Trade Associations

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CHAPTER II

TRADE ASSOCIATIONS

A. Should My Company Join a Trade Association?

The antitrust risks of participating in a trade association are generally

manageable so long as they are understood and some basic best practices

are followed.

Most trade association activities are either affirmatively

procompetitive or competitively neutral. The procompetitive activities of

an association may include (1) educating members on relevant new

developments in the industry that may enable them to become more

efficient, (2) providing product information that may enable sellers and

purchasers to make more informed decisions, (3) performing standard-

setting, accreditation, and certification functions that may instill

confidence in the industry or promote the interoperability of

complementary products, and (4) advising members on legal and

regulatory constraints which govern their conduct. An association can

also support or oppose legislative or regulatory initiatives of importance

to its members.

1Finally, an association can simply be a way for people in the same

field to meet one another and network.

Despite the many legitimate activities and objectives of trade

associations, antitrust risks can arise in two fundamental ways.

First, trade associations may pursue activities that inherently raise a

risk that their conduct could be viewed as violating Section 1 of the

Sherman Act—such as organizing the exchange of price or cost

information among members of the association or issuing standards for

products or conduct that may have the effect of making it more difficult

for some competitors to compete in the market. Those activities are

discussed in greater detail below.

Second, although courts have repeatedly expressed the view that

trade associations are not “walking [antitrust] conspirac[ies],”2they still

1. See Chapter 1, Part H.

46 Frequently Asked Antitrust Questions

present opportunities for competitors to meet and thus, “opportunit[ies]

to conspire” to fix prices or otherwise limit competition.3As a result, it is

important to ensure that the individuals participating in these activities

understand how to avoid creating even the appearance that they used

participation in trade associations as an opportunity to reach an illicit,

anticompetitive agreement with competitors. The best practices for

avoiding the appearance of impropriety when dealing with competitors,

during trade association activities or otherwise, are discussed in Chapter

I, and employees involved in trade association activities should be

familiar with them.

There are several preliminary steps that can be taken to minimize the

antitrust risks of trade association activities so that a business can enjoy

their full benefits without taking undue antitrust risks.

xBefore joining a trade association, make sure that the objectives

of the association and the activities it will undertake to achieve

those objectives are clearly understood. If the association

activities have clearly procompetitive objectives, do not involve

competitively sensitive matters, or will be attended by

companies that do not compete or persons who do not

realistically have the ability to make anticompetitive agreements

(or suggest them to competitors), the potential antitrust concerns

may be min imal.

xIf the trade association is likely to engage in activities that raise

some antitrust risks (described below), it may be appropriate for

the association to engage antitrust counsel to attend or monitor

its activities. Not only can an attorney help guide the association

through antitrust-sensitive issues; counsel’s presence will go a

long way toward dispelling any suggestion that the participants

engaged in illegal conduct, or even inappropriate discussions,

during meetings.

xTrade associations should have a written antitrust policy and

rules that inform the members of specific conduct they are not

2. Consolidated Metal Prods. v. Am. Petroleum Inst., 846 F.2d 284, 294

(5th Cir. 1988).

3. See, e.g., Capital Imaging Assocs. v. Mohawk Valley Med. Assocs., 996

F.2d 537, 545 (2d Cir. 1993) (explaining that, in the context of physician

practice association, a “finding of a legal capacity to conspire does not

resolve the issue of whether § 1 of the Sherman Act has been shown to be

violated[, and t]he mere opportunity to conspire does not by itself support

the inference that such an illegal combination actually occurred”).