United States: Federal Trade Commission

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In summary

The covid-19 pandemic has raised questions about the role of competition policy and enforcement during times of crisis. The experience of the FTC has been that competition law and policy are especially important in times of crisis and that ignoring them can have real long-term costs. Existing policies, such as those involving competitor collaboration, anticompetitive conduct that results in high prices and merger review, are well suited to protect competition and consumers in times of crisis.

Discussion points

  • Competition policy and enforcement in the wake of the covid-19 pandemic
  • Competitor collaboration
  • Pricing and price-gouging
  • Merger review, assessment of efficiency claims and the failing firm defence

Referenced in this article

  • National Industrial Recovery Act
  • Defense Production Act section 102
  • FTC v Mylan Laboratories
  • Sherman Antitrust Act section 2
  • United States Department of Justice
  • International Competition Network
  • Canadian Competition Bureau
  • Mexican Federal Economic Competition Commission
  • Joseph Simons

Competition policy in times of crisis

We find ourselves in a world where a public health crisis has led to significant economic impacts, including the loss of jobs, the closure of businesses and a significant reduction in domestic and global commerce, not to mention human tragedy of epic proportions. When the crisis abates, the task of reopening economies will pose further challenges. Some may argue that normal competition rules, such as those that affect competitor collaborations, should be suspended, or question the fairness of letting the dynamics of supply and demand set prices. The implication is that in times of emergency, the normal rules do not serve us well. While emergencies require swift and well-informed responses, it is critical not to respond in a way that exacerbates the problem.

While the coronavirus pandemic may be new, calls to turn a blind eye to competition policy and the role of markets are not. History has taught us that ignoring competition principles can prolong the economic rebound. Federal Trade Commission (FTC) Chairman Joseph Simons recently pointed out that, ‘[a]s we saw during the 2008 financial downturn and other, earlier challenging times, “emergency” exceptions to the antitrust laws are unnecessary and can be counterproductive’. 1

During the 2008 economic crisis, the then Deputy Assistant Attorney General Carl Shapiro said, ‘[k]eeping markets competitive is no less important during times of economic hardship than during normal times’.2 As with highway speed limits, it is not only important to drive safely on a sunny and dry day, but even more so when it is icy, dark and raining, because that is when accidents are most likely to happen.

History shows that regulations put in place in times of crisis can remain long after the emergency has passed and can suppress beneficial competition. The National Industrial Recovery Act3 and statutes enacted pervasive regulation on the airline and trucking industry in response to perceived crises of one degree or another, and went on to limit competition and prevent innovation and competition long after the crisis had passed.4 Antitrust agencies need to ensure not only that competition laws are enforced during the crisis, but that the principles behind them serve as a guidepost for anticompetitive regulation that could survive long after it has passed. 5

The United States antitrust agencies, the FTC and the Antitrust Division of the Department of Justice (DOJ) have long resisted calls to relax competition policy, and have helped to lead the international competition community in explaining that relaxing, suspending or eliminating competition standards can inadvertently harm consumers and producers.

In good times and bad, competition authorities such as the FTC and the DOJ protect consumers by prohibiting anticompetitive conduct that prevents markets from responding to consumer needs.6 These roles are especially important in this uncertain time. Competitive forces create incentives for businesses to provide what consumers want and need.

As always, however, reliance on markets must be buttressed by appropriate competition law enforcement. For example, the FTC and the DOJ recently issued a joint statement reiterating their commitment to protecting workers on the front lines of the covid-19 pandemic. These workers include doctors, nurses, first responders and those who work in grocery stores, pharmacies and warehouses, among other essential service providers. The FTC and the DOJ are prepared to use the antitrust laws to protect these workers against those who seek to exploit the current circumstances and engage in anticompetitive conduct in the labour market.7 Such conduct might include colluding to lower wages or to reduce salaries or hours worked. The agencies’ statement is a reminder to businesses that such conduct remains illegal during this global pandemic.

The international competition community has also emphasised the importance of sound competition enforcement practices during the pandemic. Looking to Latin America alone, the agencies of Chile, Colombia, Costa Rica, Mexico and Paraguay have affirmed that their law does not include exceptions to the enforcement of antitrust law in times of crisis, such as the one produced by covid-19. 8

Similarly, the International Competition Network recently issued a statement reaffirming the relevance of competition to economies in crisis and urging member agencies to remain vigilant to prevent anticompetitive conduct during the crisis.9 The statement recognises the ability of agencies to consider good-faith efforts and limited collaborations among competitors to provide needed goods and services in making enforcement decisions, in line with applicable laws. It also encourages transparency with respect to operational and policy changes during the crisis and supports agency advocacy to promote competition as a guiding principle for economic recovery from the pandemic. For its part, the Organisation for Economic Co-operation and Development has developed a series of policy notes on the impact of the covid-19 crisis on merger control, public procurement, exploitative pricing and competitor collaboration. 10

The pandemic has required competition law agencies to focus on three areas in particular: the treatment of competitors that seek to band together to find solutions to shortages of critical medical supplies, the role of competition in regard to producers that raise prices in response to pandemic-related shortages, and whether standards for merger review should be relaxed.

Competitor collaboration

A key issue arising in many jurisdictions is whether the covid-19 crisis justifies relaxation of normal rules on collaboration among competitors, to encourage producers to more efficiently respond to heightened demand for medical supplies and medication. In the United States, the FTC and the DOJ issued a statement reminding businesses that the pandemic does not abrogate or diminish antitrust or consumer protection rules or enforcement. However, they also developed expedited procedures for legitimate collaborations and joint ventures to address the health crisis created by the pandemic.11 The expedited procedure notes, for example, that healthcare facilities may need to work together in providing resources and services to assist patients, consumers and communities affected by the pandemic and its aftermath. Other businesses may need to temporarily combine production, distribution or service networks to facilitate production and distribution of covid-19-related supplies. Existing guidance makes clear that many such efforts to respond to the pandemic would be consistent with existing antitrust standards.12 This type of collaboration could help ease the supply and distribution challenges that potentially lead to excessive pricing.13 The FTC and the DOJ have committed to respond to all covid-19-related requests within seven days of receiving all necessary information.

The Canadian and Mexican competition agencies have reacted in similar form. The Canadian Competition Bureau (CCB) noted that the pandemic may call for the rapid establishment of business collaborations of limited duration and scope to ensure the supply of critical products and services, such as collaborative buying groups or the sharing of supply chain resources. It stated that ‘in such circumstances, where firms are acting in good faith, and motivated by a desire to contribute to the crisis response rather than achieve competitive advantage, the Bureau does not wish to see specific elements of competition law enforcement potentially chill what may be required to help Canadians’. 14 The CCB also created an expedited guidance procedure. For its part, Mexico’s Federal Economic Competition Commission (COFECE) stated that ‘any collaboration agreement between economic agents that, in the present context of a health emergency, is necessary for maintaining or raising the supply, satisfying the demand, protecting supply chains, avoiding the shortage or hoarding of goods, will not be prosecuted as long as they comply with the law and do not displace competitors in the market’.15 In like manner, Chile’s National Economic Prosecutor (FNE) stated that although it would not make any exception to its competition law in the crisis, the law would not be violated if the benefits of collaboration between competitors outweigh its anticompetitive risks, the risk of interaction between competitors is minimised, and there is no less restrictive means of achieving those benefits. 16


The covid-19 pandemic has led to critical shortages that have resulted in large price increases for certain items. Yet in competitive markets, high prices often provide the necessary incentive to attract new entrants or reallocate goods to high-need areas, which ultimately helps to bring supply back in line with demand.17 Often, price limits have the effect of prolonging the shortage, with no product available at the regulated price.

Although many states in the United States have enacted specific anti-price-gouging statutes that prohibit charging excessive or exorbitant prices for certain commodities under emergency conditions, there is no US law that generally prohibits price-gouging. Section 102 of the Defense Production Act18 does prohibit price-gouging and hoarding of materials that the President has designated as ‘scarce’ or ‘threatened’, but the current list of items designated in that category does not include most consumer goods. If the FTC learns of price-gouging or hoarding of materials covered under section 102, the FTC refers those complaints to the DOJ’s recently created Covid-19 Hoarding and Price Gouging Task Force. That Task Force is charged with enforcing section 102 of the Defense Production Act. 19

When enforcing the antitrust laws, the FTC will not hesitate to challenge collusive or other anticompetitive practices during the emergency at hand and will continue to coordinate with the DOJ in its federal antitrust oversight functions. Although independent pricing decisions alone have not been determined by courts to violate federal antitrust laws, the FTC has challenged conduct that violates the antitrust laws, allowing a monopolist to fend off new competitors and maintain high prices. The FTC will continue to look out for such conduct during this pandemic. Competition law enforcement can be an appropriate tool to address anticompetitive conduct resulting in supply shortages or price increases. For example, anticompetitive exclusionary conduct by a dominant firm may prevent new entrants from responding to shortages, thus suppressing price competition and violating section 2 of the Sherman Act. 20

An older example, arising in a different context, shows how competition law can address anticompetitive behaviour that results in high prices to consumers. In 1998, the FTC charged that Mylan Industries and four other companies carried out a plan intended to give Mylan the power, through the use of exclusive licences, to raise the price of two generic medications by depriving its competitors of the active pharmaceutical ingredient necessary to manufacture each product. Without access to the active ingredients, the FTC alleged that Mylan’s generic competitors could not effectively compete for the sale of either product. According to the FTC, this restraint of trade and conspiracy to monopolise allowed Mylan to raise its prices on the two drugs by 2,000 to 3,000 per cent, depending on the bottle size and strength.21 The FTC ultimately reached a US$100 million settlement with Mylan, which amounted to virtually all of the profits earned through the conduct as well as injunctive relief. 22

Merger review

Merger review standards are flexible enough to address any unusual questions arising from the covid-19 pandemic, such as those concerning possible failing firms. The FTC made similar complex decisions during the 2008 financial crisis.23 The FTC continues to apply its existing standards to the facts of each case and arguments adduced by the parties.24 US antitrust assessment generally relies on evidence of competition at the time of the merger, which can include and account for the potential impact of the coronavirus emergency on the merging parties.25 Of course, those using covid-19 as an excuse for their anticompetitive merger will not receive a favourable reception, especially if their proposed mergers predate the pandemic.

The standards for applying the antitrust laws, including with respect to failing firms and efficiencies, have not changed with the crisis. The US agencies have received many claims over the years that a merger should be justified because one of the firms is failing. But despite many claims and much time spent assessing the financial health of numerous firms, the facts rarely support a failing firm argument, and the stringent conditions that define a genuinely ‘failing’ firm remain. The factors are that: (i) the company is unable to meet its obligations as they come due; (ii) the company would not be able to reorganise successfully in bankruptcy; and (iii) the company has made unsuccessful good-faith efforts to elicit reasonable alternative offers that would keep its assets in the relevant market and pose a less severe danger to competition than does the proposed merger.26 Neither the factors nor the substantiation needed to meet them have changed with the crisis. As a senior FTC official recently stated:

the FTC has not relaxed, and will not relax, the intensity of our scrutiny or the vigor of our enforcement efforts. Consumers deserve the protection of the antitrust laws now as much as ever. To be clear, we support vigorous competition and hope that firms that have been hard hit by the economic downturn recover quickly and remain viable competitors so that they can continue to serve their customers. We will accept solid evidence that a firm is failing, and step aside when justified by the full evidence. But we will not turn away from the challenges ahead by changing the rules that have served us well in the past, including during prior economic downturns. 27

The US approach is similar to that taken elsewhere in the hemisphere. In a June 2020 case, the Chilean FNE approved a merger of two firms involved in the market for the distribution of liquid fuels of a specific area in the south of Chile. The FNE concluded that its exit from the market was inevitable and imminent if the sale did not take place, and that the exit of the company and its assets from the market would leave consumers worse off.28 Similarly, Canada recently approved a merger of two scrap metal processors when it found that absent the merger, the assets of the failing firm would have left the market. 29


While some regulatory responses to the covid-19 crisis are necessary and well-justified, such responses should not undermine the salutary effects of market-based competition in the long run. An emergency requires swift and effective responses, but it is important that competition agencies remain vigilant in their roles as competition advocates to ensure that regulation does not go beyond its intended purpose and unnecessarily restrict the role of competition and the functioning of a market economy. Otherwise, one crisis FTC has not relaxed, and will not relax, the intensity of our scrutiny or ther.


1 Joseph Simons (Chairman, Fed. Trade Comm’n), The Federal Trade Commission’s Response to the COVID-19 Pandemic 8 J. Antitrust Enf. 260, 262 (2020), available at https://doi.org/10.1093/jaenfo/jnaa022. For an excellent discussion of lessons learned from the United States’ experience with subordinating competition law to other goals in the 1907 global financial crisis and the Great Depression, see Marc Winerman, ‘Antitrust and the Crisis of ’07’, Antitrust Source (2008), available at www.americanbar.org/content/dam/aba/publishing/antitrust_source/Dec08_Winerman12_22f.pdf.

2 Carl Shapiro, Competition Policy in Distressed Industries, US Dep’t of Justice (13 May 2009) (Remarks Prepared for Delivery to the American Bar Association Antitrust Symposium), available at www.justice.gov/atr/speech/competition-policy-distressed-industries.

3 National Industrial Recovery Act, Pub. L. No 73-67, 48 Stat. 195 (1933). This law essentially legalised cartels and suspended enforcement of our antitrust law. It authorised firms to establish ‘industrial codes’ that were subject to nominal government review and were enforceable by the government. See Shapiro, footnote 2; and Alan J Meese, ‘Competition Policy and The Great Depression: Lessons Learned and a New Way Forward’, 23 Cornell J.L. & Pub. Pol’y. 255 (2013).

4 Russell Damtoft, The Relationship Between Competition Policy and Industrial Policy: The Historical Experience of the United States, address to UNCTAD Intergovernmental Group of Experts (7 July 2009), available at www.ftc.gov/system/files/attachments/key-speeches-presentations/russellcompetitionpolicy.pdf.

5 See Christine Wilson and Keith Klovers, ‘The growing nostalgia for past regulatory misadventures and the risk of repeating these mistakes with Big Tech’, 8 J. Antitrust Enf. 10 (2020), available at https://academic.oup.com/antitrust/article/8/1/10/5614371.

6 While this article focuses on competition law and policy, the FTC also protects consumer demand from being distorted by deceptive and unfair business practices. See, eg, Andrew Smith (Director, FTC Bureau of Consumer Protection), ‘Fighting Coronavirus scams: Taking stock’, FTC Business Blog (8 May 2020), available at www.ftc.gov/news-events/blogs/business-blog/2020/05/fighting-coronavirus-scams-taking-stock; and Coronavirus Advice for Consumers, available at www.ftc.gov/coronavirus/scams-consumer-advice.

7 See US Dep’t of Justice and Fed. Trade Comm’n, Joint Antitrust Statement Regarding Covid-19 and Competition Law in Labor Markets (13 April 2020), available at www.ftc.gov/system/files/documents/advocacy_documents/joint-statement-bureau-competition-federal-trade-commission-antitrust-division-department-justice/statement_on_coronavirus_and_labor_competition_04132020_final.pdf.

8 See Fiscalia Nacional Economica, FNE’s public statement (3 Apr 2020), available at www.fne.gob.cl/declaracion-publica/; Federal Economic Competition Commission (COFECE), COFECE’s position for enforcing the Federal Economic Competition Law in light of the current health emergency (27 Mar 2020), available at www.cofece.mx/wp-content/uploads/2020/03/COFECE-012-2020_COFECE-COVID-19.pdf; National Competition Commission of Paraguay, Public Statement (12 Mar 2020), available at www.conacom.gov.py/noticias/comunicado-la-opinion-publica-coronavirus; Colombia Superintendence of Industry and Commerce (SIC), SIC’s statement on how the health crisis has not stopped the SIC’s mission (25 Jun 2020), available at www.sic.gov.co/content/la-cuarentena-no-ha-frenado-la-el-servicio-de-administración-de-justicia-de-la-sic; Costa Rica Commission for Promoting Competition, Guideline No. 2-2020 (25 Mar 2020), available at www.coprocom.go.cr/publicaciones/comunicados/DIRECTRIZ%20002-COPROCOM%20COVID-19.html.

9 See International Competition Network (ICN) Steering Group Statement: Competition during and after the COVID-19 Pandemic, ICN (8 Apr 2020), available at www.internationalcompetitionnetwork.org/wp-content/uploads/2020/04/SG-Covid19Statement-April2020.pdf.

10 See Organisation for Economic Co-operation and Development, Competition policy responses to COVID-19, collected materials available at www.oecd.org/competition/competition-policy-responses-to-covid-19.htm.

11 See US Dep’t of Justice and Fed. Trade Comm’n, Joint Antitrust Statement Regarding Covid-19 (4 Mar 2020), available at www.ftc.gov/system/files/documents/public_statements/1569593/statement_on_coronavirus_ftc-doj-3-24-20.pdf.

12 See US Dep’t of Justice and Fed. Trade Comm’n, Antitrust Guidelines for Collaborations Among Competitors (Apr 2000), available at www.ftc.gov/sites/default/files/documents/public_events/joint-venture-hearings-antitrust-guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf; see also US Dep’t of Justice and Fed. Trade Comm’n, Statements of Antitrust Enforcement Policy in Health Care (Aug 1996), available at www.ftc.gov/system/files/attachments/competition-policy-guidance/statements_of_antitrust_enforcement_policy_in_health_care_august_1996.pdf.

13 In the first business review letter issued as part of this expedited review, the Department of Justice announced it would not challenge collaborative efforts by medical supply distributors to increase manufacturing, sourcing and distribution of personal protective equipment and coronavirus-related medication. See Department of Justice Issues Business Review Letter to Medical Supplies Distributors Supporting Project Airbridge Under Expedited Procedure for COVID-19 Pandemic Response, US Dep’t of Justice (4 Apr 2020), available at www.justice.gov/opa/pr/department-justice-issues-business-review-letter-medical-supplies-distributors-supporting.

14 CCB, Competition Bureau statement on competitor collaborations during the COVID-19 pandemic, Gov’t of Canada (28 Apr 2020), available at www.canada.ca/en/competition-bureau/news/2020/04/competition-bureau-statement-on-competitor-collaborations-during-the-covid-19-pandemic.html.

15 COFECE’s position for enforcing the Federal Economic Competition Law in light of the current health emergency (27 Mar 2020), available at www.cofece.mx/wp-content/uploads/2020/03/COFECE-012-2020_COFECE-COVID-19.pdf.

16 Chile’s National Economic Prosecutor (FNE), FNE’s public statement (3 Apr 2020), available at www.fne.gob.cl/declaracion-publica/.

17 See Michael A Salinger (former Director, FTC Bureau of Economics), Moneyball and Price Gouging (address to Antitrust Committee of Boston Bar Association, 27 Feb 2006), available at www.ftc.gov/sites/default/files/documents/public_statements/moneyball-and-price-gouging/060227moneyballandpricegouging_0.pdf.

18 50 U.S.C. § 4512.

19 See US Dep’t of Justice, Memorandum for All Heads of Department Components and Law Enforcement Agencies (24 Mar 2020), available at www.justice.gov/file/1262776/download.

20 Sherman Antitrust Act, 15 U.S.C. § 2.

21 See Compl. ¶ 18-31, FTC v Mylan Laboratories, Inc., available at www.ftc.gov/sites/default/files/documents/cases/1998/12/mylancmp.htm. Violations of the Sherman Antitrust Act, 15 U.S.C. § 2, constitute unfair methods of competition in violation of the Federal Trade Commission Act. 15 U.S.C. § 45.

22 See FTC Reaches Record Financial Settlement to Settle Charges of Price-fixing in Generic Drug Market, Fed. Trade Comm’n (29 Nov 2000), available at www.ftc.gov/news-events/press-releases/2000/11/ftc-reaches-record-financial-settlement-settle-charges-price.

23 See, eg, Howard A Shelanski, ‘Enforcing Competition During an Economic Crisis’, 77 Antitrust L.J. 229 (2010).

24 For example, the assessment of efficiency claims will continue to require that they be verifiable, cognisable and merger-specific, and the long-term impacts on competition remain at the forefront in our analysis. See US Dep’t of Justice and Fed. Trade Comm’n, Horizontal Merger Guidelines (2010), § 10.

25 Simons, footnote 1.

26 See US Dep’t of Justice and Fed. Trade Comm’n, Horizontal Merger Guidelines (2010), § 10.

27 See Ian Conner (Director, Bureau of Competition), On ‘Failing’ Firms – and Miraculous Recoveries, FTC Competition Matters Blog (27 May 2020), available at www.ftc.gov/news-events/blogs/competition-matters/2020/05/failing-firms-miraculous-recoveries.

28 FNE, FNE’s public statement on the acquisition of a service station owned by Inmobiliaria y Administradora CGL Limitada (CGL) by COPEC (8 Jun 2020), available at www.fne.gob.cl/fne-aprueba-compra-de-estacion-de-servicio-por-parte-de-copec-tras-tener-por-acreditada-la-excepcion-de-empresa-en-crisis/.

29 Competition Bureau statement regarding the acquisition of Total Metal Recovery (TMR) Inc. by American Iron & Metal Company Inc., Gov’t of Canada (29 Apr 2020), available at www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04528.html.

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