antitrust guidelines
2. 3.
SAFER ROADS SAVE LIVES
ANTITRUST
GUIDELINES
FOR THE AMERI CAN TRAFFIC
SAFETY SERVICES
ASSOCIA TI 0 N .I
The purpose of this document is to briefly review thefederal antitrust laws applicable to association activities and to setforth somegeneral guidelinesfor compliance with those laws.
There aretwo antitrust statuteswhich are of principal concernto individuals and fInns who take part in associationactivities: the Shennan Act and the FederalTrade Commission Act. Theselaws prohibit contracts,combinations and conspiraciesin restraint of trade.The SupremeCourt has said that not every contractor combination ill restraint of trade constitutesa violation; only those which unreasonably restraintradeare unlawful. Thus the courts will look at all of the facts and circumstancessurrounding the conductin questionin order to determine whether it unreasonablyrestrainstrade and thereforeviolates the
laws. Certain kinds of conduct are exclusively presumed to be unreasonableand therefore unlawful. Such conduct,which is consideredto be unlawful per se, consistsof certainpractices which clearly restrain competitionand have no other redeemingbenefits. Examplesof suchpractices include: agreementsto establishprice (price fIXing); agreementsto refuse to deal with third parties
(boycotts); agreementsto allocate markets or limit production; tie-in saleswhich require the customerto buy an unwanteditem in order to buy the product
desired. Associationsby their very nature presentpotential antitrustproblems.One reasonis that in bringing competitorstogetherinto an association,there exists the meansby which collusive action can be taken in violation of the antitrust laws. Since both the Shennan and FederalTrade Commission Acts prohibit combinationsin restraint of trade and since an associationby its very nature is a combination of competitors,one element of a possible violation is alreadypresent.Only the action to restraintrade must occur for there to be a violation.
Another special antitrust problem of an associationis that many of its valuable programsdeal with subjects sensitive from an antitrust vie\\-point: price reporting, product standards,certification, statisticsand customerrelations. Association membersshould refrain from any discussionwhich could provide the basis for an inference that the membersagreedto take any action that might restraintrade. An "agreement"among associationmembersin antitrustterms is a very broad concept-it may be oral or written, formal or informal, expressedor implied. A "gentlemen'sagreement"to "hold the line" on prices is more thaI1sufficient to evidencean unlawful conspiracyto fIX prices. The basic principle to be followed in avoiding antitrust violations in connectionwith association activity is: to see that no illegal agreements,expressed or implied, are reached or carried out throughthe association.Members should also avoid engagingin conduct which may give the appearanceof an unlawful agreement. Following are some generalguidelineswhich can minimize the possibility that inferencesof antitrust guilt can be drawn from associationactivities: 1. Meetings should be held only when there are proper items of substanceto be discussedwhich justify a meeting. In advance of every meeting,a notice of meeting along with an agendashouldbe sentto each member of the group; the agendashould be specific and suchbroad topics as "marketing practices," which might look suspiciousfrom an antitrust standpoint, shouldbe avoided. Participants at the meetingshould adherestrictly to the agenda.In general, subjectsnot included on the agendashould not be consideredat the meeting.
8.
4.
5
If a memberbrings up for discussionat a meeting a subject of doubtful legality, he shouldbe told immediately the subjectis not a properone for discussion.This, of course,is the counsel's responsibility, but in his absence,the association staff representativeor any memberpresentwho is aware of the legal implicationsof a discussion of the subjectshould attemptto halt the discussion.Shouldthe discussioncontinue, despiteprotest, it is advisablethatmembersleave the meeting. Minutes of all meetingsshouldbe kept by the association,and they must accuratelyreport what actions, if any, were taken.
6. Secretor "rump" meetingsheld at the time of the regular meetingshouldbe strictly avoided. Such meetings seldomhave anypurposeexceptto discuss illegal activities,and, accordingly, they seriouslyjeopardizelegitimate association activities and createa-verysubstantialrisk that those activities will be investigated.An associationstaff membershould usually attend all meetings. 7
During meetingsthereshouldbe no recommendationswith respectto "sensitive" antitrust subjects--those thatrelateto price, production marketsand the selectionof customersor suppliers.Pricesshouldnot be discussedat all. In the lesssensitiveareas,such as standardizationactivities, recommendations may be permissible. Members should not be in any way coercedinto taking part in associationactivities.There should be no policing of the industryto seehow individual membersare conductingtheir business.
9,
If there is any doubt aboutan association program or subjectof discussion,members should checkwith associationstaff and counsel. Members may also wish to consultwith their company'scounsel,and this is encouraged.
The following topics are some of the main ones which should not be discussed at meetingsof association members: 1. 2. 3. 4. 5. 6. 7. 8.
Do not discuss current or future prices. Do not discuss what is a fair profit level. Do not discuss price adjustments. Do not discuss cashdiscounts. Do not discuss credit terms. Do not discuss allocatingmarkets. Do not discuss wagerates. iI Do not discuss refusingto deal with a corporation.
Some of the basic areas of associationactivity which should be carefully scrutinized from an antitrust standpoint are the following:
1. Denialof association membership to an applicant. 2. Expulsionof an association member. 3. Conductofa statisticalreportingprogram. 4. Conductof a standardization andcertification program. S. Conductof a joint research program. 6. Establislunent andenforcement of codesof ethics. There are both civil and criminal penalties for violating the antitrust laws. The penalties for violating the antitrust laws are severe..An individual and a corporation found to have violated the antitrust laws may be fined up to $350,000and $10 million, respectively. Individuals and corporate officers may be imprisoned for up to threeyears. Additionally, there are civil penalties available to government antitrust enforcementagenciessuchas a ceaseand desist order and dissolution of the association.In addition to government enforcementof the antitrust laws, an individual or companythat suffers injury as a result of an antitrust violation may file a private suit againstthe violator and recovertreble damages. Therefore, the associations' antitrust liability does not lie solely at the hands of governmentenforcement agencIes.
10. Members should cooperatewith association counsel in all matters,particularly when counsel has ruled adverselyabouta particularactivity.
TheAmericanTraffic SafetyServicesAssociation 15 RiversideParkway,Suite 100 Fredericksburg,VA 22406-1022 800-272-8772 FAX: 540-368-1717 Web: www.atssa.com
SAFER ROADS SAVE LIVES
ANTITRUST
GUIDELINES
FOR THE AMERI CAN TRAFFIC
SAFETY SERVICES
ASSOCIA TI 0 N .I
The purpose of this document is to briefly review thefederal antitrust laws applicable to association activities and to setforth somegeneral guidelinesfor compliance with those laws.
There aretwo antitrust statuteswhich are of principal concernto individuals and fInns who take part in associationactivities: the Shennan Act and the FederalTrade Commission Act. Theselaws prohibit contracts,combinations and conspiraciesin restraint of trade.The SupremeCourt has said that not every contractor combination ill restraint of trade constitutesa violation; only those which unreasonably restraintradeare unlawful. Thus the courts will look at all of the facts and circumstancessurrounding the conductin questionin order to determine whether it unreasonablyrestrainstrade and thereforeviolates the
laws. Certain kinds of conduct are exclusively presumed to be unreasonableand therefore unlawful. Such conduct,which is consideredto be unlawful per se, consistsof certainpractices which clearly restrain competitionand have no other redeemingbenefits. Examplesof suchpractices include: agreementsto establishprice (price fIXing); agreementsto refuse to deal with third parties
(boycotts); agreementsto allocate markets or limit production; tie-in saleswhich require the customerto buy an unwanteditem in order to buy the product
desired. Associationsby their very nature presentpotential antitrustproblems.One reasonis that in bringing competitorstogetherinto an association,there exists the meansby which collusive action can be taken in violation of the antitrust laws. Since both the Shennan and FederalTrade Commission Acts prohibit combinationsin restraint of trade and since an associationby its very nature is a combination of competitors,one element of a possible violation is alreadypresent.Only the action to restraintrade must occur for there to be a violation.
Another special antitrust problem of an associationis that many of its valuable programsdeal with subjects sensitive from an antitrust vie\\-point: price reporting, product standards,certification, statisticsand customerrelations. Association membersshould refrain from any discussionwhich could provide the basis for an inference that the membersagreedto take any action that might restraintrade. An "agreement"among associationmembersin antitrustterms is a very broad concept-it may be oral or written, formal or informal, expressedor implied. A "gentlemen'sagreement"to "hold the line" on prices is more thaI1sufficient to evidencean unlawful conspiracyto fIX prices. The basic principle to be followed in avoiding antitrust violations in connectionwith association activity is: to see that no illegal agreements,expressed or implied, are reached or carried out throughthe association.Members should also avoid engagingin conduct which may give the appearanceof an unlawful agreement. Following are some generalguidelineswhich can minimize the possibility that inferencesof antitrust guilt can be drawn from associationactivities: 1. Meetings should be held only when there are proper items of substanceto be discussedwhich justify a meeting. In advance of every meeting,a notice of meeting along with an agendashouldbe sentto each member of the group; the agendashould be specific and suchbroad topics as "marketing practices," which might look suspiciousfrom an antitrust standpoint, shouldbe avoided. Participants at the meetingshould adherestrictly to the agenda.In general, subjectsnot included on the agendashould not be consideredat the meeting.
8.
4.
5
If a memberbrings up for discussionat a meeting a subject of doubtful legality, he shouldbe told immediately the subjectis not a properone for discussion.This, of course,is the counsel's responsibility, but in his absence,the association staff representativeor any memberpresentwho is aware of the legal implicationsof a discussion of the subjectshould attemptto halt the discussion.Shouldthe discussioncontinue, despiteprotest, it is advisablethatmembersleave the meeting. Minutes of all meetingsshouldbe kept by the association,and they must accuratelyreport what actions, if any, were taken.
6. Secretor "rump" meetingsheld at the time of the regular meetingshouldbe strictly avoided. Such meetings seldomhave anypurposeexceptto discuss illegal activities,and, accordingly, they seriouslyjeopardizelegitimate association activities and createa-verysubstantialrisk that those activities will be investigated.An associationstaff membershould usually attend all meetings. 7
During meetingsthereshouldbe no recommendationswith respectto "sensitive" antitrust subjects--those thatrelateto price, production marketsand the selectionof customersor suppliers.Pricesshouldnot be discussedat all. In the lesssensitiveareas,such as standardizationactivities, recommendations may be permissible. Members should not be in any way coercedinto taking part in associationactivities.There should be no policing of the industryto seehow individual membersare conductingtheir business.
9,
If there is any doubt aboutan association program or subjectof discussion,members should checkwith associationstaff and counsel. Members may also wish to consultwith their company'scounsel,and this is encouraged.
The following topics are some of the main ones which should not be discussed at meetingsof association members: 1. 2. 3. 4. 5. 6. 7. 8.
Do not discuss current or future prices. Do not discuss what is a fair profit level. Do not discuss price adjustments. Do not discuss cashdiscounts. Do not discuss credit terms. Do not discuss allocatingmarkets. Do not discuss wagerates. iI Do not discuss refusingto deal with a corporation.
Some of the basic areas of associationactivity which should be carefully scrutinized from an antitrust standpoint are the following:
1. Denialof association membership to an applicant. 2. Expulsionof an association member. 3. Conductofa statisticalreportingprogram. 4. Conductof a standardization andcertification program. S. Conductof a joint research program. 6. Establislunent andenforcement of codesof ethics. There are both civil and criminal penalties for violating the antitrust laws. The penalties for violating the antitrust laws are severe..An individual and a corporation found to have violated the antitrust laws may be fined up to $350,000and $10 million, respectively. Individuals and corporate officers may be imprisoned for up to threeyears. Additionally, there are civil penalties available to government antitrust enforcementagenciessuchas a ceaseand desist order and dissolution of the association.In addition to government enforcementof the antitrust laws, an individual or companythat suffers injury as a result of an antitrust violation may file a private suit againstthe violator and recovertreble damages. Therefore, the associations' antitrust liability does not lie solely at the hands of governmentenforcement agencIes.
10. Members should cooperatewith association counsel in all matters,particularly when counsel has ruled adverselyabouta particularactivity.
TheAmericanTraffic SafetyServicesAssociation 15 RiversideParkway,Suite 100 Fredericksburg,VA 22406-1022 800-272-8772 FAX: 540-368-1717 Web: www.atssa.com
