My company has been invited to join a trade association that will try to get some of the regulations burdening our industry reduced. A lawyer friend of mine told me I need to be aware of antitrust concerns. Why’d she say that?
Whenever representatives of companies in a particular industry—who normally compete against one another—join forces there is the potential for an antitrust violation. Last year, the Federal Trade Commission (FTC) reminded trade association members that there are no special antitrust rules for trade associations, and thus whenever trade association codes or rules restrict the activities of members, antitrust enforcers and the courts will view such codes or rules as joint decision-making by otherwise independent competitors.
In April 2014, the FTC issued two final orders prohibiting what it found to be unreasonable trade association rules. In one case, an association of legal support professionals had banned comparative ads and also prevented members from offering discounted rates to another member’s clients or recruiting another member’s employees without giving prior notice. In the other case, the code of ethics of an association of music teachers prevented members from soliciting clients from a rival. Each association agreed to settle the FTC charges and to change its rules. In a blog post concerning the cases, the FTC remarked, “competitors are expected to compete.”
These cases serve as a reminder that the FTC remains vigilant about trade association activity that restrains competition among the members without a legitimate business justification. This is why I always recommend there be an attorney present at any trade association meeting to safeguard against possible antitrust violations. Something as seemingly innocuous as a company representative saying, “Boy, the price competition in Mexico is killing us” could later be used as evidence of collusion to raise prices in Mexico. Aside from having an attorney present, just be mindful that all discussions should be focused on the mission of the association, or a safe topic such as the current futility of the New York Knicks.