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 common. Because of this, well being care suppliers and hospital techniques that are contemplating mergers, acquisitions and different sorts 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 also needs to take into account that failing to shut a transaction can flip a possible accomplice right into a better-informed competitor. Nonetheless, it’s not all the time clear what data could also be shared, or with whom. Additionally it is troublesome to know when a typical non-disclosure settlement might fall in need of the specified protections. Basically, the very best observe is to ascertain guardrails across the diligence course of by delegating the accountability for reviewing documentation for competitively delicate data (and probably scrubbing such documentation to take away any competitively delicate data) to a 3rd social gathering or a particular group of the customer’s staff (a “Clear Workforce”).
Talking usually, a Clear Workforce’s function is to filter and take away competitively delicate data from the stream of knowledge flowing from a vendor to a purchaser. A Clear Workforce might 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 corresponding 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 can also mixture or roll-up sure data in order that it may be offered to the customer in a abstract report or different method that doesn’t reveal competitively delicate particulars. The listing under highlights three suggestions with respect to the institution and work of Clear Groups, however it’s not meant to be an exhaustive listing of potential antitrust concerns.
1. Use non-competitively delicate data, if potential
Whereas the change of sure competitively delicate data relating to the events to a possible transaction is a needed a part of the planning course of, regulators are involved that, if not finished fastidiously and thoughtfully, the change of knowledge might 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, take into account whether or not there may be any publicly accessible 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 of to be competitively delicate and is likely to be workable substitutes for sure competitively delicate data corresponding to present or future budgets or capital expenditure plans.
2. Select the fitting crew
Cautious consideration needs to be given to the composition of the Clear Workforce. Usually, it’s preferable to have a 3rd social gathering, corresponding to a purchaser’s outdoors authorized counsel, outdoors antitrust counsel or monetary advisers, function the Clear Workforce. Any third social gathering chosen ought to enter into an settlement (the “Clear Workforce Settlement”) with the customer and vendor setting forth the third social gathering’s duties and obligations, together with the responsibility to keep up 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 customer or its staff. Moreover, the id of every worker or consultant of the third social gathering 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 social gathering underneath 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.
Nonetheless, it’s not all the time potential to interact a 3rd social gathering solely for the aim of serving as a clear crew. Hiring a 3rd social gathering could also be expensive and time consuming, and the popular third social gathering might not conform to serve in a Clear Workforce capability for a given transaction. Subsequently, the duty could also be left to sure staff of the customer, which presents its personal challenges. Workers of the customer might function members of a Clear Workforce, offered that such staff don’t 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 data revealed to them in an anti-competitive method on behalf of the customer. It may be troublesome to seek out the fitting steadiness as a result of every worker ought to (1) be sufficiently educated relating to the potential transaction and their accountability to forestall the inappropriate disclosure of competitively delicate data, 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 based mostly 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 ascertain a mechanism by which the vendor can present data which is probably competitively delicate to the Clear Workforce, which can then assessment such data and cross it alongside to the customer if acceptable. Due to the big quantity of paperwork which can must be reviewed, greatest observe is to ascertain a separate digital information 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 staff and representatives that aren’t on the Clear Workforce shouldn’t have entry to the Clear Room. The Clear Workforce ought to then assessment 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 information room (the “Unusual Knowledge Room”) which the customer and its staff and representatives might entry. The Unusual Knowledge Room and Clear Room ought to have the same file hierarchy for ease of use and they need to even have clearly distinguishable names with a view to be certain that a doc is just not mistakenly uploaded to the Unusual Knowledge Room previous to assessment by the Clear Workforce. If a doc does include competitively delicate data, then the Clear Workforce ought to comply with procedures established by the events’ respective antitrust counsels for redacting or aggregating the data earlier than sending to the Unusual Knowledge Room, or withholding such data completely if acceptable.
Greg Mennerick is an legal professional in Thompson Coburn’s Well being Care group.