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 normal. 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 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’s not all the time clear what info could also be shared, or with whom. It’s also troublesome to know when a typical non-disclosure settlement could fall wanting the specified protections. Basically, the very best follow is to determine guardrails across the diligence course of by delegating the duty for reviewing documentation for competitively delicate info (and probably scrubbing such documentation to take away any competitively delicate info) to a 3rd social gathering or a particular group of the customer’s staff (a “Clear Crew”).  

Talking usually, a Clear Crew’s goal is to filter and take away competitively delicate info from the stream of knowledge flowing from a vendor to a purchaser. A Clear Crew could 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 clients or suppliers, and future plans akin to expansions or different capital expenditures) from paperwork {that a} vendor supplies to a purchaser within the due diligence section of a transaction. A Clear Crew may combination 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 listing under highlights three suggestions with respect to the institution and work of Clear Groups, however it’s not supposed to be an exhaustive listing of potential antitrust concerns.

1. Use non-competitively delicate info, if potential

Whereas the alternate of sure competitively delicate info concerning the events to a possible transaction is a obligatory a part of the planning course of, regulators are involved that, if not completed fastidiously and thoughtfully, the alternate of knowledge might give the events a possibility to interact 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, contemplate whether or not there may be any publicly out there 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-about to be competitively delicate and could be workable substitutes for sure competitively delicate info akin to present or future budgets or capital expenditure plans.

2. Select the fitting group

Cautious consideration needs to be given to the composition of the Clear Crew. Usually, it’s preferable to have a 3rd social gathering, akin to a purchaser’s exterior authorized counsel, exterior antitrust counsel or monetary advisers, function the Clear Crew. Any third social gathering chosen ought to enter into an settlement (the “Clear Crew Settlement”) with the customer and vendor setting forth the third social gathering’s duties and duties, 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 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 individual’s obligations as a consultant of the third social gathering beneath the Clear Crew Settlement. Importantly, the Clear Crew Settlement acts as a complement to, and never a substitute of, the non-disclosure settlement that the customer and vendor ought to have entered into on the very outset of their negotiations.

Nevertheless, it’s not all the time potential to interact a 3rd social gathering solely for the aim of serving as a clear group. Hiring a 3rd social gathering could also be expensive and time consuming, and the popular third social gathering could not comply with serve in a Clear Crew capability for a given transaction. Due to this fact, the duty could also be left to sure staff of the customer, which presents its personal challenges. Workers of the customer could function members of a Clear Crew, offered that such staff don’t have (and aren’t moderately more likely to have within the close to future) duties 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 info revealed to them in an anti-competitive method on behalf of the customer. It may be troublesome to seek out the fitting stability as a result of every worker ought to (1) be sufficiently educated concerning the potential transaction and their duty to stop the inappropriate disclosure of competitively delicate info, however (2) not have (and aren’t more likely to have within the close to future) any job duties which might allow such worker to behave in an anti-competitive method based mostly on the data offered to them pursuant to their Clear Crew 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 Crew, which can then evaluation such info and cross it alongside to the customer if acceptable. Due to the massive quantity of paperwork which can must be reviewed, greatest follow is to determine a separate digital information room wherein all paperwork to be offered by the vendor may be uploaded by the vendor and reviewed by the Clear Crew (the “Clear Room”). The customer and its staff and representatives that aren’t on the Clear Crew shouldn’t have entry to the Clear Room. The Clear Crew ought to then evaluation every doc offered and log whether or not the doc comprises any competitively delicate info. If the Clear Crew and antitrust counsel for the vendor concur {that a} doc comprises no competitively delicate info, then the Clear Crew can then ship the doc on to a separate digital information room (the “Odd Information Room”) which the customer and its staff 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 as a way to make sure that a doc isn’t mistakenly uploaded to the Odd Information Room previous to evaluation by the Clear Crew. If a doc does include competitively delicate info, then the Clear Crew ought to comply with procedures established by the events’ respective antitrust counsels for redacting or aggregating the data earlier than sending to the Odd Information Room, or withholding such info totally if acceptable. 

Greg Mennerick is an lawyer in Thompson Coburn’s Well being Care group.