Most association activities are legitimate and unlikely to raise competition law concerns. However, given that many, if not most, association activities involve the direct interaction of competitors, it is prudent for association executives, staff and their advisors to take practical steps to reduce potential competition law risk.
These include:
1. Adopt and maintain an effective compliance program. According to the Bureau, an effective compliance program “plays a crucial role for trade associations.” Some of the benefits of a compliance program include reducing the risk of violating the Act, reducing the costs of investigations and proceedings and potentially mitigating penalties. Options for associations range from formal compliance programs encompassing all association activities to compliance guidelines for key activities (e.g., meetings, information exchanges and specific initiatives such as benchmarking, research and development initiatives and joint negotiations).
2. Adopt agendas and minutes for all association meetings. Associations should prepare written agendas and keep minutes for all meetings. Discussions at meetings should also stay within the boundaries of legitimate agenda items and discussions (or exchanges) of “competitively sensitive information” should be avoided – this includes discussions of current/future pricing, costs, individual customers, markets, market shares and business or strategic plans.
3. Adopt and follow conduct of meeting guidelines. One of the most practical steps an association can take to reduce competition law risk is to adopt and strictly follow conduct of meeting guidelines. Such guidelines commonly include restrictions on the exchange of competitively sensitive information (of the types discussed above) and on discussions of topics that may lead to conspiracy risk under section 45 of the Act (e.g., discussions relating to pricing, markets, concerted refusals to deal or limiting the production or supply of goods or services). Conduct of meeting guidelines also commonly include guidance on steps to take if inappropriate discussions or activities arise during association meetings or events.
4. Perform periodic compliance audits. Having a compliance program or policy in place that is not followed can, in some circumstances, be more harmful than not having a program at all (particularly if association personnel understand the terms of the program and choose not to follow it). As such, one practical way for associations to monitor compliance is to conduct periodic audits of association activities, which can be performed on an association-wide, activity-specific or spot basis.
5. Conduct competition compliance orientations for new association executives and staff. Another practical step that associations can take to ensure competition law compliance is to conduct compliance orientations for new board and executive members. In this regard, the Bureau’s view in its Corporate Compliance Programs Bulletin is that “senior management’s clear and unequivocal support is the foundation of a credible and effective corporate compliance program.”
6. Obtain legal advice for key association initiatives. Many associations do not have the budget for extensive legal advice. Recognizing this, it is nevertheless prudent for associations to obtain advice for key activities and initiatives. These may include specific projects, such as benchmarking, research or joint member initiatives (e.g., joint marketing, purchasing or negotiations with significant purchasers).
7. Avoid informal or “off the record” meetings. Associations should discourage informal or “off the record” meetings between members, particularly on the “fringes” of association meetings or using association facilities. This is not to say that members cannot meet informally for social purposes, but in a number of past association cases members either met informally (and in several cases actually established “sham” associations) to form and maintain criminal cartel arrangements. Association members should also be aware that merely because a meeting is held “off the record” or “in camera” (i.e., a discussion during a meeting is not recorded in meeting minutes) does not mean that discussions, or the fact of the meeting itself, cannot be used as evidence in competition law proceedings. The Bureau and private plaintiffs can, and commonly do, use such “circumstantial evidence” as part of their cases.
8. Generally review all association activities through a “competition lens”. Finally, it is useful for association executives and personnel to review association initiatives and activities generally through a “competition lens”. For example, if particular association activities may lead to higher prices, less quality or choice, make it more difficult for some members or competitors to compete or generally reduce competition, this may raise competition law concerns (or at minimum mean that advice should be sought).
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