The antitrust laws of the United States and the various states prohibit agreements, combinations and conspiracies in restraint of trade. Because the ABC Association ("ABC") and other trade and professional associations are, by definition, combinations of competitors, one element of a possible antitrust violation is always present, and only some action by the association that unreasonably restrains trade needs to occur for there to be an antitrust violation. Consequently, associations are common targets of antitrust plaintiffs and prosecutors.
The consequences for violating the antitrust laws can be severe. A conviction can carry stiff fines for the association and its offending leaders, jail sentences for individuals who participated in the violation, and a court order dissolving the association or seriously curtailing its activities. The antitrust laws can be enforced against associations, association members, and the association's employees by both government agencies and private parties (such as competitors and consumers) through treble (triple) damage actions. As the principal federal antitrust law is a criminal conspiracy statute, an executive who attends a meeting at which competitors engage in illegal discussions may be held criminally responsible, even if he or she says nothing at the meeting. The executive's attendance at the meeting may be sufficient to imply acquiescence in the discussion, making him or her liable to as great a penalty as those who actively participated in the illegal agreement.
The antitrust laws prohibit competitors from engaging in actions that could result in an unreasonable restraint of trade. Above all else, association members should be free to make business decisions based on the dictates of the market - not the dictates of the association.
Some activities by competitors are deemed so pernicious and harmful that they are considered per se violations - it does not matter whether or not the activities have a harmful effect on competition. These generally include price fixing, allocation of customers, markets or territories, bid-rigging, and some forms of boycotts. In addition, there are many features that factor into price; agreements as to warranty duration, freight terms, or other factors that can directly impact price also are proscribed.
Other actions such as standards development and relationships between distributors and suppliers generally are evaluated under a rule of reason - there is a balancing between the pro-competitive and anti-competitive aspects of the activities. These areas also should be approached with caution and legal guidance.
ABC has a policy of strict compliance with federal and state antitrust laws. ABC members should avoid discussing certain subjects when they are together - both at formal ABC membership, Board of Directors, committee, and other meetings and in informal contacts with other industry members - and should otherwise adhere strictly to the following guidelines:
For more information, contact the author at jtenenbaum@TenenbaumLegal.com.