Elevated consolidation within the well being care sector continues to attract media consideration and antitrust scrutiny from quite a lot of regulators together with the Federal Commerce Fee, the Antitrust Division of the Division of Justice and state attorneys normal. In consequence, well being care suppliers and hospital programs that are contemplating mergers, acquisitions and different forms of strategic partnerships or joint ventures ought to take steps to make sure that they don’t violate antitrust legal guidelines when sharing info concerning the enterprise case for a selected transaction and also needs to take into account that failing to shut a transaction can flip a possible accomplice right into a better-informed competitor. Nevertheless, it isn’t at all times clear what info could also be shared, or with whom. Additionally it is tough to know when a typical non-disclosure settlement might fall in need of the specified protections. Generally, the perfect apply is to determine guardrails across the diligence course of by delegating the accountability for reviewing documentation for competitively delicate info (and probably scrubbing such documentation to take away any competitively delicate info) to a 3rd occasion or a particular group of the customer’s workers (a “Clear Workforce”).
Talking usually, a Clear Workforce’s objective is to filter and take away competitively delicate info from the stream of knowledge flowing from a vendor to a purchaser. A Clear Workforce might accomplish this by, amongst different issues, redacting sure info (together with, however not restricted to, strategic plans, enterprise valuations, doctor compensation insurance policies, payor charges, facility efficiency, contractual phrases for particular prospects or suppliers, and future plans similar to expansions or different capital expenditures) from paperwork {that a} vendor gives to a purchaser within the due diligence part of a transaction. A Clear Workforce might also mixture or roll-up sure info in order that it may be introduced to the customer in a abstract report or different method that doesn’t reveal competitively delicate particulars. The checklist beneath highlights three ideas with respect to the institution and work of Clear Groups, however it isn’t meant to be an exhaustive checklist of potential antitrust concerns.
1. Use non-competitively delicate info, if doable
Whereas the trade of sure competitively delicate info concerning the events to a possible transaction is a crucial a part of the planning course of, regulators are involved that, if not performed rigorously and thoughtfully, the trade of knowledge might give the events a possibility to have interaction in present or future anticompetitive conduct. Thus, the events ought to, earlier than responding to any request for competitively delicate info as a part of a due diligence request, think about whether or not there may be any publicly obtainable or in any other case non-competitively delicate info which might fulfill the request. For instance, historic monetary statements, tax returns, and asset depreciation schedules are usually not thought of to be competitively delicate and could be workable substitutes for sure competitively delicate info similar to present or future budgets or capital expenditure plans.
2. Select the appropriate staff
Cautious consideration needs to be given to the composition of the Clear Workforce. Usually, it’s preferable to have a 3rd occasion, similar to a purchaser’s outdoors authorized counsel, outdoors antitrust counsel or monetary advisers, function the Clear Workforce. Any third occasion chosen ought to enter into an settlement (the “Clear Workforce Settlement”) with the customer and vendor setting forth the third occasion’s duties and obligations, together with the responsibility to take care of the confidentiality of any info offered to it and to not share any competitively delicate info in an unredacted, disaggregated or in any other case unapproved type with the customer or its workers. Moreover, the id of every worker or consultant of the third occasion needs to be disclosed to the customer and vendor and such worker or consultant ought to execute an acknowledgment of such particular person’s obligations as a consultant of the third occasion below the Clear Workforce Settlement. Importantly, the Clear Workforce Settlement acts as a complement to, and never a alternative of, the non-disclosure settlement that the customer and vendor ought to have entered into on the very outset of their negotiations.
Nevertheless, it isn’t at all times doable to have interaction a 3rd occasion solely for the aim of serving as a clear staff. Hiring a 3rd occasion could also be expensive and time consuming, and the popular third occasion might not conform to serve in a Clear Workforce capability for a given transaction. Subsequently, the duty could also be left to sure workers of the customer, which presents its personal challenges. Staff of the customer might function members of a Clear Workforce, offered that such workers should not have (and should not fairly prone to have within the close to future) obligations regarding strategic planning, direct pricing, negotiating payor agreements, gross sales and advertising and marketing, doctor compensation or different duties which might permit them to make use of any competitively delicate info revealed to them in an anti-competitive method on behalf of the customer. It may be tough to seek out the appropriate steadiness as a result of every worker ought to (1) be sufficiently educated concerning the potential transaction and their accountability to stop the inappropriate disclosure of competitively delicate info, however (2) not have (and should not prone to have within the close to future) any job obligations which might allow such worker to behave in an anti-competitive method primarily based on the data offered to them pursuant to their Clear Workforce duties.
3. Set up a clear room
To facilitate the switch of knowledge between the events, the events want to determine a mechanism by which the vendor can present info which is probably competitively delicate to the Clear Workforce, which can then assessment such info and go it alongside to the customer if applicable. Due to the big quantity of paperwork which can should be reviewed, finest apply is to determine a separate digital knowledge room by which all paperwork to be offered by the vendor will be uploaded by the vendor and reviewed by the Clear Workforce (the “Clear Room”). The client and its workers and representatives that aren’t on the Clear Workforce mustn’t have entry to the Clear Room. The Clear Workforce ought to then assessment every doc offered and log whether or not the doc incorporates any competitively delicate info. If the Clear Workforce and antitrust counsel for the vendor concur {that a} doc incorporates no competitively delicate info, then the Clear Workforce can then ship the doc on to a separate digital knowledge room (the “Atypical Information Room”) which the customer and its workers and representatives might entry. The Atypical Information Room and Clear Room ought to have an identical file hierarchy for ease of use and they need to even have clearly distinguishable names with a view to be certain that a doc just isn’t mistakenly uploaded to the Atypical Information Room previous to assessment by the Clear Workforce. If a doc does include competitively delicate info, then the Clear Workforce ought to observe procedures established by the events’ respective antitrust counsels for redacting or aggregating the data earlier than sending to the Atypical Information Room, or withholding such info completely if applicable.
Greg Mennerick is an lawyer in Thompson Coburn’s Well being Care group.
