Participation in Trade Associations and Political Activities

• Pages: 297-323

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CHAPTER XX

PARTICIPATION IN TRADE ASSOCIATIONS AND

POLITICAL ACTIVITIES

A. Assessing Association Memberships for Antitrust Compliance

Trade and industry associations serve a variety of functions for their

members—distributing information of general interest, developing and

promoting professional standards, providing opportunities to meet with

clients and otherwise develop business, allowing firms to collaborate on

technical or quality standards that benefit the industry as a whole (and

the public), and serving as a voice for lobbying and political activity on

legislation or regulations that affect the interests of the member firms.

Permitting coordination in such matters may ultimately serve to promote

competition in the industry and increase consumer welfare.

At the same time, by routinely bringing together competitors, trade

and industry associations may provide opportunities for those

competitors to engage in improper collusion under the cover of

legitimate conduct. Unsurprisingly, plaintiffs in antitrust cases often

plead participation in trade association meetings or other trade

association activities as a so-called “plus factor” that circumstantially

supports an inference of improper collusion.1 The price increase adopted

in unison following a trade association meeting is a classic example of

how circumstantial evidence may result in a felony conviction.

Because of the antitrust risk inherent in trade association activities,

companies should seek antitrust compliance advice regarding trade

association memberships and conduct.2 Antitrust counsel should also be

1. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569-570 (2007)

(discussing pleading of plus factors); see also In re Text Messaging

Antitrust Litig., 630 F.3d 622 (7th Cir. 2010) (discussing participation in

trade association and sharing of price information at association meetings

as a potential plus factor); In re Static Random Access Memory (SRAM)

Antitrust Litig., 580 F. Supp. 2d 896 (N.D. Cal. 2008) (same). Merely

pleading that a firm is a member in a trade association, without more, will

not normally suffice to survive a motion to dismiss, but courts often

scrutinize such member ship when adjudicating dispositive motions.

2. For other resources discussing trade associations in the antitrust context,

see ABA SECTION OF ANTITRUST LAW, AN ANTITRUST GUIDE FOR TRADE

Antitrust Compliance Handbook

298

proactive regarding a company’s trade association participation.3 The

first step is to identify the trade associations and the employees who

participate in activities of those associations. There should be a central

list of all associations in which the company participates, and if one is

not available, one should be created. This may be done by a

questionnaire issued to each department, supplemented by a review of

accounts payable records. Although most companies will code invoices

for this type of payment, given the imperfections of any system in which

the coding is done by human beings, a manual review of invoices

according to a list of key words (e.g., dues, trade association,

professional association, lobbying group) is usually necessary.

Once the list is created, each association should be reviewed to

determine the nature and level of risk presented by participation in that

organization. Does the association have an antitrust compliance policy?

Do lawyers review agendas and participate in meetings? What kind of

records are kept? Does the group engage in standard setting? Does it

formulate rules of “ethical conduct” for an industry or profession? If the

trade association does not meet the minimum standards of risk

management, the company should not participate.

In addition, every employee who participates in any trade association

activity should be trained on appropriate conduct for those activities.

This includes instruction regarding what constitutes potentially illegal or

problematic activity (e.g., discussions about prices), and advice regarding

actions to take should issues arise (e.g., to leave any meeting where

ASSOCIATION PROFESSIONALS AND MEMBERS (2004) [hereinafter AB A

ANTITRUST GU IDE]; AB A SECTION OF ANTITRUST LAW, ANTITRUST AND

ASSOCIATIONS HANDBOOK (2009) [hereinafter ABA ASS’NS

HANDBOOK]; OECD DIRECTORATE FOR FIN. & ENTER. AFFAIRS

COMPETITION COMM., POTENTIAL PROCOMPETITIVE AND

ANTICOMPETITIVE ASPECTS OF TRADE/BUSINESS ASSOCIATIONS (2007)

[hereinafter OECD TRADE/BUS. ASS’NS], available at

http://www.oecd.org/regreform/sectors/41646059.pdf. See also resources

listed in Appendix C.

3. In some cases, it is difficult to differentiate bet ween trade associations

and professional associations. For purposes of this chapter, the reader

should assume that both are covered. Professional associations have

frequently engaged in conduct determined to be anticompetitive,

notwithstanding the supposedly “higher” purpose of advancing the

interests of a profession. See, e.g., United States v. National Soc’y of

Prof’l Eng’rs, 435 U.S. 679 (1978).