Competition Policy, Tech, and Coronavirus: Short-Term Considerations
As government leaders, policymakers, and technology companies continue to navigate the global coronavirus pandemic, CDT is actively monitoring the latest responses and working to ensure they are grounded in civil rights and liberties. Our policy teams aim to help leaders craft solutions that balance the unique needs of the moment, while still respecting and upholding individual human rights. Find more of our work at cdt.org/coronavirus.
As the global economy tries to fight the COVID-19 pandemic, competition policy has a role to play in both the short and long term. Here are some suggestions for policymakers, through a technology lens, for short-term changes to antitrust enforcement. A subsequent blog post will address longer-term policy issues to deal with pandemics.
First, we typically restrict companies that compete with each other from sharing information with each other about consumer demand and inventory levels because that can lead to coordination and collusion. The most extreme form of coordination and collusion is, of course, price fixing – ”the supreme evil of antitrust,” according to the Supreme Court. It is so injurious to competition and consumers that we punish offenders with massive fines and jail time.
The antitrust agencies should consider whether it might be beneficial to relax some of the information sharing rules in key product areas as companies try to manage consumer demand around coronavirus. For example, grocery stores might be better able to manage demand surges if they can share inventory and demand data with each other around key products like milk, bread, and laundry detergent. The same is true for retailers like Target, Amazon, and Walmart. Drug stores might be better able to serve the public if they can exchange information on supply levels of children’s Tylenol and other over-the-counter products that help treat COVID-19 patients. Hospitals and other medical providers could also benefit from sharing information that would, in normal times, be considered competitively sensitive and thus non-shareable under the antitrust laws.
Such coordination carries with it the risk that companies will restrict supply, price gouge, or exclude disfavored competitors. The antitrust agencies should make it crystal clear that such conduct remains not just illegal but go-to-jail illegal. And to mitigate that risk, the antitrust agencies could narrowly define the set of products for which companies can share such information, limit the timeframe for information sharing, and perhaps even act as the clearinghouse for information sharing to reduce the risk of this cure being worse than the disease it attempts to mitigate. Notably, the antitrust agency in the UK just announced that grocery stores are allowed to share information on supplies without fear of prosecution.
What’s the tech angle on this? Information sharing and data pooling are areas of expertise for many companies that base their business model on processing data. Several of them have been in the antitrust crosshairs for years now, and thus also have antitrust expertise in-house. They could help design the data collection and assist the government in monitoring how retailers are using it.
Second, some manufacturers may be facing labor shortages if workers are ill or caring for sick family members. Just as in the retail context, sharing data about the strength of a manufacturer’s workforce could be barred under antitrust law. The antitrust authorities could allow manufacturers to share information about their ability to make key COVID-19 products (e.g., medicines, food, medical supplies) and to consider pooling labor. They could also consider allowing manufacturers to devote production lines to key products and to share information about those decisions without fear of antitrust prosecution. We have precedent for these types of temporary adjustments in times of emergency: the FTC and DOJ offered similar antitrust limited reprieves during Hurricanes Katrina and Rita.
What’s the tech angle on this? Tech companies’ data expertise comes in handy here too, in tracking labor force strength and predicting which areas of the country might suffer labor shortages at which times, as well as in identifying products that are essential for our national response to COVID-19.
Third, tech companies have a penchant for mergers and acquisitions. With the federal antitrust agencies working from home, and some of them unfortunately likely to get sick or be busy caring for family members, we may need to give them more time to review potential deals (as one of the FTC commissioners just tweeted). Under the current system, the agencies only have 30 days to decide whether to open a full investigation of a transaction. Tech companies (and non-tech companies) that want to do mergers during the pandemic could announce publicly that they will voluntarily double the time that the agencies have for that initial rule. If companies are not willing to make such declarations voluntarily, the FTC should work with the House Judiciary Committee to ensure it has the rulemaking authority to expand the time for initial merger reviews during the next six months (which could be expanded or contracted depending on the pandemic’s progress).