2 of the Sherman Act, and those regulating
joint action among competitors, addressed
by Section 1 of the Sherman Act.
Another area of antitrust law pertains
to challenged conduct. The antitrust laws
only forbid restraints of trade that are
considered “unreasonable.” Courts and
agencies therefore apply a so-called Rule
of Reason, examining the nature of the
conduct, the market in which it occurs and
the positive and negative impacts it may
have on competition in the relevant market.
This is a complicated, economics-driven
inquiry with general rules but few concrete guideposts.
By contrast, certain marketplace conduct is considered anticompetitive (and
illegal) per se, having no redeeming positive effects on competition. Agreements
to fix prices, rig bids, divide territories or
allocate customers or market segments
fall into this category of business activity.
Even if the argument can be made that
this conduct benefits consumers, it is
prohibited. Many times this conduct will
bring harsh criminal penalties as well as
civil suits.
Trade Association Activities
Activities of trade associations have
been suspect since before the founding of
this nation. Writing in 1776, Adam Smith
warned, “People of the same trade seldom
meet together, even for merriment and
diversion, but the conversation ends in a
conspiracy against the public, or in some
contrivance to raise prices.” (Wealth of
Nations [1776], Vol. I, Ch. 10, pt. 2.) On
the other hand, cooperation, education
and information exchanges through trade
associations most frequently generate
improved efficiencies, technological
advances and better value for consumers,
so nobody opposes the ongoing existence
of the organizations. Antitrust regulators
try to keep the balance tipped toward the
benefit side.
The most common dangers posed by
trade associations are ( 1) anticompetitive
conduct by the association itself and ( 2)
association provision of resources and
facilities to abet member collusion. In the
first category are exclusionary actions such
as membership rejections or expulsions
for anticompetitive reasons (e.g., price
discounters); denying non-member access
to commercially crucial association services
or trade show participation; discriminatory
standard setting; codes of ethics that
restrict advertising, business relationships,
pricing, competitive bidding or services
offered; and collection and dissemination
of non-public price-signaling information.
The IDEA board, professional staff and
counsel must remain knowledgeable about
the rules and nuances surrounding these
activities and assure that a proper balance
is struck. To date, they have been quite
successful in carrying out these responsibilities.
The second category involves joint
action by members to enhance profitability
by constraining the marketplace. IDEA is
different from many other trade associations in that the nature of the district
energy industry offers scant incentive for
members to conspire against the public.
District energy system operators generally
do not compete against each other; nor do
they generally sell their heating/cooling/
energy output in a consumer market. So
there is no incentive for them to conspire
to keep output low, prices high or the
number of competitors small. IDEA members who are service providers, vendors or
suppliers to the district energy industry
have little incentive to collaborate to stabilize prices or markets, as this could
directly harm the owner/operator members. Therefore IDEA is an unlikely forum
for such endeavors.
Even though anticompetitive conduct
is unlikely, IDEA should remain vigilant in
overseeing the discussion agenda at membership gatherings because the consequences of faltering can be severe:
; A violation of the antitrust laws carries
potential penalties that include criminal
prosecution with fines of up to $1 million
per violation for individuals and $100
million for corporations and/or jail sentences of not more than 10 years and
civil remedies of treble damages,
attorney’s fees and injunctive relief.
; Trade associations can be found liable
for the antitrust violations of their agents
acting within the scope of their apparent
authority – i.e., the agent appears to be
acting in the ordinary course of the
association’s business. Associations
generally are liable for actions of member
volunteers (including board members
and commission/committee members)
taken under the auspices of the association, even if the specific actions were not
authorized by the association. No ratifi-cation by the trade association of the
agent’s conduct is required for a finding
of liability.
; Membership in a trade association that
has been found to have engaged in
unlawful behavior may be used as a
basis to infer complicity in anticompeti-
IDEA’s Antitrust Policy Statement
It is the policy of IDEA that its operations be conducted in keeping with the highest ethical
standards and in full compliance with all applicable laws, including federal and state antitrust
laws of the United States, Canada, the European Union and its individual nations, as well as the
other nations where its members operate.
In accordance with this policy, you should not discuss with competitors matters involving price
or pricing policy, terms and conditions of sale, the allocation of territories or customers, output
restrictions, or any other action that would restrain competition. You should not discuss any
matter that is not consistent with the proposition that each IDEA member must exercise its
independent business judgment in pricing, customer dealings and markets. And you should not
discuss non-public information about future products or other competitive initiatives of your
company, or any of your company’s competitors.
If you observe conduct that you believe may violate these obligations, either during or outside
of meetings of the members, you should bring it to the attention of the participants and request
that they drop the topic until such time as further discussion is approved by Counsel. If the conduct persists, you should bring the matter to the attention of IDEA leadership representatives at
the meeting.
Violation of the antitrust policy could potentially subject all of our members to antitrust scrutiny
and, accordingly any member who violates the policy will be subject to appropriate disciplinary
action.
