Navigating New Antitrust Snares While Driving Post-COVID Economic Health and Revenue
Client Alert
For most trade associations and professional societies, the coronavirus pandemic has resulted in major reductions in member’s revenues. With retail stores closed and professional practices dependent on virtual meetings between professionals and clients/patients, non-essential industries and professions experienced devastating decreases in revenue. Now that the economy is reopening, members of trade associations and professional societies are asking how they can, individually and collectively, maximize opportunities to regenerate revenue. Trade associations and professional societies are being asked to provide information on raw material availability, government support programs, coronavirus-related safety issues, insurance questions, employee relations, telecommuting as a way of life, and more.
The issues raised are mostly unique to the profession or industry. Some of the discussions are private, while others – such as debates involving if and when to open professional sports leagues – are reported on a daily basis by the media. These information exchanges and discussions are of great assistance in propelling our economy forward, but also pose an antitrust risk. If the information exchanges or discussions result in an agreement, direct or indirect, which unreasonably restrains trade, you have a potential antitrust violation. If the agreement involves price fixing, customer allocation, bid rigging, territorial allocation or certain types of boycotts, all potential per se antitrust violations, those who participate in the agreement (including trade association executives who facilitate the discussions) may be charged with a felony, which carries a statutory maximum penalty of 10 years in prison and a $1 million dollar fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million dollars.
Trade associations and professional societies should have antitrust counsel review the agendas of all meetings that involve discussions of sensitive antitrust issues. The FTC and the Department of Justice have offered to provided trade associations and professional societies with expedited advisory opinions or business review letters as to whether contemplated action will be challenged by the government as an antitrust violation.
The cost of violating the antitrust laws is compounded by the fact that plaintiffs injured by antitrust violations can file class action law suits. If successful, a class of plaintiffs will be entitled to recover actual damages multiplied by three, plus reasonable attorney fees and costs of litigation.
If an association executive or member feels that any subjects scheduled for discussion at an association meeting or raised during such a discussion present antitrust issues, counsel should be consulted before the discussion is held.
For further information, contact Steven John Fellman (sfellman@gkglaw.com) or Rich Bar (rbar@gkglaw.com).
