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IUVA Statement of Antitrust Policy
The International Ultraviolet Association (IUVA) is a nonprofit dedicated to the development of research and education in UV technology. IUVA is not intended to, and may not, play any role in the competitive decisions of its members or their employers, or in any way restrict competition in the industry.
Through its publications, technical conferences and other activities, IUVA brings together representatives of competitors in the UV and associated industries. Although the subject matter of IUVA activities is normally technical in nature, and although the purpose of these activities is principally educational and there is no intent to restrain competition in any manner, nevertheless the Board of Directors recognizes the possibility that the Association and its activities could be seen by some as an opportunity for anticompetitive conduct. For this reason, the Board has taken the opportunity, through this statement of policy, to make clear its unequivocal support for the policy of competition served by the antitrust laws and its uncompromising intent to comply strictly in all respects with those laws.
In addition to the Association's firm commitment to the principle of competition served by the antitrust laws, the penalties which may be imposed upon both the Association and its individual and corporate members involved in any violation of the antitrust laws are so severe that good business judgment demands that every effort be made to avoid any such violation. Certain violations of the Sherman Act, such as price-fixing, are felony crimes for which individuals may be imprisoned for up to three (3) years or fined up to $100,000, or both, and corporations can be fined up to $1 million for each offense. In addition, treble damage claims by private parties (including class actions) for antitrust violations are extremely expensive to litigate and can result in judgments of a magnitude which could destroy the Association and seriously affect the financial interests of its members.
It shall be the responsibility of every member and guest of IUVA to be guided by the IUVA policy of strict compliance with the antitrust laws in all activities. It shall be the special responsibility of committee chairs and Association officers to ensure that this policy is known and adhered to in the course of activities pursued under their leadership.
To assist the IUVA staff and all its officers, directors and committee chairs in recognizing situations which may raise the appearance of an antitrust problem, the Board will as a matter of policy make available the Association's Antitrust Compliance Manual. The Association will also seek general legal advice when questions arise as to the manner in which the antitrust laws may apply to the activities of IUVA or any committee or task force.
Antitrust compliance is the responsibility of every IUVA member. Any violation of the IUVA policy will result in immediate suspension from membership in the Association and immediate removal from any Association office held by a member violating this policy.
ANTITRUST COMPLIANCE MANUAL
Participating in trade or professional associations can help a company to better compete and grow their business. However, because such activity involves contact among competitors of an industry, those who participate in them are vulnerable to violating the antitrust laws. The following compliance program addresses the specific activities of an association that may result in an antitrust violation and how we can avoid any problems. It is the responsibility of each IUVA member in the first instance to avoid raising improper subjects for discussion.
THE ANTITRUST LAWS
The federal antitrust laws give the force of law to the philosophy underlying our economic system, namely, that a free market, wherein unfettered supply and demand determine the conditions of commerce, serves to achieve the most equitable allocation of goods and services at the lowest possible prices.
The two U.S. laws that have been invoked most frequently in investigations of possible antitrust violations in which associations have been involved are the Sherman Act and the Federal Trade Commission Act. The former declares unlawful "every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade," and the latter prohibits "unfair methods of competition in or affecting commerce."
GUIDELINES
Please note that it is a per se violation of the federal antitrust laws for competitors to agree on prices, allocation of customers, or allocation of territory. "Per se" means that no legal defense can be used to mitigate this automatic violation.
This means that at no time at any IUVA meeting may the group engage in discussions that could be construed as the beginning of a conspiracy among member companies to fix prices, allocate customers, or allocate territory; or to do any of the "don’ts", shown in the enclosed "Major Do's and Don’ts."
Even an agreement by competitors that is obviously well-intentioned or which satisfy a public interest objective is a violation of the antitrust laws if it could reduce competition.
Sometimes an enthusiastic person may make statements at a meeting that sounds as if they could be considered an implied violation of the antitrust laws. Should you ever face such a statement, immediately clarify the situation and reaffirm IUVA’s guidelines for meeting discussions, citing the “Major Do’s and Don’ts,” and return to the topic on the agenda.
Some activities of an association fall within a "gray area" in relation to the antitrust laws, statistical reporting programs, industry standards, advertising campaigns, seals of approval or certification, codes of ethics and the like must all be carefully scrutinized to avoid antitrust violations.
All IUVA programs are to be carefully reviewed by our Board, Executive Director, and, where appropriate, referred to legal counsel to make certain they comply completely with antitrust laws.
Effect of Antitrust Laws on Professional and Trade Associations
Professional and trade associations are subject to scrutiny under the many federal and state antitrust laws. One of the most powerful of these is the Sherman Act. Section 1 of that Act prohibits "contracts, combinations or conspiracies ... in restraint of trade." In cases not involving associations, it can be very difficult to demonstrate the essential element of "combination." But by its very nature, an association is a combination, such that there is no problem in proving that fact. This should serve as a signal to associations that they must proceed with extreme caution lest they be cited for antitrust infringements, carrying stiff fines and jail sentences.
Responsibility for enforcement of the antitrust laws lies with the Department of Justice, the Federal Trade Commission, and each of the fifty states which has enacted antitrust legislation.
The federal government can bring civil and criminal felony cases against associations, including members and staff. Penalties are severe. Each individual can be fined up to $100,000 and each member corporation can be fined up to $1,000,000. Individuals are subject to imprisonment of up to three years. In addition, the government can impose civil sanctions such as cease and desist orders which result in government restraints on the activities of association members. This, in turn, inhibits association functions and may culminate in the dissolution of an association.
In addition to lawsuits prosecuted by the government, civil treble damage suits can be brought by competitors and consumers. By way of illustration, the Sherman Act prohibits any price agreements regardless of purpose. Thus, if members of an association have an agreement which violates the law, even if it benefits customers, members can be found liable for treble damages for injury resulting from the excess price charged.
From a practical standpoint, associations, including IUVA normally will need to focus on the following specific areas of antitrust compliance: price-fixing, division of customers, statistics programs, standardization and certification, and industry self regulation.
Price-Fixing
Association members are most likely to violate, and the government has expressed its greatest concern about the price-fixing prohibitions of the Sherman Act. A price-fixing violation can be inferred from the fact of similar price conduct by members, even though there is no written or oral agreement shown. If prices are fixed, it is no defense that the prices set are reasonable or that the ends sought are worthy.
Division of Customers
An agreement among members of an association to allocate customers is in and of itself a criminal act. The antitrust laws prohibit any understandings or agreements between competitors or members of an association that involve the division or allocation of customers. Even informal agreements whereby one member agrees to stay out of another member’s territory will constitute a violation of the antitrust laws.
Standardization and Certification
An association that develops voluntary industry standards may face antitrust problems if the standard favors some and discriminates against others. Similarly, association certification activities which further the interests of certain groups to the exclusion of others may result in antitrust problems.
lndustry Self-Regulation
Associations commonly establish codes of ethics for their members with procedures for enforcing them. It is laudable for an association to wish to promote high ethical standards, but antitrust problems may arise if an association's attempt to enforce its code of ethics causes economic injury.
Rules for IUVA Board Members and Officers
In order to insure that IUVA adopts proper procedures minimizing the risk of investigations and unintentional law violations, IUVA has adopted the following procedures:
- Agendas of all meetings of the Board of Directors and other meetings with potential antitrust significance must be kept, and where appropriate, reviewed by legal counsel.
- All members of the Board of Directors shall receive a copy of the association's antitrust policy statement detailing what can and cannot be done at IUVA meetings.
- The bylaws or written policy statements of IUVA shall contain a full description of the association's intentions to fully comply with the antitrust laws.
- Legal counsel may be requested to be present at Board of Directors meetings and any other meetings where sensitive issues are being discussed.
- Minutes of all meetings must be approved by the Executive Director and, where appropriate, reviewed by counsel. The minutes should include statements to show the interest of the Board of Directors in complying with antitrust laws.
- No association staff member should communicate with officials of the Federal Trade Commission or the Antitrust Division of the Department of Justice without advice of counsel.
The Sherman Act is a criminal conspiracy statute. If you, as a IUVA member or employee, sit in a room while members engage in an illegal discussion involving an antitrust violation such as price-fixing, you may be held criminally liable even though you say nothing during the discussion. Your attendance at such a meeting may be sufficient to find that you acquiesced in the discussion and are equally as liable as those who vocally agree to fix prices.
Rules for IUVA Members
The best way to avoid possible infringement of the antitrust laws is to institute a program of compliance. At IUVA gatherings, all association members should avoid discussion of certain sensitive subjects. Informal gatherings which follow association meetings are particularly looked upon with great suspicion by the government.
First, make no agreement in restraint of trade. Additionally, some topics should be scrupulously avoided in all meetings:
- Do not discuss current or future prices; be very careful of discussions of past prices;
- Do not discuss what is a fair profit level;
- Do not discuss an increase or a decrease in price;
- Do not discuss standardizing or stabilizing prices;
- Do not discuss pricing procedures;
- Do not discuss discounts;
- Do not discuss credit terms;
- Do not discuss controlling sales;
- Do not discuss allocating markets;
- Do not discuss cost information or productive capacity;
- Do not complain to a competitor that its prices constitute unfair trade practices; and
- Do not discuss refusing to deal with a company because of its pricing or distribution practices. Even group discussions focused on a particular supplier, customer, or competitor - particularly of a negative or critical nature - carry the potential of being misconstrued as a collective effort to exclude that party from some competitive benefits of the market. Association discussion should be more generic and focused on broader industry issues rather than on individual market participants.
With regard to antitrust risks present in membership and industry self-regulation, membership policies should avoid the following:
- Restrictions on dealing with nonmembers;
- Exclusions from membership, especially if there is a business advantage in being a member; and
- Limitations on access to association information, unless the limitation is based upon protection of trade secrets.
Industry self-regulation and codes of ethics should avoid the following:
Requiring refusal to deal with any member violating the association's code of ethics;
- Arbitrary enforcement of the code; or unreasonably severe penalties for violation of the code;
- Limitations on access to association information, unless the limitation is based upon protection of trade secrets; and
- Regulations or policies which have price fixing implications, or otherwise restrain competition, such as preventing the advertising of prices.
Informal Discussions
The informal discussions that often follow immediately after a meeting probably offer the greatest hazard of inadvertent violation, or potential violation of the antitrust laws.
To guard against this, all personnel involved in IUVA meetings must thoroughly understand these guidelines as to prohibited activities. IUVA officers and directors especially, must be alert to guide discussions away from dangerous areas. In cases of uncertainty, IUVA policy is to err on the side of caution rather than to risk violation of the antitrust laws.
We should bear in mind that we are a potential target for government antitrust enforcers and private treble damage suits. By conducting our business openly and avoiding even the appearance that we are engaging in activity which might be seen to have an effect on prices or competition, we can protect ourselves from charges of antitrust violations.