An important component of board governance that all leaders should be familiar with is the concept of antitrust. Violating antitrust laws can result in damaging fines and even prosecution. The Sherman Antitrust Act reads: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal.”
Antitrust Compliance For Your Association
What does this mean and what does compliance with antitrust provisions look like? Potential antitrust violations include:
- Suggestions of profit levels
- Price setting
- Advertising prohibitions
- Prohibiting competitive bidding
- Requiring uniform terms
- Encouraging boycotting
What must an association do to promote antitrust compliance programs?
- Supply written guidelines to all staff and association leaders
- Supply the same information to chapters
- Create an antitrust statement:
Example: Members of this organization — and participants in this meeting — must be mindful of the constraints of the antitrust laws. There shall be no discussion, nor any agreements or concerted actions that may restrain competition. This prohibition includes the exchange of information concerning any of the following: individual company rates, coverages, market practices, claims settlement practices, or any other competitive aspect of an individual company’s operation. Each member or participant is obligated to immediately speak up to prevent any discussion of this type or that is outside these bounds.
- Place the statement on every board agenda and have the statement read aloud at every meeting. Make sure this is noted in the meeting minutes.
- If board members are in the presence of any discussion (such as at an annual meeting of the organization) where members may suggest price fixing, boycotting or any other antitrust violation, board members must step in to announce to attendees that the action is anti-competitive, in violation of the antitrust act and attendees should disregard the comments. This also pertains to the association online listserves and chat rooms, social media and association-facilitated gatherings.
Taking these simple steps to educate board leaders and have vital conversations about antitrust compliance can go a long way towards keeping the association out of trouble and give board members peace of mind.