five principal antitrust problem areas. These Some topics which should be scrupulously
are: price-fixing, division of customers, avoided in all meetings:
membership standardization and certification
and industry self-regulation. 1. Do not discuss pricing
2. Do not discuss profit levels
PRICE-FIXING. Price (defined broadly to 3. Do not discuss an increase or decrease in
include all elements of price) is the most price
sensitive area under the antitrust laws, and 4. Do not discuss standardizing or stabilizing
therefore government has evinced its prices.
greatest concern about violations and 5. Do not discuss pricing procedures.
potential violations of the price-fixing 6. Do not discuss cash discounts .
prohibitions of the Sherman Act. A price- 7. Do not discuss credit terms.
fixing violation can be inferred from the fact of 8. Do not discuss controlling sales.
www.ssct.org similar price conduct by members, even 9. Do not discuss allocating customers or
though there is no written or oral agreement markets
shown. If prices are fixed it is no defense that 10. Do not complain to a competitor that his
ANTITRUST LAWS & the prices set are reasonable or that the ends or her prices constitute unfair practices
sought are worthy 11. Do not discuss refusing to deal with
TRADE ASSOCIATIONS a corporation because of its pricing or
Guide for Members of the DIVISION OF CUSTOMERS OR MARKETS. distribution practices.
An agreement among members of an 12. Do not attend informal sessions in which
Southern Society of Coatings association to divide customers or markets any of the above subjects are discussed
Technology – SSCT served is, in and of itself, a criminal act The
antitrust laws prohibit any understandings or With regard to antitrust risks present in
Trade associations are subject to strict agreements between competitors or membership and industry self-regulation,
scrutiny under the many federal and state members of an association that involves the membership policies should avoid:
antitrust laws. One of the most powerful of division or allocation of customers. Even
these is the Sherman Act. Section 1 of that informal agreements whereby one member 1. Restrictions on dealing with non-members
Act prohibits "contracts combinations or agrees to stay out of another member’s 2. Exclusions from membership, especially if
conspiracies… in restraint of trade." But by its territory will constitute a violation of the there is a business advantage in being a
very nature a trade association is a antitrust laws member.
combination, such that there is no problem in 3. Limitations on access to association
proving the fact. This should serve as a MEMBERSHIP. A basic assumption about information, unless the limitation is based
signal to trade associations that they must every trade association is that its members upon protection of trade secrets
proceed with extreme caution lest they be derive an economic benefit from
cited for antitrust infringements carrying stiff membership. Denial of membership to an Industry self-regulation and codes of ethics
fines and jail sentences. applicant may therefore constitute a restraint should avoid:
of trade in that such denial of an economic
Responsibility for enforcement of the antitrust benefit limits the rights of an applicant to 1. Requiring refusal to deal with any member
laws lies with the Department of Justice, the compete. Thus membership criteria must be violating the association's code of ethics
Federal Trade Commission and the over 40 carefully drafted to avoid antitrust problems. 2. Arbitrary enforcement of the code
states which have enacted antitrust 3. Unreasonably severe penalties for violation
legislation. STANDARDIZATION AND of the code
CERTIFICATION. 4. Regulations or policies which have
The federal government can be expected to An association which develops voluntary price-fixing implications such as preventing
bring civil and criminal felony cases each industry standards may face antitrust the advertising of prices
year against trade associations, including problems if the standard favors some and
members and staff. Penalties are severe. discriminates against others. Similarly Without being alarmist trade associations
Each individual can be fined up to $1,000,000 association certification activities which should bear in mind that they are targets
and each member corporation can be fined further interests to certain groups, to the for government antitrust enforcers and
up to $100,000,000. Individuals are subject to exclusion of others may result in antitrust private treble damage suits By conducting
imprisonment of up to ten years. In addition, problems. their business openly and avoiding even the
the government can impose civil sanctions appearance that they are engaging in activity
such as cease and desist orders which result INDUSTRY SELF-REGULATION. which might be seen to have an effect on
in government restraints on the activities of Associations commonly establish codes of prices or competition, trade associations can
association members. This in turn inhibits ethics for their members, with procedures protect themselves from charges of antitrust
association functions and may culminate in enforcing them. It is laudable for an violations.
the dissolution of an association altogether. association to promote high ethical standards
but antitrust problems may arise of an
In addition to lawsuits prosecuted by the association’s attempt to enforce its code of
government civil treble damage suits can be ethics causes economic injury .
brought by competitors and consumers. By
way of illustration the Sherman Act prohibits
any price agreement regardless of purpose. RULES FOR MEMBERS
Thus, if members of a trade association
have an agreement as to price, they cannot The best way to avoid possible infringement
justify the agreement by showing benefits to of the antitrust laws is to institute a program
customers. Members will be found liable for of compliance. At association gatherings, the
treble damages for injury resulting from the association should resolve to avoid
excess price charged. discussion of certain sensitive subjects.
Informal gatherings which follow association
From a practical standpoint trade meetings are particularly looked upon with
associations should focus their concern on great suspicion by the government.