FTC (Federal Trade Commission) Reminder: Be Careful To Avoid Antitrust Violations
The Federal Trade Commission (FTC), in a recent post on its website, cautioned trade associations to not run astray of the antitrust laws. The FTC’s post provided an important reminder that while trade associations serve a number of legitimate, procompetitive purposes, trade associations activities are not above antitrust scrutiny.
As the FTC itself recognizes, most trade association activities are procompetitive or competitively neutral. Trade associations may establish standards that protect the public or allow for the interoperability of components made by different manufacturers. They may also represent their members before legislative bodies and governmental agencies. These activities, when performed with adequate safeguards, ought not to pose an antitrust risk.
But, as with all competitor collaborations, trade associations should operate with caution: they should not stray into forbidden antitrust activity. Put simply, to avoid violating the antitrust laws, trade associations should stay away from conduct or discussions that could be construed as facilitating price fixing, bid rigging, market allocation, or other anticompetitive activity. In practical terms, several topics are almost always off limits:
pricing and price terms
sales and service territories for particular products
customers and customer territories
a specific members’ individual decisions regarding selection of suppliers or customers
marketing plans and especially future marketing plans or new product offerings
other proprietary or competitively sensitive information
The antitrust enforcers take these concerns to heart. As noted in the FTC’s blog post, the FTC recently made final two orders prohibiting unreasonable trade association rules. In both the first case and second case, the agency prohibited rules limiting a trade association’s members from engaging in conduct that could prompt customers to switch from one member to another.
Trade associations should engage with antitrust counsel to ensure compliance with the antitrust laws. That may include, for example, vetting any proposed rules or regulations with counsel and counsel’s participation in association meetings. Trade association members should also be vigilant with respect to their activities.