Posted May 6th, 2020 in Top Stories, Legal Insights with Tags COVID-19, COVID-19 for Nonprofits, Antitrust Laws
Associations: Tips to Avoid Antitrust Dilemmas During the COVID-19 Pandemic
The COVID-19 pandemic has changed the way that associations and its members are engaging. With the stay at home orders in place across the country, in-person meetings have been replaced with video or teleconferences, and a lot more communication is being done in writing. These electronic meetings and interactions are often more informal than usual (in person, letters, emails), and participants may not be as thoughtful or aware of the potential antitrust issues. Additionally, another risk with the increasing use of electronic communication platforms is that it creates a paper trail of these communications that could be an issue if an antitrust investigation is ever initiated against the association.
If proper care is not taken, an association could be subject to scrutiny under a bevy of antitrust laws prohibiting market competitors from—among other things—combining to fix prices, monopolize commerce, and divide customers.
This article provides a high-level list of do’s and don’ts that associations and its members should follow to avoid antitrust violations during the pandemic.
BEST PRACTICES FOR AVOIDING ANTITRUST VIOLATION
- Attend or stay at any informal meeting where there is no agenda, no minutes are taken, and no association staff member is present.
- Do anything before or after association meetings—on list-serves, chat groups, video conferences, instant messaging, email, or at social events—that would be improper at a formal association meeting.
- Discuss your prices or competitors’ prices with a competitor (except when buying from or selling to that competitor) or anything that might affect prices such as costs, discounts, terms of sale, or profit margins.
- Agree with competitors to uniform terms of sale, warranties, or contract provisions.
- Agree with competitors to allocate, divide, or otherwise distinguish customers or territories.
- Act jointly with one or more competitors to put another competitor at a disadvantage or adversely affect that competitor’s marketplace.
- Try to prevent your supplier from selling to your competitor.
- Discuss your future pricing, marketing, or policy plans with competitors.
- Discuss your customers with your competitors.
- Make statements about your future plans regarding pricing, expansion, or other policies with competitive overtones. Do not participate in discussions where other members do.
- Be alert to antitrust issues. Notify association staff and legal counsel of anything that seems improper.
- Copy an association staff member on any communications or documents sent, received, or developed by you when acting for the association.
- Set a meeting agenda and follow it. This helps an association avoid topics that give rise to antitrust violations.
- Set “rules” for list-serves (and warn members to follow the rules) that prohibit messages about prices, pricing strategies, restrictions on advertising, and similar topics.
- Consult with legal counsel. An experienced tax-exempt organization attorney can help in analyzing each unique case, reviewing meeting agendas, and preparing for any legal challenges.