Home 9 Uncategorized 9 Legally Speaking — That Word Doesn’t Mean What You Think It Means: Antitrust Edition

Legally Speaking — That Word Doesn’t Mean What You Think It Means: Antitrust Edition

by | May 7, 2024 | 0 comments

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Column Editor:  Abby L. Deese  (Assistant Library Director for Reference and Outreach, University of Miami School of Law) 

Against the Grain V36#2

There’s nothing like a strangely-aggressive policy change to make me want to take a deep dive into an area of law that I know little about.  In October of last year, the American Association of Law Libraries introduced a new Antitrust Compliance Policy.1  This policy was full of expansive language about prohibited activities, and its announcement was accompanied by two unrecorded informational webinars with a guest speaker from the Association’s outside counsel.  The gist seemed to be:  the first rule of Fight Club is, don’t talk about our vendors.

Suggested new problem activities ran the gamut from boycotting vendors to simply expressing negative opinions about vendor products on association-run forums or listservs.  The policy included an explicit instruction not to engage in pricing or cost discussions of any kind on association platforms.  The Annual Salary Survey was called into question.  Increasingly detailed and incredulous questions about potentially prohibited activities abounded during the webinars, synthesized by the diplomatic interventions of the moderators.  In short, the new policy seems to prohibit nearly every useful member activity of the association.  So I had to ask myself:  what drove this change?2

Enter the Department of Justice and the Federal Trade Commission.  In February of 2023, the Department of Justice announced the withdrawal of a long-standing set of agency guidance documents that had created a so-called “safety zone” for certain information-sharing activities that might otherwise appear to trigger scrutiny for anti-competitive practices.3  Primarily, but not exclusively, this allowed organizations to participate in market surveys with three objective criteria:  1) Data is collected by a third party;  2) Information is more than three months old;  and 3) Information is sufficiently anonymized in the aggregate.4  There were three documents that provided guidance on these practices over time:  Antitrust Enforcement Policy Statements Issued for Health Care Industry (1993), Statements of Antitrust Enforcement Policy in Health Care (1996), and Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (2011).5  You might be noticing one strange commonality amongst all of these documents:  they’re explicitly targeted at the healthcare industry.

So how did their withdrawal set off a reaction in a library professional association?  Despite the healthcare-targeted nature of the original guidance, “practitioners have long viewed the Guidance as broadly addressing the exchange of information through third parties” and the “FTC has described the Guidance as providing a ‘safety zone’ for data exchanges (regardless of industry).”6  Because companies, including companies who are increasingly themselves members of professional associations, have “commonly participated in third-party surveys regarding historical labor conditions including wage and hiring surveys,”7 the threat of the Guidance withdrawal is implicit.

It all seems to come down to the “dramatically increased civil and criminal enforcement activity” of the DOJ and FTC in recent years.8  President Biden’s FTC chair appointee, Lina Khan, is described by news organizations as having “steered the agency to its most aggressive antitrust enforcement in decades” and the DOJ is described as also having increased enforcement.9  And yet, it is the DOJ who led the charge in revoking the previous guidance — the FTC took another five months to issue a similar withdrawal.10  

Professional associations are rightfully wary of litigious threats from the mega-corporations who participate in their organizations in the dual capacity of members and vendors,11 and of the threat of overzealous enforcement of antitrust law.  But it is still the law of the land, regardless of agency guidance, that “exchange of price data and other information among competitors does not invariably have anticompetitive effects” and is therefore not a per se violation of the Sherman Act.12  But all of these information-sharing activities seem far different from the grasping many-tentacled Standard Oil of antitrust’s origins.  So it makes me wonder: how did antitrust law get here, to this point where it feels as if it is being wielded to protect the trade secrets (if you believe that pricing can ever be a trade secret)13 and business interests of corporations rather than the right to competitive markets and pricing for the members of the professional associations who deal with them? 

The greatest enforcement concern tends to be against economic boycotts.  The history of the Sherman Act begins with the efforts to dismantle the “trusts” of the late 19th and early 20th centuries, but despite the way the law has been deployed over the years, early debates surrounding the Sherman Act and related antitrust proposals indicated that there was a recognized benefit to allowing “labor combinations,” or trade unions, to similarly consolidate power.14  Under U.S. antitrust law, there is a difference between the objective of unions to organize for “self-protection” and the objective of members of a professional association to organize in order to force corporations to take more favorable actions.

This difference has played out in several major cases involving professional associations over the years.  When the Superior Court Trial Lawyers Association tried to boycott the District of Columbia over inadequate compensation related to indigent defense provided under the DC Criminal Justice Act in 1983, the Court of Appeals for the DC Circuit found that the activism of the association might be subject to First Amendment protection.15  However, the Supreme Court disagreed, pointing out that “every concerted refusal to do business with a potential customer or supplier has an expressive component” and that creating an exception from the per se antitrust laws based on this common element would “create a gaping hole in the fabric of those laws.”16  As such, the boycott was a “naked restraint of price” and a per se violation.17

In 1982, in finding that a nonprofit trade association could be liable for treble damages for the actions of its agents, the U.S. Supreme Court was particularly interested in the fact that a competitor used the association’s internal procedures to injure the business of the plaintiff corporation.18  In the dissent, however, three Justices disagreed that encouraging “plaintiffs to seek recovery from nonprofit organizations, rather than from the commercial enterprises that benefited from the violation [would] facilitate proper antitrust enforcement.”19  At the same time, the potential for “anticompetitive activity” is great when “many of [the organization’s] officials are associated with members of the industries regulated” by that same organization’s codes.20 

The anti-competitive power of standard-setting organizations was explored again with the American Bar Association in 1995, when the FTC alleged that “law school accreditation program[s] [were] controlled by law school faculty, who were using the ABA’s power over accreditation to force law schools to inflate faculty salaries and benefits.”21  The result was a consent decree that, among other things, prohibited the ABA from collecting salary data and using it in setting accreditation standards.  While law school faculty arguably intended their efforts to advocate for better compensation, the courts have found that these efforts are anti-competitive price-fixing when the member collective leverages its accreditation powers in order to achieve its goals.  

What strikes me the most about the timing of these professional association cases and the original issuance of the DOJ and FTC guidance documents creating safe zones for certain information-sharing activities is that the guidance came after.  And yet, the cases that came before largely did not arise because of the kinds of information-sharing shielded by the guidance.  From conversations with librarians who are members of other, much larger, library associations, and particularly one with more complex legal structures and more involved lobbying activities, I gather that the antitrust conversations are not so grim elsewhere in libraryland.22  So I come back once again to the question:  why this powerful reaction now to the revocation of the guidance?

I suspect that the heart of the matter is an institutional and corporate reaction to a robust and rejuvenated labor movement,23 and to the growing use of economic boycotts to put pressure on institutions and governments.24  Unions and boycotts make every C-suite nervous, whether they’re in a nonprofit or a Fortune 500.

I have three thoughts in conclusion.  The first is that professional associations are not labor unions, and we can’t (and sometimes shouldn’t) rely on them to support us in advocating for fair wages.  We need a different solution.25  The second is that a professional or trade association is most likely to be a “walking conspiracy” when competitors occupy a dual role as members and vendors — which is perhaps a dual role we should not encourage or allow in our professional associations.26  And the third is that if the antitrust and defamation threats have reached the point where professionals can’t engage in frank discussions about products and services crucial to their business purposes, then we need to have a conversation about whether professional associations have been effectively reduced to social clubs — and whether we might just need an Anti-SLAPP for Anti-TRUST. 

I’ll see you off-list.  

Endnotes

1. American Association of Law Libraries, Antitrust Compliance Policy (Sept. 25, 2023), https://www.aallnet.org/about-us/what-we-do/policies/antitrust-compliance-policy/ (membership required).

2. Spoilers: This is relevant to anyone who belongs to a professional association.

3. William T. McEnroe et al, “DOJ’s Rescission of Longstanding Guidance Creates Uncertainty for Market Benchmarking Activities,” LawFlash: Morgan Lewis, February 7, 2023, https://www.morganlewis.com/pubs/2023/02/dojs-rescission-of-longstanding-guidance-creates-uncertainty-for-market-benchmarking-activities

4. Sheldon Klein, “Don’t Ask, Don’t Tell? The Antitrust Risk of Conducting and Participating in Market Surveys Increase,” Client Alerts: Butzel, February 13, 2023, https://www.butzel.com/alert-dont-ask-dont-tell-the-antitrust-risk-of-conducting-and-participating-in-market-surveys-increase

5. McEnroe, “DOJ’s Rescission of Longstanding Guidance.”

6. McEnroe, “DOJ’s Rescission of Longstanding Guidance.”

7. McEnroe, “DOJ’s Rescission of Longstanding Guidance.”

8. “DOJ Withdraws ‘Out of Date’ Antitrust Enforcement Guidance Relating to Healthcare Providers,” McGuireWoods, February 8, 2023, https://www.mcguirewoods.com/client-resources/alerts/2023/2/doj-withdraws-out-date-antitrust-enforcement-guidance-relating-healthcare-providers/

9. Jim Tankersley, “An Emboldened F.T.C. Bolsters Biden’s Efforts to Address Inflation,” New York Times, February 27, 2024, https://www.nytimes.com/2024/02/27/us/politics/biden-ftc-competition-mergers.html

10. “Federal Trade Commission Withdraws Health Care Enforcement Policy Statements,” Federal Trade Commission, July 14, 2023, https://www.ftc.gov/news-events/news/press-releases/2023/07/federal-trade-commission-withdraws-health-care-enforcement-policy-statements

11. SPARC’s Landscape Analysis Report from 2019 is an eye-opening introduction to the impact of corporate business models and acquisitions on a contracting academic publishing market.  Claudio Aspesi et al. “SPARC Landscape Analysis,” March 29, 2019, https://doi.org/10.31229/osf.io/58yhb

12. United States v. U.S. Gypsum Co., 438 U.S. 422, at n.16 (1978), available at https://supreme.justia.com/cases/federal/us/438/422/

13. Neal F. Weinrich, “When Is Pricing Information a Trade Secret,” February 17, 2014, https://www.bfvlaw.com/when-is-pricing-information-a-trade-secret/

14. As said Henry D. Clayton of Clayton Act fame: “A mere organization for self-protection is not a trust and is not contrary to good government,” and “You cannot treat labor as a mere commodity.” 33 Cong. Rec. Appx. 333 (1900) (speech of Rep. Henry D. Clayton).

15. FTC v. Sup. Ct. Trial Lawyers Ass’n, 493 U.S. 411, 411 (1990), available at https://supreme.justia.com/cases/federal/us/493/411/. (hereinafter Trial Lawyers). 

16. Trial Lawyers, at 431-32.

17. Trial Lawyers, at 412.

18. American Soc. of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556, 571 (1982), available at https://supreme.justia.com/cases/federal/us/456/556/.  (hereinafter Hydrolevel)

19. Hydrolevel, at 591.

20. Hydrolevel, at 571.

21. “Recent Enforcement Actions By The Antitrust Division Against Trade Associations,” U.S. Department of Justice, December 31, 1969, https://www.justice.gov/atr/speech/recent-enforcement-actions-antitrust-division-against-trade-associations

22. The somewhat dated but publicly available ALA Legal Framework, by comparison, devotes one paragraph to antitrust, and only briefly alludes to information-sharing risks in a 2008 update.  See “ALA Legal Framework: Twenty Questions,” American Library Association, 2006, https://www.ala.org/ala/ourassociation/governingdocs/legalguidelines/legalframework/alalegalframework.htm and “ALA Legal Framework: Twenty questions and answers,” American Library Association, last updated March 12, 2008, https://www.ala.org/aboutala/mleader/factsheets/legalframework

23. Wyatte Grantham-Phillips, “Labor Movements Are Seeing Historic Victories This Year.  Can Unions Keep Up The Momentum?” PBS News Hour, October 11, 2023, https://www.pbs.org/newshour/economy/labor-movements-are-seeing-historic-victories-this-year-can-unions-keep-up-the-momentum

24. Make Me Smart, “Boycotts, Buycotts and the Rise of Consumer Activism,” March 12, 2024, https://www.marketplace.org/shows/make-me-smart/boycotts-buycotts-and-the-rise-of-consumer-activism/

25. And perhaps that solution is as simple as the public Google Sheet, a tool wielded with great effect during the #MeToo movement and in sharing salaries in professions where pay parity is a constant battle.  See, Tanya Basu, “How Google Docs Became the Social Media of the Resistance,” June 6, 2020, https://www.technologyreview.com/2020/06/06/1002546/google-docs-social-media-resistance/

26. The caveat to this is that, increasingly, even librarians are competitors, particularly those of us caught in the corporatization of higher ed.

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