To ensure strict compliance with the antitrust laws of the United States, the American Association of Advertising Agencies has adopted this Antitrust Policy. This Policy discusses the standards of conduct that must be observed in relation to any Association-related activities to protect against the fact or appearance of violations of the antitrust laws in connection with those activities.
The primary antitrust law covering association conduct is Section 1 of the Sherman Antitrust Act, which prohibits anticompetitive agreements, contracts and combinations. Conduct prohibited under Section 1 of the Sherman Act includes any agreements between competitors to reduce competition between them or to exclude rivals from markets.
Because such agreements can be hard to demonstrate directly (e.g. through an actual contract evidencing an agreement), courts and enforcers often resort to indirect evidence of an agreement, which can include evidence that members of an association have been having discussions relating to areas unrelated to the legitimate business of the association (but related instead to potential agreements that might violate the Sherman Act). It is therefore critical that Association members not engage in discussions that could be seen as potentially leading to the types of illegal agreements described below.
Below are a few categories of agreements between competitors that have been held to be violations of Section 1 of the Sherman Act:
One of the clearest antitrust violations an association can experience is an agreement by its members to fix prices, reduce output or capacity, or allocate markets. These types of agreements are per se violations of the antitrust laws—illegal even if the agreement at issue is not likely to lead to higher prices or lower output. This is true even if the prices set are reasonable or the ends sought are worthy. Terms and conditions of sale that affect price are seen by courts and enforcers as elements of price and carry the same obligations. These terms and conditions may include discounts, warranty terms, and other contractual provisions in agreements with vendors and/or clients. Consequently, members should not discuss these topics in connection with Association activities.
Another type of agreement that associations sometimes experience that is prohibited by Section 1 of the Sherman Act is a boycott, whether of competitors, suppliers, or customers. In its starkest terms, a boycott is an agreement by a group of companies to not do business with a targeted company. Discussions between Association members should avoid complaints about competitors, suppliers, or customers that could be interpreted as a prelude to an agreement to boycott them. Furthermore, the Association itself recognizes the need to undertake its own membership decisions and related disciplinary actions in accordance with strictly defined legal guidelines and only with the participation of counsel.
Statistical reporting is a common association-sponsored activity and is considered to be procompetitive by courts and enforcers if it is done correctly. However, both courts and enforcers have long recognized the possibility that such reporting, if done improperly, could further price-fixing schemes by providing information about competitors’ output or prices to allow those competitors to detect “cheating” on an anticompetitive agreement. As a result, statistical reporting projects must be conducted with great care in order to conform with clearly defined rules regarding how data is collected and disseminated to Association members. Consequently, development of new statistical reporting programs should be done in consultation with counsel.
It is also possible, though rare, to incur an antitrust infraction through association-sponsored efforts to petition government agencies for action. While petitioning activity that is intended to lead to government action is generally protected conduct, sham petitioning that is designed to harm competition through the imposition of government processes that themselves limit competition or harm competitors is not protected.
The proper conduct of Association meetings requires an understanding and conscious awareness by all of antitrust implications. Even a member that has not actively participated in an improper discussion at a meeting it attends may face antitrust risk if an agreement in restraint of trade results from that meeting. Members and 4A’s personnel should leave any such discussions, end them if possible, and report them to Association leadership immediately.
BE ALERT AND KEEP INFORMED. Antitrust laws are wide-ranging, complex, and subject to changing interpretations. Violations of the antitrust laws can have very serious consequences for the Association, its members, and their employees. Members should consult their company lawyers or Association counsel immediately with any questions about the legality of any proposed Association-related activities. You may direct any questions or concerns to [email protected].
(Revised May 15, 2019)
4A’s Antitrust Compliance Statement of Policy for Distribution and Recitation at Meetings
It is the policy of the American Association of Advertising Agencies (“4A’s”) to comply fully and strictly with federal and state antitrust laws. 4A’s policy is motivated by a firm respect and belief in the antitrust laws and the free market philosophy underlying those laws, as well as a recognition of the potentially severe consequences of antitrust violations.
Our aim as an association is to conduct ourselves in such a way as to avoid any potential for antitrust exposure. Full compliance with the antitrust laws is a requirement for 4A’s participation, and responsibility for compliance rests with each member.
In order to comply with the antitrust laws, competitors should not discuss certain subjects when they are together — whether at formal 4A’s meetings, on conference calls, in correspondence, or through informal contacts with other 4A’s members.
Topics to avoid discussing with competitors include: prices, price trends, timing of price changes, costs of common inputs, margins, terms of sale, discounts and rebates, and the like.
Further, members are prohibited from:
- Fixing or setting prices for selling products or services;
- Allocating geographic markets or clients between or among competitors;
- Bid rigging, bid rotation, or otherwise distorting the bid process;
- Boycotting competitors, clients, or vendors;
- Agreeing upon levels of production or output;
- Conspiring to exclude competitors or clients from certain markets; and
- Discussing specific non-public R&D, sales or marketing plans, or company confidential product, development, or production strategies.
4A’s meeting participants are obligated to terminate any discussion, seek legal counsel’s advice, or if necessary terminate any meeting if the discussion may be construed to raise any antitrust risks. You may direct any questions or concerns to [email protected].
(Revised May 15, 2019)