Guidelines for your clients’ participation in trade associations

June 20, 2013

L-378667_RTR23GK8The lawful activities of trade associations are valuable and should be encouraged. Efficiency in production and distribution through research, development of new products and new application for products, representation of industry groups in dealing with government or consumers, effective group advertising by associations of small producers, are all worthwhile and legitimate. Unfortunately, the necessary presence and interaction of competitors at association meetings or at informal gatherings related to such meetings can easily create a starting point for antitrust accusations.

Trade associations are dangerous simply because they provide opportunities for communications among competitors. Any such communication later might be claimed by others to be the germination point of subsequent illegal conduct or the vehicle of an unlawful conspiracy. Therefore, a trade association, which by its very nature is a combination of competitors, is frequently a basis for allegations of a violation of the antitrust laws.

If your client decides to participate in trade association activities, a decision not to be undertaken lightly, the following guidelines may help avoid a very expensive and distasteful confrontation with an antitrust violation:

(1)        Define the legitimate common problem or problems for which the association is formed; assure that any program or activity of the association is designed solely to meet the common problems and do not go beyond what is reasonably and clearly necessary.

(2)        One should be acquainted with the basic and important economic conditions of the industry involved and act cautiously. For example, if price uniformity exists, strict limitations should be placed on standardization and reporting activities and standardization efforts permitted only if clearly lawful and justified by sound business reasons.

(3)        Screen all codes of ethics and other regulations for elements of boycott or exclusion.

(4)        Assure that the purposes of each activity are set forth plainly in minutes of meetings or in resolutions adopting a program or activity; one should not act informally.

(5)        Provide maximum accessibility to customers, government, and the public of statistical surveys and reports to the extent practicable.

(6)        Avoid any forecast of future trends and future prices whatsoever.

(7)       Avoid oversimplified slogans and expressions which may be construed as evidence of exclusionary or illegal intent.

(8)       Assure that membership is open to all similarly engaged or legitimately interested in the industry.

(9)       When in doubt, one should find out or disassociate himself and disavow the activity.

Advise your clients to protect themselves. Constant vigilance is required. The likelihood of an antitrust violation is increased, not decreased, when a trade association is available as a vehicle for competitors to gather.  You can get the discussion going with your clients on the steps that need to be taken for compliance in this area by using the practice tools available in Antitrust Law Compliance (§§99:1 et seq.) in Business Transactions Solutions and Antitrust Compliance (§§24:1 et seq.) in Legal Compliance Checkups: Business Clients, both of which are available on the Thomson Reuters Legal Solutions site and through Westlaw Next at Business Counselor.