Lessons For Associations From 2013 Antitrust Activity

Associations are walking antitrust risks, and plaintiffs and the government took their aim at a variety of association activity in 2013 — from dentists to music teachers, wire transfers to equines. The results are instructive for associations and their members as they work together in 2014, whether setting membership rules, dealing with nonmembers, organizing meetings or sharing information. Here are some of 2013's antitrust highlights:

Trying to Maintain Professionalism Among Members Has Its Limits

Two professional associations settled with the Federal Trade Commission in response to allegations that their membership criteria unlawfully restricted competition.1 In one case, the Music Teachers National Association maintained a code of ethics that called on members not to recruit students from one another. Meanwhile, some of the association's affiliated state and local groups purportedly required members to not charge below-average fees or offer free lessons.

The association claimed it had never enforced these provisions, and had no role in the local members' rules, but it seems even the appearance of a collusive limitation on competition was enough to get the FTC's attention. Like the music teachers, the California Association of Legal Support Professionals allegedly maintained a rule that it was unethical for members to undercut other members' prices, disparage other members, or recruit other members' employees without first notifying the company.

Both sets of rules may have been the result of good-faith efforts to maintain professional collegiality among the associations' members. But the FTC nevertheless targeted the associations for their code provisions' potential impact on competition. In response to the FTC's investigation, both associations entered into consent orders that prohibited the restrictive code provisions and required the implementation of robust antitrust compliance programs.

With Great (Market) Power Comes Great Responsibility

The American Quarter Horse Association (AQHA), dedicated to the breeding of quarter horses, lost at trial in its defense against claims that the association improperly excluded cloned horses from its registry.2 One of the association's primary functions is to record and track the pedigrees of quarter horses. In 2004, the association issued a rule excluding from its registry any horse produced from "cloning" utilizing genetic manipulation to produce to a live foal. This rule was developed by a group...