Antitrust Law and Trade Associations
Wednesday, August 30, 2017
Posted by: Kristi Olson
by David H. Baker, General Counsel, AEMA, ARRA, and ISSA
Many members of trade associations are generally familiar with the concept of limited immunity from the antitrust laws for trade associations. This immunity stems from two U.S. Supreme Court decision in the 1960s. The first case involved a complaint by a group of truck drivers for Noerr Motor Freight alleging that the big bad railroads, through an association called the Eastern Railroad Presidents Conference, had conspired against them by seeking to pass laws imposing strict weight limits on trucks and punitive tax rates on heavy trucks. The lower court that heard the case found the railroads liable for a violation of the Sherman Act and the appeals court affirmed that decision.
However, the U.S. Supreme Court in Noerr v. Eastern Railroads held that “no violation of the [Sherman] Act can be predicated upon mere attempts to influence the passage or enforcement of laws”. Noerr, 365 U.S. at 135 (1961). The Court further held that “the Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint [of trade] or a monopoly.” Noerr, 365 U.S. at 136 (1961).
It is because of the Noerr decision in 1961 that PPRA and its three association members can lobby the Congress and the President. We take this immunity for granted today, since most of us have grown up under the Noerr doctrine. However, prior to 1961, there was no immunity for trade associations to lobby the Congress or the Executive.
The Noerr doctrine was extended to administrative agencies by the U.S. Supreme Court in 1965 by the United Mine Workers v. Pennington decision. In that case, the union sued a coal company for certain royalty payments. The coal company cross claimed that the union had violated the Sherman Act by lobbying the Secretary of Labor to establish certain minimum wage standards. Again, as in Noerr, the lower court found the union liable for a violation of the Sherman Act and the appeals court affirmed that decision.
The Supreme Court reversed and held that “Noerr shields from the Sherman Act a concerted effort to influence public offices regardless of intent or purpose”. Pennington, 381 U.S. at 670 (1965). Because of the Pennington decision, PPRA can also lobby government agencies like FHWA and DOT generally. And the overall theory of law is referred to as the Noerr-Pennington doctrine or immunity.
The Noerr-Pennington doctrine has also been held to provide immunity for legitimate governmental action by a trade association from state antitrust laws. Aurora Cable v. Jones Intercable, 720 F. Supp. 600 (1989)
The Noerr-Pennington doctrine does NOT, however, provide immunity for members of trade associations when they are engaged in normal commercial activity. Members cannot discuss prices of their services, costs of input commodities or pricing generally simply because they are at an association meeting and there is “immunity” under the Noerr-Pennington doctrine. This is the reason that the Antitrust Guidelines or Policies for all three PPRA member trade associations prohibit any discussion of pricing or costs at association meetings.
Most professionally managed trade associations have legal counsel in attendance at all Board and committee meetings, to ensure compliance with the federal and state antitrust laws. Also professional trade association staff, often indicated by the CAE designation or AMCI certification, have specialized training in antitrust compliance and can provide antitrust compliance as well.
Antitrust enforcement by the Department of Justice and the Federal Trade Commission is serious business. Every few years, DOJ or FTC publish a settlement with an offending trade association that either violated the Sherman Act or the FTC Act. Sometimes monetary penalties are imposed. On occasion, the senior officer or executive goes to jail. So PPRA and its members should avoid any discussion of pricing at association meetings. If in doubt, speak to your legal counsel or executive director before you initiate a discussion. Nobody looks good in green jump suits!