Is Your Agreement Non-Exclusive in Name Only?

Antitrust Byte

The legality of certain collaborative arrangements and contracts often rises and falls on whether the relationship between the parties involved is exclusive or non-exclusive. For example, the issue of exclusivity often determines whether an ACO or other network is deemed to be over-inclusive and, therefore, able to exercise market power, or the foreclosure effects of a contractual relationship between a dominant provider and a payor might unreasonably harm competition.

As recent case law and enforcement actions have made clear, contractual language addressing the issue of exclusivity, while obviously relevant, is not always determinative. Instead, and regardless of the contractual language between the parties, the courts and enforcement agencies look at whether the parties operate, in practice, as if the relationship is exclusive or not. Regarding network participation, the enforcement agencies will look at whether competing networks exist and whether network members actually participate in those competing arrangements. For payor contracts, the enforcement agencies will look at whether payors actually contract with competing providers—and if not, why not.

Exclusive arrangements often generate efficiencies and can be procompetitive. There are certain facts that if present, make it less likely that the exclusive arrangement would cause significant competitive harm. Nevertheless, there is no set of facts under which an exclusive arrangement is considered presumptively lawful. Instead, the facts are generally analyzed under the rule of reason, entailing a comparative analysis of the arrangement’s benefits and its possible competitive affects.

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For additional information about the issues discussed above, or if you have any other antitrust concerns, please contact the Epstein Becker Green attorney who regularly handles your legal matters, or one of the authors of this Antitrust Byte:

E. John Steren
Member of the Firm
[email protected]

Patricia Wagner
Member of the Firm,
Chief Privacy Officer
[email protected]