The original membership of this Association, conscious of the antitrust problems inherent in trade association activities, provided in the Association Bylaws that the new organization “shall not directly or indirectly restrict free and lawful competition.” Since its formation, the Association has maintained a consistent, aggressive, and proper observation of both the letter and the spirit of the law in this area on behalf of its membership. To ensure continued strict compliance with the antitrust laws, this re-statement of ACA Antitrust Policy has been prepared for the membership. These clear statements of conduct must always be kept in mind, and all Association meetings and other activities must be conducted in accordance therewith.
Section 1 of the Sherman Antitrust Act and Section 5 of the Federal Trade Commission Act prohibit “contracts, combinations or conspiracies in restraint of trade and unfair methods of competition in commerce….”
One of the clearest antitrust violations an association can commit is an agreement by its members to set prices at a fixed level. Such an agreement is a per se violation of the antitrust laws, even if the prices set are reasonable or the ends sought are worthy. Similarly, terms and conditions of sale which affect the buyer should not be discussed. These include discounts, freight allowances, terms of product warranties and other individual policies followed in dealing with customers. Informal understandings and planned courses of action on these subjects by competitors also clearly are forbidden.
Administrative or disciplinary action against member companies, or the expulsion of member companies, may result in economic injury to the affected members and, thus, may constitute an illegal boycott or restraint of trade. Therefore, these sensitive areas must be discussed in accordance with legal guidelines and only in the presence of counsel.
Frequently, an association engages in the voluntary development of a product specification or industry standard of quality. Antitrust problems can arise if the standard developed advances the economic interests or operates as a marketing advantage for some members to the detriment of others.
Statistical reporting is another common activity. However, since some other associations and their members have used these activities in the past to further and monopolistic schemes, statistical reporting projects must be conducted with great care in order to conform with rules regarding the collection, protection, and dispersal of confidential product information. Antitrust problems also may arise when associations become involved in research and development programs. When pooling of results exists, joint research and development activities may injure competition by diluting the competitive pressure to innovate.
A potential antitrust infraction can also involve normally protected efforts to petition government agencies for action. A delicate balance always must be maintained between the First Amendment right to petition government and the antitrust laws’ prohibition against restraint of trade. The First Amendment does not protect parties which seek to prod government agencies into imposing trade restrictions by misleading them or by engaging in other dishonest activities. Any effort designed to injure industry competitors clearly is prohibited.
The proper conduct of association meetings requires an understanding and conscious awareness by all of antitrust implications. Your in the discussion (pro or con) may not protect you if, out of such discussions at a meeting you attend, any agreement in restraint of trade originates. However, no imputed unlawful purpose can arise if conscious independent and individual judgment is exercised and no illegal common course of action is pursued.
From time to time, ACA member companies might solicit the support of the Association in circumstances involving government administrative actions directed against that company. In such situations, the appropriate role of the Association is to act in a manner consistent with the interests of the membership as a whole. Accordingly, any assistance provided individual association members shall be done solely with a view toward protecting or advancing the interests of the industry and shall seek, where appropriate, to promote favorable government policies or foster precedent advantageous to the entire industry.
BE ALERT AND KEEP INFORMED. Antitrust laws are , complex, and subject to changing interpretations. Consult your company’s lawyer or an Association counsel immediately if you have any questions about the legality of any proposed Association action.
THOMAS J. GRAVES
American Coatings Association, Inc.