Antitrust Issues Teaming Agreements

State contractors and other companies in this area should be aware of the particular risks and challenges associated with the cartel and abuse of dominance rules they face when considering acquisitions or other business practices. Companies should be advised on activities that may pose a high risk to cartels and abuse of dominance, including reviewing a merger or acquisition, forming an association agreement, or reviewing an agreement that may limit the hiring or compensation of staff. As noted above, prudent compliance efforts can reduce the risk of an investigation or action to implement cartel rules and potentially costly and cumbersome abuse of dominance. Defence and aerospace companies often enter into cooperation agreements or other cooperation agreements on contracting. In most cases, the team is fully compliant with antitrust rules. However, in certain circumstances, teaming may raise serious concerns about cartels and abuse of dominance. This newsletter highlights some of the key factors that contractors should consider when reviewing team agreements. The FTC`s approval order in the Northrop Grumman/Orbital ATK agreement shows how the purchasing agency`s views can convince antitrust authorities to take a different approach than most other types of transactions in the defense sector. In general, both antitrust authorities favour structural mitigation measures to address the possible anti-competitive effects of the proposed transactions. Despite this institutional preference, the FTC accepted behavioural assistance to allay its concerns about the Northrop Grumman/Orbital ATK transaction, probably in part, because it was an agreement reached by the defence industry and the DOD supported the operation.7 See FAR 9.602; FTC and DOJ Antitrust Guidelines of Collaborations Among Competitors, FTC and DOJ; Memorandum to the secretaries of the military divisions of the Minister of Defence, Jacques Gansler Re: Anti-Competitive Teaming, 5 January 1999 (with the mention that “cooperation agreements with cooperation have the potential to create insufficient competition for our contracts” and to direct contractual offers for the “review” of exclusive team agreements).

This memo was implemented by the Defense Contract Audit Agency Guidance, which instructs auditors to report cases of anti-competitive association. DCAA Contract Audit Manual 4-705 (January 2004); 41 No. 16 GOVTCONT No. 180. Since the publication of these guidelines, antitrust authorities have become increasingly active in investigating and challenging conduct that could impede competition for staff and staff. In January 2018, Deputy Attorney General Makan Delrahim said he was “shocked” by some of the no-poaching agreements that the DOJ had complied with.20 Shortly after his statement, the DOJ filed a complaint against Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation, saying that the two companies had agreed not to request or hire each other`s staff. The DOJ said the agreements “reduced competition for workers at the expense of workers in this important U.S. industry.” 21 The DOJ described the disputed sector as characterized by “strong demand and limited supply of qualified personnel experienced in the railway industry” and other professional skills22. This prohibits them from entering into or applying future non-disclosure agreements and requires them to establish a compliance program for cartels and abuse of dominance23.

On October 6, 1999, the FTC and DOJ jointly published the federal registry project “Antitrust Guidelines for Collaborations Among Competitors” (see 64 Fed.

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