Elevated consolidation within the well being care sector continues to attract media consideration and antitrust scrutiny from a wide range of regulators together with the Federal Commerce Fee, the Antitrust Division of the Division of Justice and state attorneys basic. 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 data relating to the enterprise case for a selected transaction and must also 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 data could also be shared, or with whom. Additionally it is tough to know when a typical non-disclosure settlement could fall in need of the specified protections. On the whole, the very best follow is to ascertain guardrails across the diligence course of by delegating the accountability for reviewing documentation for competitively delicate data (and doubtlessly scrubbing such documentation to take away any competitively delicate data) to a 3rd get together or a particular group of the client’s workers (a “Clear Workforce”).
Talking usually, a Clear Workforce’s function is to filter and take away competitively delicate data from the stream of data flowing from a vendor to a purchaser. A Clear Workforce could accomplish this by, amongst different issues, redacting sure data (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 resembling 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 combination or roll-up sure data in order that it may be offered to the client in a abstract report or different method that doesn’t reveal competitively delicate particulars. The listing beneath highlights three ideas with respect to the institution and work of Clear Groups, however it isn’t supposed to be an exhaustive listing of potential antitrust issues.
1. Use non-competitively delicate data, if attainable
Whereas the trade of sure competitively delicate data relating to the events to a possible transaction is a obligatory a part of the planning course of, regulators are involved that, if not completed rigorously and thoughtfully, the trade of data may give the events a chance to interact in present or future anticompetitive conduct. Thus, the events ought to, earlier than responding to any request for competitively delicate data as a part of a due diligence request, think about whether or not there may be any publicly out there or in any other case non-competitively delicate data which might fulfill the request. For instance, historic monetary statements, tax returns, and asset depreciation schedules are usually not thought-about to be competitively delicate and is perhaps workable substitutes for sure competitively delicate data resembling present or future budgets or capital expenditure plans.
2. Select the fitting staff
Cautious consideration needs to be given to the composition of the Clear Workforce. Usually, it’s preferable to have a 3rd get together, resembling a purchaser’s exterior authorized counsel, exterior antitrust counsel or monetary advisers, function the Clear Workforce. Any third get together chosen ought to enter into an settlement (the “Clear Workforce Settlement”) with the client and vendor setting forth the third get together’s duties and obligations, together with the responsibility to take care of the confidentiality of any data offered to it and to not share any competitively delicate data in an unredacted, disaggregated or in any other case unapproved kind with the client or its workers. Moreover, the identification of every worker or consultant of the third get together needs to be disclosed to the client and vendor and such worker or consultant ought to execute an acknowledgment of such individual’s obligations as a consultant of the third get together below the Clear Workforce Settlement. Importantly, the Clear Workforce Settlement acts as a complement to, and never a substitute of, the non-disclosure settlement that the client and vendor ought to have entered into on the very outset of their negotiations.
Nevertheless, it isn’t at all times attainable to interact a 3rd get together solely for the aim of serving as a clear staff. Hiring a 3rd get together could also be pricey and time consuming, and the popular third get together could not comply with serve in a Clear Workforce capability for a given transaction. Due to this fact, the duty could also be left to sure workers of the client, which presents its personal challenges. Workers of the client could function members of a Clear Workforce, offered that such workers would not have (and usually are not fairly prone to have within the close to future) obligations regarding strategic planning, direct pricing, negotiating payor agreements, gross sales and advertising, doctor compensation or different duties which might permit them to make use of any competitively delicate data revealed to them in an anti-competitive method on behalf of the client. It may be tough to search out the fitting stability as a result of every worker ought to (1) be sufficiently educated relating to the potential transaction and their accountability to stop the inappropriate disclosure of competitively delicate data, however (2) not have (and usually are 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 knowledge offered to them pursuant to their Clear Workforce duties.
3. Set up a clear room
To facilitate the switch of data between the events, the events want to ascertain a mechanism by which the vendor can present data which is doubtlessly competitively delicate to the Clear Workforce, which can then overview such data and cross it alongside to the client if applicable. Due to the massive quantity of paperwork which can should be reviewed, finest follow is to ascertain a separate digital knowledge room during which all paperwork to be offered by the vendor might 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 shouldn’t have entry to the Clear Room. The Clear Workforce ought to then overview every doc offered and log whether or not the doc comprises any competitively delicate data. If the Clear Workforce and antitrust counsel for the vendor concur {that a} doc comprises no competitively delicate data, then the Clear Workforce can then ship the doc on to a separate digital knowledge room (the “Odd Information Room”) which the client and its workers and representatives could entry. The Odd 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 so as to make sure that a doc will not be mistakenly uploaded to the Odd Information Room previous to overview by the Clear Workforce. If a doc does comprise competitively delicate data, then the Clear Workforce ought to comply with procedures established by the events’ respective antitrust counsels for redacting or aggregating the knowledge earlier than sending to the Odd Information Room, or withholding such data solely if applicable.
Greg Mennerick is an lawyer in Thompson Coburn’s Well being Care group.
