Antitrust Pitfalls for Trade Associations and Members

84 Pages·2012·0.93 MB·English

by  Erika Simon

Presenting a live 90-minute webinar with interactive Q&A
Antitrust Pitfalls for Trade Associations
and Members
Avoiding Anticompetitive Conduct Amid Increasing Federal Scrutiny

TUESDAY, FEBRUARY 7, 2012
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
Today’s faculty features:
Philip C. Larson, Partner, Hogan Lovells, Washington, D.C.
Carl W. Hittinger, Partner, DLA Piper, Philadelphia
Christopher E. Ondeck, Partner, Crowell & Moring, Washington, D.C.
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Antitrust Compliance Considerations
for Trade Associations

Philip C. Larson
Hogan Lovells US LLP
Washington, DC
[phone] Strafford Webinar
[email protected] February 7, 2012
The interaction of trade associations with
antitrust laws
Antitrust laws recognize that trade But cooperation between competitors
associations can benefit competition can invite antitrust challenges
 Provide information on important x Coordination on prices or other
regulatory developments
terms
 Advocacy and other public policy
representation x Allocation of markets
 Promote consumer awareness of
x Collective refusals to deal
industry issues and
developments
x Certain membership restrictions
 Facilitate legitimate
benchmarking activities
x Abuse of standards making
 Self-regulation and certain ethical
process
standards
 Provide and implement
appropriate technical standards
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Why should associations worry about
antitrust laws?
• Examples of past and current antitrust actions
o Nat’l Soc’y of Prof’l Engineers v. United States, 435 U.S. 679 (1978) (holding that
industry code of conduct restricting certain bidding practices was unlawful).
o United States v. ABA, Civil Action No. 95-1211 (D.D.C. June 25, 1996) (prohibiting
certain conduct with regard to ABA accreditation of law schools that excluded
competitors of existing accredited law schools);
http://www.justice.gov/atr/public/press_releases/2006/216804.htm (press release
reporting that ABA admitted to a violation of the consent decree in 2006, resulting in
a $185,000 fine).
o United States v. Nat’l Ass’n of Realtors, Civ. No. 05C-5140 (N.D. Ill., November 18,
2008) (consent decree between the US and the National Association of Realtors
prohibiting association rules that restrict broker‘s ability to use certain online
technologies) .
o In the Matter of Nat’l Ass’n of Music Merchants, Inc., FTC File No. 01-0203 (April
10, 2009) (consent decree barring the National Association of Music Merchants
from facilitating exchanges of price information and business strategies between
music instrument manufacturers).

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Why should associations worry about
antitrust laws? (cont.)
• Examples of past and current antitrust actions (cont.)
o In the Matter of Boulder Valley Individual Practice Ass’n, FTC File No.
051-0252 (Dec. 24, 2008) (consent decree prohibiting certain BVIPA
activities, including group refusals to deal and group negotiations, and
restricting the exchange of information concerning whether or on what
terms physicians will do business with payors).
o In the Matter of M. Catherine Higgins, FTC File No. 051-0252 (Feb. 5,
2010) (consent decree restricting defendant‘s individual activities within
and with respect to the Boulder Valley Individual Practice Association and
individual competitors; the consent decree resulted from an investigation
of an alleged violation of the BVIPA consent decree).
o American Needle, Inc. v. National Football League, 130 S. Ct. 2201
(2010) (applying rule of reason to NFL licensing of team-labeled apparel).
o K&S Associates, Inc. v. American Ass’n of Physicists in Medicine, No.
3:09-01108 (N. D. Tenn., Jan. 26, 2011) (denying motion to dismiss
boycott allegations against association that denied reaccreditation).

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Why should associations worry about
antitrust laws?
• The Obama Administration has been more vigorous in its enforcement
activities than some prior administrations
• Potential for association, member, and individual liability (both civil and
criminal)
o Association liability: may be liable for anticompetitive actions by the
association or by members acting with ―apparent authority.‖
[E.g., FTC v. Super. Ct.
Trial Lawyers Ass’n, 493 U.S. 411 (1990) (association liable for own conduct); Am. Soc’y of
Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556 (1982) (association liable for conduct of
members acting with apparent authority).]
o Member liability: members may be liable for agreements with other
members, but mere membership in an organization is not enough.
[E.g., Allied
Tube & Conduit v. Indian Head Inc., 486 U.S. 492 (1988) (member company liable for role in
standard setting); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) (member not liable due
to lack of evidence of an agreement).]
o Individual liability: association officers and directors who knowingly
participate in violation of antitrust laws may be liable. [E.g., Reifert v. S. Cent. Wis.
MLS Corp., 368 F. Supp.2d 912 (W.D. Wis. 2005) (directors of association held liable for ratifying
and approving unlawful tying arrangement).]

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Primary antitrust statutes involved
• Sherman Act § 1 (and possibly § 2 as well)
• Federal Trade Commission Act § 5 (―unfair methods
of competition‖)
• State antitrust laws
• European Union and laws of other nations outside
the US
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Sherman 1: agreements
• Sherman 1 claims must be premised on ―contract[s],
combination[s]… or conspirac[ies].‖ 15. U.S.C. 1.
o ―[E]very action by a trade association is not concerted action by the
association members.‖
[AD/SAT, Div. of Skylight, Inc. v. Associated Press, 181
F.3d 216, 234 (2d Cir. 1999).]
o ―[T]here must be direct or circumstantial evidence that reasonably
tends to prove that [alleged conspirators] had a conscious
commitment to a common scheme designed to achieve an unlawful
objective.‖
[Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 768 (1984).]
o Motive to conspire must be plausible.
[Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574 (1986).]
o Agreement must be between independent actors.
[American Needle, Inc.
v. NFL, 130 S. Ct. 2201 (2010); Copperweld Corp. v. Independence Tube Corp., 467
U.S. 752 (1984).]

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