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Staying Aware of U.S. Competition Legal Issues at a Time of Economic Upheaval

April 06, 2020
Firm Memoranda

At a time of crisis and economic upheaval, there is a natural tendency for people to pull together. Currently, many are isolating in their homes, yet communities and businesses everywhere are coming together to face a common enemy: COVID-19. One might say this is the best of humanity revealing itself. But when that “pulling together” crosses into the economic and legal realm, businesses should realize that even well-intentioned steps might later be questioned by regulators or civil plaintiffs. History has shown that economic crises often motivate incumbent competitors to act in anticompetitive ways. Regulators in the United States, Europe, Australia, and elsewhere have all signaled they are aware of these dangers and have, in several instances, explicitly promised to apply increased antitrust scrutiny during and after the COVID-19 pandemic. In some cases, regulators are already seeking out informants regarding any anticompetitive schemes.

Companies facing the current crisis, as well as those yet to come, should understand when and how they face potential competition law violations. The types of conduct giving rise to liability under antitrust laws are many and complex, and the line between legal and illegal behavior is often blurry. Conduct that may in some cases be permissible may not be in others. It is critical for businesses to be on the lookout for all such conduct (and consult with appropriate in-house and external counsel) to ensure they do not fall victim to anticompetitive harms, and to avoid missteps that could unwittingly result in significant antitrust liability.

This memorandum provides an overview of one of the most important competition regimes in the world—the United States—and how to assess potentially anticompetitive behavior during and after a time of economic crisis. Its intent is to give those who do not regularly practice competition law a practical guide on (a) how businesses can help minimize their own exposure to antitrust liability, (b) understand the antitrust laws’ applicability during times of crisis, and (c) how to spot competitors’, suppliers’, and purchasers’ potentially anticompetitive behavior (and seek appropriate legal advice). Although there is a substantial body of law regarding anticompetitive mergers and acquisitions, this memorandum focuses on conduct-oriented behavior, because that behavior is more likely to create immediate problems for market participants in the face of economic upheaval.

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Adam Wolfson
Phone: +1 213-443-3084

Karl Stern
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Thomas Pease
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Ethan Glass
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Stephen Swedlow
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Ari Herbert
Phone: +1 213-443-3255

Will Sears
Phone: +1 213-443-3282