ANTITRUST COMPLIANCE GUIDELINES
SAMPLE Association Antitrust Policy
It is a good idea for an association’s governing board to adopt an antitrust policy such as the following:
ABC Association intends to comply with all applicable antitrust laws. Under no circumstances will ABC directly or indirectly be involved in conduct that leads to or implies an agreement among its members that would restrain trade and/or otherwise violate antitrust laws. Any conduct by ABC’s officers, directors or employees that is contrary to the antitrust laws is contrary to ABC policy. Any officer, director or employee found in violation of this policy or the applicable antitrust laws will be subject to appropriate disciplinary action.Guidelines for Antitrust Compliance
The following general rules are intended to assist associations avoid potential antitrust problems when conducting meetings:
A meeting should be held only if there are proper matters to be discussed which justify the meeting.
For each meeting, an agenda should be developed and provided to each attendee.
The agenda should be specific and avoid topics that may cause antitrust problems such as price, production, markets, and selection of customers or suppliers. In addition, discussions of price, pricing, discounts, credit terms, refusals to deal and allocation of markets should be avoided.
Participants at meetings should adhere strictly to the agenda. In general, subjects not included on the agenda should not be considered at the meeting.
If a subject of doubtful legality is brought up at a meeting, the person leading the discussion should be told immediately that the subject is not a proper one for discussion and discussion should be halted. Should the discussion continue, despite protest, it is advisable that attendees leave the meeting.
Minutes of all meetings should be kept that accurately report what actions, if any, were taken.
Unscheduled, informal, secret or “rump” meetings held in conjunction with the regular meetings should be avoided. Such meetings seriously jeopardize legitimate Council activities and create a very substantial risk of investigation. An association staff member should attend all meetings.
No meetings should include recommendations with respect to “sensitive” antitrust subjects, such as those listed in #3 above.
Members should not be coerced to take part in association activities. The industry should not be policed to see how individual members are conducting their business activities.
Make certain that no officer, director or member of the association makes any statement - orally or in writing - which states or appears to state an official policy or position of the association without specific authorization to do so.
Legal counsel should attend all association meetings where there is potential for discussion of legally sensitive subjects.
Members should check with association staff and/or counsel if there is any doubt about the propriety of an association program or subject of discussion. Members may also wish to consult with their company’s counsel.
Members should cooperate with association counsel in all matters, particularly when counsel has ruled adversely about a particular activity.
Summary of Antitrust Laws
The Sherman Act.
The Sherman Act, enacted in 1890, is the basic federal antitrust law. Section 1 of the Act prohibits agreements in unreasonable restraint of trade. While every business agreement restrains trade to some extent, not every agreement violates the law. Over time, certain types of agreements or conduct have been found to always be unlawful (per se violations), and other agreements or conduct are evaluated based on all the facts and circumstances to determine if they violate the law (the “rule of reason” test). Section 2 of the Sherman Act prohibits unreasonable business behavior designed to achieve or maintain monopoly power.The Clayton Act.
Section 2 of the Clayton Act prohibits certain types of price and related discrimination; Section 3 of the Act prohibits exclusive dealing arrangements; and Section 7 covers mergers, acquisitions and other business arrangements that adversely affect competition or threaten to create a monopoly.The Federal Trade Commission Act.
The FTC Act grants the FTC the authority to enforce antitrust laws by issuing cease and desist orders or by seeking other relief from courts against unfair methods of competition and other anticompetitive practices.State antitrust laws.
In addition to the federal statutes, each state has its own antitrust law. Generally, most actions that violate the federal antitrust laws also violate the comparable state law.Government enforcement of the antitrust laws.
The antitrust laws can be enforced by the federal government, state government, competitors, suppliers or customers. The Department of Justice and the Federal Trade Commission have concurrent jurisdiction to enforce the federal antitrust laws. The Department of Justice generally challenges price fixing conspiracies by seeking criminal penalties. The Department of Justice may also seek civil remedies in antitrust matters. The FTC usually challenges the more complicated antitrust matters where extensive economic analysis is necessary.State government enforcement of state antitrust laws.
In addition to enforcing their own state laws, state governments may sue under the federal laws for damages or injuries suffered by the state in its role as purchaser or supplier of products, or on behalf of citizens for injuries they suffer from violations of the federal statutes.Private enforcement of the antitrust laws.
Private parties may sue for damages under Section 4 of the Clayton Act. Section 4 provides for the recovery of triple the amount of damages awarded by the jury, plus attorneys’ fees and costs. If the Department of Justice or FTC has previously proved that conduct violated the antitrust laws, private parties can rely on that finding and do not have to incur the expense or difficulty of again proving that the antitrust laws were violated. However, private plaintiffs cannot sue to enforce the FTC Act.Summary of Sanctions for Violating Antitrust Laws
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Violations of the antitrust laws can have serious consequences for an association, its officers, directors and employees, including damage suits, criminal fines of $350,000 against individuals and $10 million against the association, imprisonment for as long as three years and damage to the association’s reputation. In extreme cases, the government can seek to dissolve an association. Furthermore, an association’s exposure is not limited to government action. Private parties injured by violations of the antitrust laws may also bring an antitrust action seeking treble damages against the association and its representatives. Summary of Conduct Considered Per Se Illegal
Certain activities or conduct are considered always or almost always to restrict competition and therefore are illegal under the antitrust laws. Examples include:Summary of Conduct Reviewed Under the “Rule of Reason”
agreements among competitors to raise, lower, control or stabilize the prices of goods or services;
agreements with suppliers to raise, lower, control or stabilize the resale prices of goods or services;
boycotts involving monopoly power that deny necessary business relationships to competitors, suppliers or customers; and
agreements to allocate markets or customers, or concerted action to limit output of goods or services.
Conduct that is not per se illegal is evaluated under the Rule of Reason. Conduct that involves some restraint of trade may be permissible if the overall effect of the activity is to improve competition rather than restrict it. Activities evaluated under the Rule of Reason include:
membership decisions (inclusion, exclusion, termination of);
lobbying efforts;
industry-wide surveys, data collection, statistical gathering and similar activities; and,
standardization and certification programs.
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