Antitrust laws & trade associations



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www.ssct.org
ANTITRUST LAWS & TRADE ASSOCIATIONS

Guide for Members of the Southern Society of Coatings Technology – SSCT
Trade associations are subject to strict scrutiny under the many federal and state antitrust laws. One of the most powerful of these is the Sherman Act. Section 1 of that Act prohibits "contracts combinations or conspiracies… in restraint of trade." But by its very nature a trade association is a combination, such that there is no problem in proving the fact. This should serve as a signal to trade associations that they must proceed with extreme caution lest they be cited for antitrust infringements carrying stiff fines and jail sentences.
Responsibility for enforcement of the antitrust laws lies with the Department of Justice, the Federal Trade Commission and the over 40 states which have enacted antitrust legislation.
The federal government can be expected to bring civil and criminal felony cases each year against trade associations, including members and staff. Penalties are severe. Each individual can be fined up to $1,000,000 and each member corporation can be fined up to $100,000,000. Individuals are subject to

imprisonment of up to ten years. In addition,

the government can impose civil sanctions

such as cease and desist orders which result

in government restraints on the activities of

association members. This in turn inhibits

association functions and may culminate in the dissolution of an association altogether.
In addition to lawsuits prosecuted by the

government civil treble damage suits can be

brought by competitors and consumers. By

way of illustration the Sherman Act prohibits

any price agreement regardless of purpose.

Thus, if members of a trade association

have an agreement as to price, they cannot

justify the agreement by showing benefits to

customers. Members will be found liable for

treble damages for injury resulting from the

excess price charged.
From a practical standpoint trade associations should focus their concern on five principal antitrust problem areas. These are: price-fixing, division of customers, membership standardization and certification and industry self-regulation.
PRICE-FIXING. Price (defined broadly to

include all elements of price) is the most

sensitive area under the antitrust laws, and

therefore government has evinced its greatest concern about violations and potential violations of the price-fixing prohibitions of the Sherman Act. A price-fixing violation can be inferred from the fact of similar price conduct by members, even though there is no written or oral agreement shown. If prices are fixed it is no defense that the prices set are reasonable or that the ends sought are worthy





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