendations
In today’s report, we provide recommendations on how to approach various kinds of collaborations, including: information sharing, joint research and development initiatives, joint procurement, and standard setting. We also discuss how updated guidance should move away from efficiencies-based justifications for anti-competitive behavior, as well as consider monopsony dynamics of collaborations, presumptive thresholds, and consolidation concerns.
New guidelines would build on the learning and experience of the past quarter century and reflect the experience of the Agencies over many years of collaboration review in a changing economy. They would also benefit from refinement through an extensive public consultation process. The goal of our report is to serve as a launching point for discussion of this important work with the Agencies and the practitioner public. We welcome feedback to refine and strengthen the report’s recommendations.
Chloe Field is the Initiative on Climate Risk and Resilience Law Fellow at the Sabin Center for Climate Change at Columbia Law School.
Cynthia Hanawalt is the Director of Climate Finance and Regulation at the Sabin Center for Climate Change Law.
Denise Hearn
Denise Hearn is a Resident Senior Fellow at the Columbia Center on Sustainable Investment. She is an applied researcher, writer, and advisor who works with governments, financial institutions, companies, and nonprofits on antitrust, economic policy, and new economic thinking. She co-authored The Myth of Capitalism: Monopolies and the Death of Competition — named a Financial Times Best Book of 2018.
