AMI Antitrust Guidelines

Association of Medical Illustrators Antitrust Guidelines

By Matthew P. Farmer, Esq., William P. Hamilton, CMI, and AMI Professional Guidelines Committee

Overview

Federal and state antitrust laws are designed to protect and promote competition. They do this by making it illegal for competitors to act in concert to fix prices or otherwise unreasonably restrain trade. The most important antitrust statutes relating to trade association activities are Section 1 of the Sherman Act and Section 5 of the Federal Trade Commission Act. There are four main areas of antitrust concern for professional associations: price fixing, membership, standardization and certification, and industry self-regulation.

General Antitrust Guidelines

Trade associations provide opportunities for competitors to act in concert by reaching, even if only tacitly, agreements on business practice. If these agreements reduce competition, antitrust concerns may be raised. It is important for trade associations to be very careful when proposing rules, codes of conduct, membership requirements, standards of practice, preferred practices and so on that deal with individual members' business practices. For example, a trade association cannot demand members to charge certain prices a violation known as price-fixing. Nor can it publish or suggest preferred or common prices. It cannot, without serious risk, prohibit or discourage members from using certain types of contracts, suppliers, or entering into certain business relationships a violation known as boycotting. Trade associations can expose themselves to investigation and litigation by imposing membership criteria that exclude otherwise legitimate businesses from membership, by prohibiting certain kinds of advertising by members, and by trying to dictate business practices to reduce competition among members or use the concerted might of members to harm non-member competitors. Here is what the U.S. 7th Circuit Court of Appeals had to say about trade associations and antitrust: Competitors are permitted by the antitrust laws (and certainly by the per se rule) to engage in cooperative behavior, under trade association auspices or otherwise, provided they dont reduce competition among themselves or help their suppliers or customers to reduce competition. In Re Brand Name Prescription Drugs Antitrust Litigation, 186 F.3d.

The AMI is committed to antitrust compliance and expects its members do the same. It is the belief of the AMI that competition is the fairest and most efficient mechanism of economic regulation. Accordingly, any activity that intentionally or unintentionally reduces competition or restrains trade is contrary to that belief and AMI policy.

AMI Conduct

Member concerns about economic and legislative activities often call to question the AMIs proper response and role in such matters:

1). As an organization we do not collude with regard to pricing, contract terms, or the blackballing of potential buyers, suppliers or competitors. We cannot, and do not, demand that our members only use a standard AMI contract, that they not use work-for-hire or other legal agreements, or that they not do business with a particular buyer, supplier or competitor. We do not urge our members to price art and services at a particular price or even similarly understanding that pricing is a function of the market, not the AMI.

The AMI can provide educational materials such as sample contracts, education about contract and copyright law, business and ethical practices, and pricing information based upon industry wide surveys in which the data is historical and at least three months old.

2). Individual members should not share pricing, contractual information or suggest blackballing any buyer, supplier or competitor at an AMI meeting venue. This includes the AMI listserv, Member Community blog or forum, or any other AMI sanctioned event or program. For their own protection individual members should not discuss such matters even privately among themselves. Members should never engage in such discussions through the AMI or suggest the AMI in any way encourages such behavior.

3). The AMI can conduct salary and pricing surveys if the antitrust safety zone rules are followed: a) the survey is managed by a third-party (e.g., a purchaser, government agency, health care consultant, academic institution, or trade association); b) the information provided by survey participants is based on data more than 3 months old; and, c) there are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data represents more than 25 percent on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider. If these criteria are met, an association can collect and disseminate data on a wide range of matters, including such things as past salaries, vacation policies, types of office equipment used, etc.

Simply put, we may educate our members but we may not urge them to take concerted action.

Conduct for Members to Follow

AMI members should adhere to the following general guidelines when participating in AMI activities:

Do not discuss current or future prices or costs.
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 credit terms.
Do not discuss controlling sales.
Do not discuss banning or otherwise restricting legitimate advertising by competitors.
Do not discuss allocating customers or markets to or among competitors.
Do not complain to a competitor that its prices constitute unfair trade practices.
Do not ask competitors why a past bid was so low, or to describe the basis for a past bid.
Do not discuss refusing to deal with a company because of its pricing or distribution practices.
Do not allow informal discussions of industry problems or issues to drift toward discussion of price fixing or boycotting.
Do not vote or act in your capacity as an AMI member with the intention to harm a competitor.

Legislative Efforts

Generally, a trade association can take a position on legislation, including urging members to vote for or otherwise support particular legislation as long as the legislation is relevant to the member's business interests. Other types of organizations can present at our meetings with regard to legislation but the AMI cannot tell or in any way coerce its members to take a particular action.

The same is not true of candidates for office. A not-for-profit association cannot directly support or encourage support of a candidate. To do that, they have to form a separate political action committee (PAC) that operates with voluntary independent member contributions, not membership dues. Normally, antitrust laws don't affect political activity of either kind. It is more a matter of staying within the scope of the AMIs purpose as a nonprofit organization.

A Trade Association Is Not a Labor Union

The manners in which a trade association can address industry issues are information, education and promotion. Actions such as collective bargaining, standardizing fees/wages, and boycotting are allowable only within the contractual relationship of a labor union and an employer. For example, The Animation Guild Local 839 negotiates wages, benefits, and work conditions for many creative artists employed in Hollywood California. The Graphic Artists Guild (GAG) is organized as a union so that [they] may act collectively and advocate for artists' rights in the political arena [quoted from http://www.gag.org/about/index.php]. The AMI is not a labor union; we are a 501(c)(6) trade association.