Membership Criteria and Availability of Association Benefits to Nonmembers

• Pages: 63-76

63

CHAPTER IV

MEMBERSHIP CRITERIA AND AVAILABILITY OF

ASSOCIATION BENEFITS TO NONMEMBERS

A.Membership Criteria and Expulsion of Members

An association forms because its members have common interests

that can benefit from joint effort. Most associations have limitations on

membership in order to function effectively.

1

Membership is typically

restricted to those in a discrete trade or profession, based on the good

produced or service provided. Membership criteria may limit eligibility

to participants at one or more levels of a supply chain or by market

function (e.g., manufacturers, wholesalers, or retailers) or specify that

member activities occur in a particular geographic area.

2

Membership in

a trade or professional association also may be conditioned on a

company’s or individual’s compliance with product or service standards

or ethical codes, or becoming certified to engage in a particular

profession or line of business.

3

1. See Northwest W holesale Stationers v. Pac. Stationery & Printing Co.,

472 U.S. 284, 296 (1985) (associations “must establish and enforce

reasonable rules in order to function effectively”).

2. Geographic limitations have b een held to be acceptable where they define

a functionally existing trading region; conversely, arbitrary or overly

restrictive geographic boundaries have been found unreasonable. See

Am. Fe d’n of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950)

(rule that prospective members could not join if they were located less

than one quarter of a mile from an existing member found unreaso nable

because the boundary did not reflect a natural trade boundary). It is

increasingly common for international or foreign organizations to seek

membership (or participation) in domestic associations. For purposes of

antitrust analysis, a foreign organization with domestic manufacturing

facilities and sales may be consider ed to be competing with domestic

manufacturers. See, e.g., United States v. Material Handling Inst., 1973

Trade Cas. (CCH) ¶ 74,362 (W.D. P a. 1973) (consent decree requiring six

trade associations to admit to membership any firm that manufactures

within the United States “no less than 75% . . . of all material handling

equipment sold by the firm in the U.S.”).

3. See Chapter VIII for a discussion of the antitrust principles applicable to

standard-setting activities.