Antitrust Statement

Trade associations perform many useful and legitimate functions. Because trade association meetings bring together competitors makes the meetings vulnerable to antitrust scrutiny and can expose participants to antitrust claims.

Section 1 of the Sherman Act, a key US antitrust law, prohibits any agreement between two or more companies that results in an unreasonable restraint of trade. There is no safe harbor under the antitrust laws for trade association activities. Violating the Sherman Act is a felony that can result in imprisonment for up to 10 years, in addition to civil penalties and reputational damage.

Under the antitrust laws, company employees are not allowed to discuss certain topics with competitors. Company employees should heed the following warnings, which apply to all contacts with a company’s competitors, when attending trade association meetings to avoid running afoul of the antitrust laws.

You should not discuss the company’s non-public,
competitively sensitive information with competitors, including:

  • Current or future pricing and discounts.
  • Bid amounts and terms, including decisions whether to bid or not bid.
  • Output or capacity levels.
  • Limits on sales levels or sales of certain products to certain regions.
  • Customers.
  • Key contract or sale terms.
  • Salaries and wages, or limitations on hiring a competitor’s employees.
  • Strategic plans.
  • Business expansion or contraction plans.
  • Planned geographic growth
 

In addition, do not:

  • Agree to, or discuss refusing to, do business with any competitor, customer, or company.
  • Agree to, or discuss, any limitations on your company’s activities or independent decision-making, such as changing the way you adjust pricing or make output decisions.
  • Exchange non-public, competitively sensitive information with competitors.

Any type of joint effort with trade association members should be first vetted by counsel, including data exchanges, joint ventures, or lobbying efforts. We also want to avoid creating the appearance of illegal collusion, or that inappropriate communications or information exchanges are taking place. Any meeting with a competitor could later be interpreted as evidence of an illegal information exchange or of cartel activity. As much as possible, avoid side-meetings and conversations with your competitors during this meeting.

Stopping the Conversation

 

Cartel agreements are agreements between competitors to fix prices, alter output, allocate markets or customers, or rig bids. This type of behavior is per se illegal, meaning there is no justification. It is automatically illegal. If these topics come up during the meeting:

  • Interrupt the meeting and suggest pausing the conversation until it can be vetted by the association’s legal counsel.
  • If, after vocally objecting, the conversation continues, state that you are leaving the meeting and ask that the minutes reflect your concern and departure.
  • Promptly leave and immediately contact the association’s legal counsel.

It is possible that, if discussion steers towards a sensitive topic, it will be less obvious or overt than the per se violations discussed above. For this or other reasons, it may not be feasible to immediately interrupt or leave the discussion. If that happens:

  • Avoid participating in the discussion.
  • If you feel comfortable, suggest that the discussion be delayed until vetted by legal counsel.
  • If the discussion continues, leave as soon as possible.
  • Immediately contact the association’s legal counsel.

If an inappropriate discussion arises during a side conversation in which you are involved, insist that it end immediately. If it continues, announce your intent to leave because you feel it violates the law. Leave, and immediately contact the association’s legal counsel.

Permissible Conduct and Information Exchanges

 

Lawmakers and regulators recognize that trade associations and standard-setting organizations often promote competitively benign or procompetitive activities, such as:

  • Collecting publicly available information about the industry, organizing it and disseminating it to industry participants
  • Setting industry standards that increase product interoperability, compatibility or safety.
  • Creating a public website that informs customers about a complicated industry.
  • Lobbying efforts.
  • Coordinating collection and exchange of historical, aggregated industry data.
  • Sharing non-strategic technical or scientific data that results in consumer benefits.
 

Not all information exchanges with competitors are prohibited. There are safe harbors to guide information exchanges with procompetitive or benign purposes. Generally, information is not considered competitively sensitive if it is:

  • Three or more months old.
  • Collected and aggregated by a third party.
  • Data aggregated from five or more firms, where no firm counts for more than 25% of the aggregated value, and it is impossible to identify any individual firm.
  • Highly technical and nonstrategic.
 

Procompetitive or benign information exchanges that reduce fraud or confer consumer benefits are particularly encouraged. Nonetheless, all information exchanges with meeting attendees or trade association members should be cleared in advance with the association’s legal counsel.

If you receive any documents containing non-public, competitor, or industry information at a trade association meeting (for example, if a customer gives you a document that includes information about a competitor), make a notation on the document listing the source, date, and context in which you received it, so that it is clear to a reader that the document is not evidence of an anticompetitive information exchange. Contact the association’s legal counsel if you think the document could be viewed as evidence of prohibited activity.

After the Meeting

 

If, after the meeting, you become concerned about a topic that was discussed, immediately contact the association’s legal counsel. Do not discuss the topic further with other participants.

The association’s legal counsel is Eric Pritchard. Eric can be reached at eric.pritchard@pierfered.com.