One of
the primary functions of trade associations is to provide its members
with a variety of statistical information on economic and business
factors that affect the industry. The distribution of information on
past sales, transportation costs, production costs, and production
levels undeniably promote a pro-competitive market. While the
compilation and distribution of such statistical data has been held to
be a legitimate activity of an association, the activity is not entirely
free from antitrust considerations. Fortunately, fairly clear guidelines
have been established through the judicial process and from various
governmental enforcement agencies.
Minimize
the Risk
In order
to minimize antitrust risk in statistical gathering activities,
associations should attempt to adhere to the following guidelines: 1)
collect and report historical data; 2) Disclose aggregate data, not
information specific to individual companies or transactions; 3) permit
broad access to the data collected; 4) do not limit information to
association members; 5) make participation in the data a voluntary,
collective process; 6) do not require audits of information submitted;
7) maintain confidentiality of individual information collected; 8)
utilize third parties to collect and distribute the data; and, 9) make
it clear that the information is not to be discussed among competitors.
Even
strict adherence to these guidelines does not guarantee the avoidance of
an antitrust violation, particularly in the area of pricing.
Both
Federal Trade Commission ("FTC") and the Department of Justice
("DOJ") offer procedures for obtaining opinions regarding data
dissemination programs. These procedures can be cumbersome, although the
DOJ has adopted a procedure to expedite the processing of business
review requests with respect to joint ventures and information exchange
programs.
Research
is also a valuable function commonly undertaken by trade associations.
In recognition of the benefits of joint research, the government has
established guidelines to reduce the risk of antitrust activity.
In 1980,
the Department of Justice released the Research Joint Ventures Guide,
which was followed by the National Cooperative Research Act (NCRA),
which was passed by Congress in 1984. The NCRA was amended in 1993 by
the National Cooperative Research and Production Act to expand coverage
to production activities.
Marketing
and Trade Shows
Another
important and valuable function of a trade association is the marketing
of its industry’s products and services. This marketing can take many
forms, including sponsoring trade shows, engaging in industry
advertising, and regulating the marketing practices of its members.
Great care must be taken in this regard because governmental enforcement
agencies closely scrutinize the marketing practices of trade
associations.
While
association-sponsored trade shows present the inherent risks
accompanying the gathering of competitors, this risk can usually be
minimized. Internally, the sponsoring association must take care to
avoid unreasonably excluding industry competitors from participating in
the trade show. Both the DOJ and the FTC have demonstrated interest in
challenging exclusionary practices; particularly where participation in
the trade show is reasonably necessary to compete in the industry.
Advertising
practices are also subject to scrutiny, by the FTC, under the trade
regulation laws prohibiting deceptive advertising. Additionally, the Lanham
Act creates a private action for deceptive or false advertising.
Associations contemplating price related advertising campaigns are
strongly encouraged to consult the FTC’s advertising guidelines.
Additionally,
associations must carefully avoid encouraging or promoting the
discussion of pricing and sales considerations. There is always the risk
that competitors may utilize the trade show to facilitate a conspiracy
to fix prices, divide market, or allocate customers.
Governmental
Relations
The Norr-Penington
doctrine provides for an exemption from antitrust liability for
concerted activity seeking to modify laws or regulation. Under this
doctrine, governmental agencies may be "petitioned" or
contacted to persuade officials to adopt or change laws or regulations.
There are exceptions such as the "sham" and "market
participate" exceptions, although virtually all communications are
protected. Also, an association may raise the "State Action"
defense to alleged to antitrust violations. The defense may be raised
where: 1) the challenged conduct flows from a clearly articulated and
affirmatively expressed state policy’ to displace competition with
regulation, and 2) the activity is subject to active state supervision.
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For example, many states recognize the existence of agricultural boards
that are made up of private competitors. These boards meet to recommend
price floors and output restrictions that are often adopted by the
state. Under the "State Action" doctrine, these boards are
granted "immunity" from antitrust violations for what is would
otherwise be considered patently illegal. The obvious problem with this
defense is that the entity may never know, until ultimate court review,
whether there is sufficient state oversight to support the exemption. To
be on the safe side, it is recommended that trade associations evaluate
whether there is any reasonable way they can carry on a particular
activity without relying upon the State Action defense. If no such
alternative is available, the association should press for active
supervision and oversight of the collective activities and develop a
record of active review by state regulators.
