Protecting Against Increased Antitrust Risks in a More Aggressive Enforcement and Litigation Environment
Date: October 28, 2022
Association activities have come under challenge numerous times in the last decade, and the scrutiny of association activities seems to be increasing. The focus is primarily directed at two types of association activities: (1) information exchanges and data collection and (2) standard setting and licensure. This is in addition to the more traditional focus on the mere opportunity association meetings provide for direct interaction among competitors, which associations must proactively address through the adoption of appropriate antitrust policies, antitrust compliance warnings delivered before each meeting (and referenced in the minutes), and attorney monitoring for particularly sensitive meetings.
The FTC and DOJ have developed joint guidelines on information exchanges and data collection, and it is important that your association be aware of those guidelines and whether your current practices run afoul of the guidelines. In addition, while not set forth in a single set of guidelines, the DOJ has issued a number of “business review letters” addressing its views on certain types of standard setting and licensure activities. The business review letter is a process where an organization considering a certain action can ask the DOJ for its opinion on whether the proposed practice is likely consistent with the antitrust laws.
Another area of increasing vulnerability is the erosion by the courts of the immunities and protections that associations have traditionally enjoyed in helping to populate and work with state licensing and regulatory boards. Although professionals and industry experts can and should provide invaluable expertise to regulatory boards, the courts have held that the members of such boards can be held liable for implementing standards, licensing and certification programs that limit innovation or competition against established providers, if there is little oversight by state officials and the regulatory board is controlled by licensed providers. An association or its leaders who encourage or participate in such actions also may be the subject of antitrust claims if their efforts are not properly structured to avoid antitrust exposure.
If an association is not careful, it can get into real trouble as antitrust investigations and litigation are serious business, at minimum involving significant expenditures of attorneys’ fees defending the investigation/lawsuit. Private litigation exposes an association to treble (triple) damages and paying the fees and costs of the plaintiff(s). Many associations have learned the heavy cost of antitrust litigation the hard way. Even with antitrust insurance coverage that every association should consider, the time and attention to such litigation can be enormously disruptive.
Whiteford has lawyers with deep experience in the antitrust laws and in the counseling of associations and private business on ensuring antitrust compliance and protecting the organization from antitrust exposure. Given the increasing focus of regulators and private plaintiffs on association activities, it might be wise to engage counsel to conduct an antitrust risk and compliance audit which will involve attorneys interviewing association personnel to look for potential risk areas, reviewing available insurance coverage, as well as the development of protective guidelines and procedures to insulate and protect the association from antitrust risk.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.