|
Trade associations abound because they are very worth while organizations.
They execute group funded projects that enable more and higher quality
information about their industries. They are the industry interface with
legislative and regulatory authority, speaking for their industry as a
whole. They are expense sharing facilities through which smaller member
companies have a larger voice than they might otherwise be able to afford.
They sponsor group research pertinent to their industries. There are many
more reasons why they are worth the candle.
Within the ambit of all that goodness, however, lurk many opportunities for
exposure, manipulation and abuse. The management of an association must by
definition be politically correct and extremely tactful. Association
management must deal with many potential prima donnas. Associations cannot
really function as police or as disciplinarians. If the membership is not
mature enough to collectively self regulate, sometimes bad things happen.
Association functions are often rather celebratory in nature, even if the
purpose of the function is serious. It is generally in the mind of every
industry representative that attends the functions that an opportunity to
visit with friends and colleagues always has its happy side. I agree with
that and would hate to see it lost because excessive conduct resulted in the
necessity to eliminate the fun.
Some of the difficulties are the product of judgment impaired by
celebration. The fact that association functions are more coed than they
used to be has produced better behavior than was previously the case. Frat
boy exuberance is now toned down a bit thanks to inclusion of women. That is
good. We don’t have to be frat boys in our forties and fifties.
Other difficulties arise most frequently because association functions are
the venue for cartel behavior.
The most obvious cartel practice is the price fixing conspiracy, the
“gentleman’s agreement”, most notable – so the joke goes – for a shortage of
gentlemen. Every antitrust prosecutor begins every grand jury investigation
with subpoenas not only to the suspect companies, but also to the industry
association and to the hotels in the cities of the suspect gatherings.
Anyone who believes that having such arrangements take place at association
functions is useful, convenient and camouflaged is someone who has never
received a grand jury testimonial subpoena. Over the years I have heard some
of the very best price fixing humor in the resulting testimony. As a former
prosecutor, I was able to enjoy it not only from the enforcement
perspective, but also as an industry lawyer representing companies and their
management folks who were involved. It’s only funny to the lawyers.
Other than overt price fixing, standards setting, a classical association
function, is sometimes allowed to become exclusionary. The industry leaders
sometimes like to push for standards than only they can meet because they
hold patent rights that would preclude others from complying with the
standard. You should know that state bar association intellectual property
section seminars always include a part of the program devoted to the
antitrust implications of standards setting. It is a lucrative profit center
for antitrust/IP types.
Standardization can also apply to business methods that in themselves tend
to have a competition suppressing influence upon pricing. Illustratively, in
one industry of my extensive experience, the adoption of a standard method
of accounting almost eliminated the need to have price fixing meetings.
Unfortunately, the need to reassure each other that there would be no rogue
elements opportunistically quoting favorably to large accounts of other
members produced the hard core conduct that eliminated the need to prove
that the adoption of the common accounting methods alone could suffice to
show the elements of a Sherman Act violation. In any industry that deals
with a lot of commodities and that hedges its raw material purchases on
commodity markets, standardized cost accounting practices can usually be
found. What that does is make a lesser amount of actual conspiracy behavior
suffice to show that it and the accounting practices have produced the
prohibited pricing results.
These are just a few of the many trade association issues that enthuse
antitrust lawyers. Space does not permit encyclopedic treatment.
|
