CEMA Antitrust Policy and Meeting Guidelines

The antitrust laws are a comprehensive charter of economic controls aimed at promoting free competition. These laws rest upon the premise that the preservation of free competition will yield the best allocation of economic resources, the lowest prices, and the greatest material progress for the public welfare. Under the antitrust laws competitors may not restrain competition via agreements or understandings regarding the price, production or distribution of products and services.

Competitors may not engage in any activity intended to restrict the competitive capability of their customers, suppliers, or other competitors.

The antitrust laws are immensely complex and are often of unclear applicability. Unlawful agreements can be inferred from circumstantial evidence. A conviction for violating the antitrust laws may result in stiff fines, extended jail sentences for individuals who participated in the violation and forced disbanding of their trade association.

Even if an antitrust case is won or settled, the demands upon the time of those involved can be tremendous. Legal fees and costs can easily run into the six figure range and more.

The Antitrust Laws

The most important antitrust statutes applicable to CEMA activities are Section I of the Sherman Act which prohibits contracts, combinations and conspiracies in restraint of trade, and Section 5 of the Federal Trade Commission Act, which establishes broad prohibitions against unfair methods of competition and unfair or deceptive business acts or practices.

The Sherman Act

The Sherman Act prohibits any joint agreement or understanding affecting the price of a product regardless of the purpose of the understanding. A price fixing violation may be inferred from similar price behavior by competitors, even in the absence of an oral or written agreement. Attendance at meetings in which illegal price fixing is discussed may be sufficient to imply acquiescence to the plans discussed and thereby make the individual liable to as great a penalty as those who were active participants.

The Federal Trade Commission Act

Unlike the Sherman Act, The Federal Trade Commission Act reaches anticompetitive acts committed by single persons or companies, whether or not there is any agreement or "combination." Like the Sherman Act, it also covers joint actions.

Noerr-Pennington Doctrine

In general, an effort to influence the exercise of government power, even for the purpose of gaining an anticompetitive advantage, does not create liability under the antitrust laws.

In Noerr, the Supreme Court held immune from antitrust liability a combination of rail freight interests which was formed in order to have legislation passed that would grant the members of the combination a competitive advantage over truckers. Noerr, 365 U.S. at 145. The Supreme Court has read Noerr broadly: "Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or purpose." Pennington, 381 U.S. at 670. "Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition." Id. T

The Supreme Court has applied the Noerr-Pennington doctrine to courts and administrative agencies. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510-11 (1972) ( California Transport). The Noerr-Pennington doctrine thus protects those who attempt to use the power of government organs, including the judiciary, to further private ends. In Noerr, the Court held that "no violation of the (Sherman) Act can be predicated upon mere attempts to influence the passage or enforcement of laws".

In short, our counsel stated in referring to the Noerr-Pennington doctrine and the Supreme Court cases that followed Noerr, that our collective consideration of whether or not to support or oppose certain legislative or regulatory actions of the government are important activities protected under the Constitution. Every year, in Hartford and with our association and other's efforts in Congress, we regularly consider where we are on legislative and regulatory matters, take positions on those issues, and then engage our membership in influencing legislators and regulators in their consideration of the outcome of government activities.

We take care in providing legislative or regulatory proposals, either of our own creation or those created by others or government, to our membership and soliciting their opinion as to whether we should oppose or support those proposals and including our opinion(s) about those proposals. Such is our right under the Constitution and within the protection of the Noerr-Pennington doctrine. We strongly emphasize adherence to these anti-trust issues to make it clear what we can and what we cannot do, if for no other reason than to reassure people that engaging in legitimate, legal efforts to influence government is the right of any group of citizens and is a specifically protected practice under the Constitution.

General Operating Procedures/Meeting Guidelines

To guard against unintentional conduct, all CEMA meetings shall be conducted in accordance with the following procedures:

  1. A written agenda will be prepared for each meeting and, when appropriate, the agenda will be reviewed in advance by legal counsel.
  2. Accurate minutes, which provide a complete summary of each meeting, will be prepared.
  3. Legal counsel will be present at all meetings deemed of a sufficiently sensitive nature to require additional precautions and protection.
  4. All Association meetings will be properly scheduled; no "rump" sessions will be permitted.
  5. In case of any doubt concerning the propriety of any topic or discussion, consult CEMA staff or legal counsel before raising the issue in open session.
  6. In the event an issue which appears of sensitive nature arises at a meeting, the Chair should immediately recess the meeting temporarily to request advice of counsel on proceding with any discussion of a sensitive nature.
  7. When in doubt, ASK.

The guidelines that follow are designed to assist you in avoiding even the appearance of questionable activity. These guidelines will be followed at all CEMA meetings and will lead to compliance with the antitrust laws.

  • Do not enter into any agreements with competitors regarding or affecting prices.
  • Do not discuss your company's current prices with competitors.
  • Do not agree with competitors on pricing or profit levels.
  • Do not agree with competitors to give or deny cash discounts or promotional allowances.
  • Do not agree with competitors to give or deny credit to a specific customer, or to establish uniform credit terms.
  • Do not agree with competitors to deal or not to deal with any customer or agree on the prices to be charged to a specific customer.
  • Do not discuss allocation of markets or territories.
  • Do not enter into agreements with competitors concerning price quotations or bids.
  • Do not discuss with competitors boycotting certain suppliers or others.

WHAT YOU CAN DO

  • Discuss better ways to educate and provide meaningful information to association members about the industry.
  • Discuss macroeconomic trends, forecasts of the state and national business environment, and materials availability affecting the industry as a whole (never on a company specific basis) emphasizing that each company is free to use this information in the way it sees fit and should make its own business decisions.
  • Provide a properly structured environment, through the use of third party, credit reporting companies, for the exchange of credit information to protect association members against financial loss generated by bad credit risks.
  • Discuss federal and state governmental actions and develop industry-wide lobbying efforts.
  • Discuss technological advances and better ways to utilize them.
  • Discuss ways to improve the public image of the industry.

Conclusion

This statement is not a complete summary of all applicable laws; rather it is intended to highlight the basic principles of federal antitrust laws. Any questions concerning these guidelines and procedures or any other antitrust related concerns should be addressed to CEMA legal counsel or staff.