Transcript SDO Anti-trust.ppt

Standards
Anti-Trust Compliance Briefing
August 31, 2004
Anti-Trust 101
Anti-trust laws are, in general, a collection of
statutes, rules, regulations and court decisions
which collectively govern the competitive
operation of commerce in the United States.
Anti-Trust Laws
• Section 5 of the Federal Trade
Commission Act prohibits "unfair methods
of competition in or affecting commerce,
and unfair or deceptive acts or practices in
or affecting commerce."
• Section 1 of the Sherman Act prohibits
"contracts, combinations, or conspiracies .
. . in restraint of trade."
The Sherman Act
• Sherman Act is a criminal conspiracy statute
• Liability even if you are not an active participant
• Simply attending a meeting where others
discuss price-fixing can leave you criminally
liable
Silence Is Not Protection
• Mere attendance at a meeting that
violates the Sherman Act may be
sufficient to imply acquiescence in the
discussion and thereby make the
individual and company as liable as
those who actively agreed to fix
prices.
Consequences
• Fines for the trade association
• Fines for participants ($1,000,000/individual
$100,000,000/company)
• Triple damages (private actions)
• 10 years in jail
• Consent decree under which the trade association must
operate (more fines)
• Court order disbanding the association
Noerr-Pennington
• Noerr-Pennington doctrine applies to
groups lobbying government
• Standards Committee participants are
NOT protected by free speech
Leading Supreme Court Case
• Hydrolevel Corp. v. The American Society
of Mechanical Engineers, 456 U.S. 556
(1982)
• Held an association liable for the acts of its
agents
Standards Participants Must Not:
• Adopt rules or policies which have price-fixing
implications such as prohibitions on advertising prices
• Require participants to refrain from dealing with a
company that has violated Standards or association's
rules, policies or by-laws
• Enforce any rule, policy or bylaw arbitrarily
• Impose unreasonably severe penalties for violation of a
rule, policy or by-law
Topics Which Must be Avoided at
Standards Meetings
• Current or future prices (Great care must be taken in
discussing past prices)
• What constitutes a "fair" profit level
• Possible increases or decreases in prices
• Standardization or stabilization of prices
• Pricing procedures
Topics Which Must be Avoided at
Standards Meetings (continued)
• Cash discounts
• Credit terms
• Boycotts or limiting supply
• Allocation of markets
• Refusal to deal with a corporation because of its pricing or
distribution practices
• The pricing practices of any industry member that are unethical or
constitute an unfair trade practice
Committees Should
• Have all agendas approved by legal
counsel prior to meeting
• Never have meetings without an official
agenda
• Never hold separate “after meetings”
• Keep meeting minutes that are reviewed
by legal counsel
• Remember that the Sherman Act also
applies after meetings
SDO Protection
• HR 1086 became Law in June
• SDO actions will be judged under a “rule
of reason”
• Harsher penalties for companies and
individuals
• Increased penalties to individuals and
corporations
• New law encourages cooperation with
authorities by offering lower penalties