MoFo Competition Podcast: The ESG Movement and Its Impact on Antitrust Compliance

In this episode of MoFo Perspectives, MoFo Antitrust partners Megan Gerking and David Shaw speak with MoFo ESG Practice Group chair and Berkeley School of Law Adjunct Professor, Susan Mac Cormac, and UC Davis Acting Professor Amelia Miazad to discuss the strong movement toward increased corporate social responsibilities—with a specific focus on environmental, social, and corporate governance (ESG) issues. Our panel of experts examines the current state of ESG efforts, explores areas of tension with antitrust principles, and identifies practice tips for ensuring that compliance with antitrust laws does not get in the way of achieving companies’ important ESG goals.

Transcript

[00:00:00] Intro/Outro: Welcome to MoFo Perspectives, a podcast by Morrison and Foerster, where we share the perspectives of our clients, colleagues, subject matter experts, and lawyers.

[00:00:13] Megan Gerking: Hello, and welcome to MoFo Competition, a MoFo podcast series exploring current and emerging trends and antitrust, and how to navigate today’s shifting competition wild landscape. I am Megan Gerking, your host for this episode. There’s a strong movement for increased corporate social responsibilities, specifically on environmental, social, and corporate governance. Companies are called on by investors, shareholders, consumers, and regulators to manage their ESG risks.

Companies are acting on their own to manage these risks and to advance their ESG goals, but they might also consider taking actions with other companies in the industry to have a greater impact or force change. Today, with me is a panel of experts on these issues, we will discuss the importance of ESG efforts and explore the inherent tension between ESG and antitrust, how to mitigate antitrust risk, and more broadly discuss whether anything more could be done to ensure antitrust is not getting in the way of achieving important societal goals.

With us today is Amelia Miazad, acting law professor at UC Davis and an ESG expert. Amelia was previously a senior research fellow at UC Berkeley School of Law, where she founded and led the Business and Society Institute, which is dedicated to defining and advancing a legal and policy agenda that encourages companies to account for stakeholders and the environment. She is the author of Pro-social Antitrust and is the host of the podcast, ESG Beat.

Suz Mac Cormac chairs the ESG social enterprise and impact investing and energy practices at MoFo. Suz’s practice focuses on late-stage financings, secondaries, and other corporate transactions for large investors dedicated to impact. She is an adjunct professor at Berkeley law, specifically on the intersection of corporate law, governance, and sustainability.

David Shaw is a partner in MoFo’s antitrust practice group, where he has a government-facing antitrust practice. Most recently, David was the deputy chief of staff and counsel to the AAG of the Antitrust Division and oversaw the division’s relationships with the state AGs.

Thanks everyone for joining. I would like to begin today’s discussion with some basics. Suz, could you give us some background on ESG, and why it is important to companies and their boards, especially today?

[00:02:51] Suz Mac Cormac: Well, thanks so much, Megan, and it’s great to be here with our fabulous antitrust partners, and, of course, Amelia, who is a leading light in this area.

I like to start with some definitional parameters because ESG is often used and usually misunderstood. ESG has been around for companies and investors since the sixties and seventies, and, in fact, governance probably a hundred years before that, but putting it together in the current composition is really the purview of investors in companies over the last, say 10, 15 years.

I like to distinguish it between impact sustainability and CSR. And the movement really started with CSR or corporate social responsibility, which at this point has been relegated more to good stuff on the side: tree planting, bicycle riding, philanthropy, having a foundation. Impact is used by investors and companies to focus on the good or service that a company is producing.

In other words, they’re in healthcare, they’re in renewable energy. What they do as a business is actually good for the world or improving the world around them or the people around them. ESG and sustainability, which I tend to use interchangeably, is a focus on environmental, social, and governance in a way that really goes to the operations of a company, what they actually do internally when it has many, many different facets.

For example, ESG on the environmental side can include energy management, water and wastewater management. In terms of social capital, it’s cybersecurity and data security and customer privacy. In terms of human capital, it’s DEI: diversity, equity, and inclusion. Business model and innovation, including supply chain management and leadership and governance, including competitive behavior.

So it’s incredibly broad. And as you see, it’s not let’s have a plant a tree day. It is key to the operations and therefore the success. And in fact, profitability of a company. ESG varies industry by industry in terms of what is material for one company, say in consumer related to supply chain, may be less important to a company, for example, in the area of healthcare or technology software, particularly.

So it’s very important to identify what is material to operations? What is key for ESG by sector? And why it’s so critical now, and Amelia, I have seen a sea change over the last two years, is I would say there are really two reasons. First, there is a lot more focus on certain areas of ESG that had been given short shrift over the past decade.

Anti-corruption, cyber, and sanctions always were on the radar of companies and investors. Human rights and supply chain, DEI, and climate are now sort of first and foremost to some extent because there’s regulation to some extent, because regulation is coming. More importantly, because it is being focused on and demanded by shareholders, large institutional investors, employees, customers, regulators, NOGs, whether the company itself believes they’re important—all of those constituents believe that they are very important, and so the board is focusing increasingly on those areas and making sure that management is devoting sufficient resources to those areas. They are hard. They’re hard areas to get a handle on, particularly when you are responsible for your supply chain.

And so many companies are working together and collaborating to tackle the issues, particularly human rights and climate, but DEI as well. Collaboration is not new. I would point to the electronic industry code of conduct that we actually helped put together back in 2004, where all of the large tech companies came together to say, okay, we are going to voluntarily say these are sort of the rules of the road, have how we engage with each other—and with our supply chain. Obviously, that had antitrust implications, but collaboration, particularly in the areas of human rights, DEI, and climate is increasing.

[00:07:11] Megan Gerking: Thanks, Suz, for that helpful background and setting up the discussion on antitrust. Amelia, it does sound like companies are acting together or collaborating more now, and it would be helpful if you could give an overview of that inherent tension between ESG and antitrust.

[00:07:32] Amelia Miazad: Yeah, thank you so much. Antitrust law and corporate purpose are on a collision course today. And I think some are worried that it’s a collusion course, and I’m happy that we’re even having the debate. As Suz just touched upon, there’s been a sea change in the ESG movement that we’ve been watching over the past couple of years. Suz has been watching over the past decade or more.

Stakeholders, including employees, communities, regulators, non-profits are calling upon corporations to provide solutions to societal problems. That has been happening for a very long time, but here’s what’s different today. Today, the demands are coming from investors, and this is what has brought the pressure to a tipping point.

Today, investors are pressuring companies to reduce their externalities and to address systemic risks, in particular, climate change, but also human rights and DEI, as Suz touched upon. What companies are realizing is that to address these demands, they need to collaborate more and more with their competitors.

As we’ll hear about later, and as we’ll discuss with Megan and David, this may not mean that they’re violating antitrust. In most cases, they may not be, but it at least places companies in the antitrust danger zone more often. Now, I want to sort of contextualize why investors are more focused on these systemic risks today, and it’s really due to a historical accident.

It’s the rise of index investing. Capital is more concentrated in a few large asset managers. We’ve heard a lot about the big three: BlackRock, State Street, and Vanguard. Just to put things in perspective, these three asset managers collectively hold more than 20% of the S&P 500 and roughly 80% of all indexed funds. Investors are also collaborating and the reason why is because these investors manage portfolios that are so large that they cannot diversify their risk. And so they need to ensure that companies are not externalizing their costs onto the rest of portfolios. Now, this is an economic phenomenon, and although there’s a very robust debate with an antitrust, it’s not focused on this tension.

It’s not focused on the tension between the economic pressures on companies to address environmental and social goals. So let’s just map out what the debate is with an antitrust. There’s a progressive or a Neo Brandeisian movement that seeks to return antitrust to its roots by reducing concentrations of corporate power.

And then there’s traditionalists who worry against deviating from economic standards and worry that competition will be chilled because we will divert antitrust focus from economic problems to social problems. What both of these debates is not acknowledging is that addressing social problems is an economic imperative today. To remain competitive, companies have to address their externalities.

Some may argue that antitrust leaves plenty of room for competitor collaboration. There’s the competitor collaboration guidelines. But as we look at more and more case studies that are putting pressure on companies to address human rights abuses, to address climate change, we begin to see how limiting those competitor collaboration guidelines are.

The overarching reason that they’re limiting is because they rely on unilateral and voluntary initiatives, and there are some things that cannot be addressed through unilateral and voluntary initiatives. I hope that we’ll get into those when we delve into some of the case studies.

The last thing that I’ll say is that, unlike in the U.S., global competition authorities are actively debating whether competition policy is thwarting the private sector’s ability to meet particularly climate goals. I hope that we could have that debate in the U.S., as well.

[00:11:41] Megan Gerking: Thanks, Amelia. It’s really interesting to hear about the pressures that are on companies today to act together and that greater outcomes could be achieved through collaboration, but as David and I know well, cooperation among similarly situated companies or competitors that does or could affect the price and quality and quantity of goods and services create antitrust risk.

David, could you give some background on how that risk plays out?

[00:12:13] David Shaw: Sure. Thanks, Megan, and I’m really pleased to be on here with Suz, Amelia, and you. So, any time you have competitors that are talking to each other and collaborating on anything in which there’s a dimension of competition, there is antitrust risk. In a pretty practical way, that’s going to manifest itself sort of several different dimensions. One is there are federal enforcers who enforce the interest laws. There’s the Department of Justice and the Federal Trade Commission, and competitor collaboration that crosses the line or is perceived to cross the line could open a company up to an investigation and a possible enforcement action by the federal antitrust enforcers.

But it’s not just the DOJ and the FTC. We also are in an environment where state attorneys general are increasingly active in enforcing antitrust laws. They both have state antitrust laws, but they can bring lawsuits and use their compulsory process under state law to investigate what are essentially federal antitrust cases.

Even if you got comfortable that for whatever reason DOJ or FTC would be unlikely to open an investigation, there is this background also of 50 different, more than 50 once you include territories and the District of Columbia, enforcers out there who may act and look into any sort of collaboration.

In fact, the attorney general from Arizona had a recent op-ed in the Wall Street Journal specifically on antitrust in ESG and warning that he would be looking for investigations to open and potential cases to bring.

[00:14:04] Megan Gerking: Antitrust risks could also play out in the form of civil litigation. Consumers or others who are purportedly harmed by an agreement could bring federal and state antitrust and related claims.

So we’ve talked a bit how risks can play out in terms of enforcement actions or litigation, but, David, what agreements or actions, collaborations really raise antitrust risk, and what is the standard under which these agreements and actions are reviewed?

[00:14:39] David Shaw: Thanks, Megan. For the most part, what we’re talking about here is Section 1 of the Sherman Act, which prohibits agreements that unreasonably restrain trade.

Now, outside of naked restraints on trade, price fixing, or market allocation, most agreements are analyzed under the rule of reason, which looks at whether an agreement imposes an unreasonable restraint of competition, taking into account a variety of factors, including specific information about [inaudible] business, its condition before and after the restraint is imposed, and the restraints history nature and [inaudible] fact. And so long as any anti-competitive effects don’t outweigh pro-competitive benefits, then the restraint is lawful. Now, while the scope of the rule of reason is broad, it’s fundamentally limited to assessing competition. Courts can’t take other policy considerations into account, no matter how socially beneficial those may be.

And so a court looking at an agreement, if the agreement is net anti-competitive, then the court is going to find that illegal, even the underlying motivation is morally worthy or socially desirable.

[00:15:52] Megan Gerking: Thanks, David. So, there’s really no values-based intent exception to antitrust law, but not all cooperations or collaborations in this space will run afoul of the antitrust laws. There are likely collaborations that could occur to further ESG efforts that might be completely unrelated to competition, and AAG Jonathan Kanter has recently reaffirmed that antitrust enforcers would not be at all concerned with those types of collaborations. The types of collaborations that we’re really talking about that could result in antitrust risk are ones that impact price, quality, or quantity of goods or services.

So, for example, an agreement between companies to change to a component part that is more environmentally sustainable, that might be more expensive. That is going to come under scrutiny under the antitrust laws because it is possible or likely that that increase in the component part could be passed onto the customer or consumer in the way of a price increase.

It is interesting to contrast the EU to the U.S. here. The EU, or the EC, has acknowledged that situations where cooperation between companies to achieve ESG gains would not be problematic under a possible cost-benefit analysis. This was a view explained by the EC executive vice president, Margrethe Vestager.

The EC has identified the possibility that certain collaborations, even though they’re agreements between competitors and impacting competition, they might not be problematic from their perspective. For example, she said an agreement that creates a more sustainable product—that might actually be better for consumers overall, or an agreement that helps society as a whole; for example, cutting pollution or carbon emissions from a product.

As David and I had been discussing, that same analysis would not apply in the U.S. The U.S. law does not consider values-based intent as part of the analysis. They will assess whether the agreement has an unreasonable restraint or impact on competition. David, this might be a good time for us to discuss the collaboration guidelines in a bit more detail.

[00:18:19] David Shaw: Sure. Thanks, Megan. As Amelia mentioned, there are competitor collaboration guidelines that sort of lay out circumstances under which competitor collaborations are not going to raise concern in the antitrust laws, including explicit safety zones that say that if the collaboration is between companies that, on the net, have less than 20% market share in the effected market then it’s generally not going to raise any antitrust issues, but Amelia’s right that competitor collaboration guidelines are limited. It’s not carte blanche, and U.S. law is going to sort of channel corporate actions in a way that is unilateral or voluntary. Once you get outside of things that are unilateral and voluntary, the interest risk is going to go up significantly, depending on the circumstances.

[00:19:12] Amelia Miazad: So, let’s talk about some concrete examples. As I was drafting the paper, I looked to the submissions to the European Commission where companies and industries submitted comments and explained why competitor collaboration was an economic imperative and why these collaborations couldn’t just be unilateral and voluntary in order to be effective.

So, just some examples. The food industry’s efforts to combat global pollution, which they have to do because that is what their investors are asking them to do, requires industry-wide standards that would perhaps mandate the use of food-grade recycled plastics, as one example. The same is true for the clothing industries initiative to develop mandatory industry-wide standards to address forced labor.

These unilateral and voluntary initiatives have proved efficient in meaningfully addressing social and environmental harm, and investors are asking for more.

[00:20:12] Suz Mac Cormac: Yeah, the investors are asking for more, and companies need to provide more. As I said, some of it is driven by the investor requirements and demand.

Some of it is driven by basic operational needs. I’ll give the example of manufacturing. If you look at global manufacturing, India is between 3% and 5% of global manufacturing. For probably 15 years, I’ve been saying, Amelia, that India is going to be on fire, is not going to have enough arable land.

It’s going to have real issues as a result of climate. Well, those issues impact their ability to continue to manufacture because they can’t keep the workforce, and they can’t produce. When companies make climate commitments, net zero, particularly, but carbon neutral, as well. And those are two different things.

And or when companies are going to be subject to the new SEC regulations related to climate, every company is going to have to look all the way through their supply chain. They will be responsible for the production of every one of their contracting parties, the parties with whom they contract upstream and downstream.

Let’s take my example. In India, if they can’t pivot quickly, they have 20-year supply contracts with companies in India that are going to have to address the issues with climate. There’s no way one company alone can take the 50 or a hundred manufacturing, and really help them improve their facilities or change their processes to be able to operate without water, with less energy use, with less people.

They are all getting together. That is the apparel industry, is all getting together and saying, okay, we are all using the same, let’s say, 20 sites in India. Let’s go together to them to give them the support. Number one, let’s go together because they’re going to have to report to us, but number two, let’s go together to them to see if we can provide them with some of the resources they need to be able to meet their obligations under the supply contract. I was listening to Megan, and yeah, you can get out of it if it doesn’t impact price or supply, but those collaborations are going to influence price and supply. Even if you just say we’re just going to report, we’re just going to go together to make sure we get all of the data.

The companies in India are going to have to improve and change their processes, which will impact price just to report to us on their emissions or on their water use. So, David or Megan, how do you address that when you have a whole industry that says the only way we can continue to produce your jeans, your socks at all, even if it’s at a higher price, is to work collaboratively with our supply chain?

[00:22:51] Amelia Miazad: So, what Suz just said really raises a limitation of antitrust law, which is time horizons. These sustainability concerns may raise consumer prices, may reduce output in the short term, but if we look at a long-term horizon, which is what the large investors are looking at, it becomes very clear that consumers in the future are better off if we make some of these decisions today. That time horizon is not accounted for in a robust way in the current antitrust analysis.

[00:23:28] Suz Mac Cormac: That’s very true, but, Amelia, before we turn it over to the real experts, I would say that time horizon looked like it was far off. You have Bob Letterman and the car going over the cliff.

You don’t know when the car is going over the cliff. So where are we two years, five years, 20 years away, in preparing? India is now on fire, so either we’re pivoting and we’re just leaving them to their own devices, they’re all going to migrate elsewhere, or we’re providing them support so that they can even meet their obligations out of these contracts and actually provide employment.

I agree with you a hundred percent of the timeline. I just think the timeline is accelerating and the impact of not acting is more clear. David, Megan.

[00:24:09] David Shaw: Yeah, I’ll jump in. I think there are things that you can do that are within existing law, and one example of sort of standard setting, right? Is sort of robust framework around standard setting.

It’s generally recognized to be pro-competitive. You still have to be careful with how you do it. So, you could have companies come together and say we’re going to set standards for what is an appropriate supply chain to look like and what are things that were criteria they’re going to have to be enact in order to qualify for some sort of ESG certification, and individually, people could say we’re going to move, so we’re only going to do business with companies that can meet that certification. What starts to get very dicey from a USA trial law perspective is companies coming together to say here are the standards, and jointly we are committing not to do business with people who don’t meet these standards, because that’s not unilateral and starting to look like an agreement that affects a dimension of competition in a way that’s frankly not lawful under U.S. law.

[00:25:17] Megan Gerking: Yeah. I agree with that, David. I would just add they could set up a third-party organization, and under proper antitrust counsel also think about identifying those standards like we will do business with factories who do XYZ. It’s framing it in a more positive way instead of we’re not going to do business with these companies that aren’t meeting certain standards, which, as David pointed out, could create risk under antitrust law, refusal to deal, or boycott.

[00:25:50] Suz Mac Cormac: What I’m hearing is, and I worked with business for social responsibility, or BSR, on the EICC, but their BSR has set up REBA, the Renewable Energy Buyers Alliance.

There are a lot of NGOs that are stepping into this role where they are helping the set standards, and then their members follow those standards, which I’m hearing is helpful. So we have the standards, and the companies, the industry consortium, is going beyond that and in the end saying, okay, we can impose these standards, but unless we get these companies some assistance, we’re writing off whole sections of India, and millions of people will die because there’s not going to be any gainful employment.

There are already scorching temperatures, no arable land and no water. We actually want to go beyond, as an industry consortium. Not one of us has the resources to do it, but together we can help provide the resources so they can meet the standards. That will again influence price. Should that also be in the purview of the NGOs, of Conservation International, of BSR, of these entities that help set the standards, but then maybe the answer to our clients is you make a donation and you work with the NGO in providing those resources.

[00:27:00] David Shaw: Yes. I certainly think that is a safer way to do it then for the companies to be talking to each other on their own and coordinating that support or that help because that’s where you really are getting into a real antitrust danger zone. If two major users of a given factory in India said you must meet these standards, which are going to raise prices for everyone who uses you in order to use both of us.

I mean, that might have a socially beneficial outcome, and maybe that’s something that should be allowed, but under current law, it’s not, and it could have the effect of also raising the costs on its competitor. Maybe he doesn’t want to participate in that. So that’s sort of a textbook example of an antitrust violation.

Maybe you take out the textbook, you take out the pro-social motivation there, but that is something that, pretty close, if not clearly over the line.

[00:27:58] Suz Mac Cormac: That’s interesting to me. And if I can just add one of the things that I hear, and I know Amelia does all the time, are you sure the antitrust rules apply to me?

Look, we’re trying to do good here. We are not colluding for the purposes of raising price. We are collaborating for the purpose of addressing issues that are not being addressed by the government or otherwise in the private sector. So, Amelia, I’m going to leave it to you.

[00:28:23] Amelia Miazad: I think the interesting thing is that, as Suz knows, because she advises so many of these investors, it is not only for the purpose of being pro-social. It is an economic imperative.

Let’s look at another concrete example that I’ve heard both investors and in-house counsel talk about, which is biodiversity, the loss of biodiversity. Antitrust prevents output restrictions that are agreed to by competitors, but sometimes those output restrictions are necessary or arguably necessary in order to maintain biodiversity or supply, even in the near future.

That is a very clear collision course between what’s pro-social and an economic imperative and antitrust, and I’d love to hear Megan and David’s thoughts about that.

[00:29:17] David Shaw: Amelia, that question of biodiversity, I think really goes to essentially the tragedy of the commons. You have a situation where, maybe overfishing, where unrestrained competition seems like it’s going to actually essentially kill the industry. The way antitrust has traditionally dealt with this is to kick it to regulation. If it’s purely domestic, you might have a state or a federal rule or law administering it. If it’s international, it might be something that’s governed by a treaty. But if you had the two biggest competitors, or the three biggest competitors, or whomever getting together and privately making an agreement to restrain output, that’s going to raise antitrust issues.

It’s a tough problem, depending on the circumstances, but it’s something that even the outcome seems problematic, it’s still something where there really is a concern under the antitrust laws.

[00:30:16] Amelia Miazad: Yeah, and I think we’re going to see a lot more focus on that because biodiversity is now a chief focus in engagement for investors.

That resource has to be maintained over the near term. And antitrust is really forwarding that effort, which means it’s benefiting consumers today, but not consumers even five years from now.

[00:31:04] Megan Gerking: I would just point back to what David and I were talking about with the prior hypo. One thing that they could consider, an industry could consider, is through trade association and encouraging the use of certain policies, and, in a way, restrict output, but really kind of further the biodiversity goals.

I think that’s a good transition to the last segment, which is whether anything more can be done to ensure that antitrust is not getting in the way. It’d be great to hear each of your reactions.

[00:31:43] Suz Mac Cormac:

I do think if we empower more NGOs to take on this role, to work collaboratively with industry, to, as you and David indicated, not just set the standards, but then provide the resources in through the NGOs to the entities in the supply chain, that will be helpful, but, Amelia, I know you think, in addition, there has to be some change to regulation and I agree with that. Philanthropic capital is less than one quarter of 1%. So you can’t solve these issues, human rights, DEI, climate philanthropically, even with the sidearms of all of these entities or the NGOs. That means the fundamental operations of these companies has to change. As Amelia said, the question is short-term, long-term. In the long-term, they’re going to get creamed economically.

In the short term, these actions may have an impact on price. They may have an impact on product supply. They may run afoul of the antitrust rules. If we’re going to solve the longer-term issue, Amelia, what do you think needs to happen at the DOJ?

[00:32:59] Amelia Miazad: Thank you for that opportunity. This is a fun part, where an academic gets to have a magic wand and pretend that she can have any policy impact, but there’s a bunch of things I think that we can do, from the timid to the bold. I think we should absolutely take a page from the EU and other global antitrust authorities, and we should convene a public debate on whether competition policy prevents or discourages companies from collaborating to address these financial, environmental, and social risks. I think it would go a long way for the DOJ and FTC to update the antitrust guidelines for collaboration, specifically on competitor collaboration to address climate change.

It’s not a new idea. When president Obama identified cyber threats as a national security danger, the DOJ and FTC issued an antitrust policy statement on the sharing of cybersecurity information. They can do something similar, given the Biden administration’s focus on the climate crisis. I think the antitrust authorities have a role to play alongside the other agencies that are very active with respect to addressing climate change.

Then, I think that courts and antitrust authorities should recognize that there are pro-competitive justifications for these competitor collaborations to address environmental and social risks. I think that requires thinking about a different standard, like a universal consumer standard, that takes this time horizon into account.

So it’s not let’s do this because it’s pro-social, it’s let’s figure out what is going to impact the markets in the future and anchor our antitrust analysis to that. So those are just some ideas and thoughts, and I think there’s so much at stake in this debate and that competitor collaboration holds a lot of promise for addressing these risks.

I think that these risks are absolutely financially material and the antitrust paradigm needs to account for them as financially material.

[00:35:06] Megan Gerking: Thanks, Amelia. David raised earlier in the discussion business review letters, which are letters reviewed by DOJ submitted by companies seeking to engage in practices that could implicate antitrust laws.

I think one thing that David and I had discussed is whether those could be utilized in a different way to encourage companies to seek quote unquote DOJ’s blessing before engaging in practices that could implicate antitrust risk. David, do you want to give your thoughts on that?

[00:35:43] David Shaw: Sure. I’m happy to. As Megan mentioned, there’s a process to essentially send DOJ a letter and outline a course of conduct and for DOJ to respond with its present enforcement intention.

Practically, if DOJ blesses a proposed collaboration, the chances of enforcement action drop to near zero. Yeah, there’s a couple limitations with the process. One is that, traditionally, it takes a very long time. We’re looking at six months or longer, often, much longer, between the submission of a business review letter and an actual response from DOJ.

Also, it’s not an immunity, it’s not an exemption. DOJ can’t change the law. And so DOJ’s probably not going to sign off on something that it thinks goes over the line, or even too close to the line, and even if it did, that would not immunize people from potential private actions or even potentially a state AG action, especially given the potential divide in philosophies between who’s running the federal government and who’s in power at the state level.

One interesting thing to look at, though, is the response to the crises that came out of COVID-19 with regard to personal protective equipment, to the development of a vaccine, to the development of potential therapeutics. And there, DOJ and the FTC sort of acting very quickly to provide fairly concrete guidance to industry on potential collaborations in order to address that.

You could certainly imagine the DOJ, the FTC, taking a similar tact with regard to ESG-based initiatives and collaborations.

[00:37:30] Megan Gerking: Thanks, David. I would also just add that unilateral conduct, generally, that a company might take on its own to further its ESG efforts and initiatives will not implicate the antitrust laws unless that company has a significant market presence or market power.

There is a wide range of conduct that an individual company could engage in, but as we’ve discussed today, that might not always be the most impactful or produce the most change. I’d really like to thank everyone on this panel for taking the time to talk with us today and giving your perspectives.

Thank you, and we’ll talk to you next time.

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