The Guild of Scenic Artists (Guild) is an organization of Scenic Artists, many of which compete with each other. As an organization of competitors in the Scenic Art industry, the Guild must act cautiously to ensure against violations of federal and state antitrust laws.
Topics which should not be discussed during organization meetings include those that could be construed as an agreement even tending to (a) raise, lower or stabilize prices or price levels, including credit terms, (b) regulate production or availability of products or services, (c) allocate markets or customers, or (d) encourage boycotts or dealing only on certain terms.
Even if you are not an active participant in a discussion which could violate the antitrust laws – that is, if you are merely present while others engage in such a discussion and you neither attempt to stop it or nor leave the room – you personally could be convicted of a felony and fined as much as $350,000 and/or imprisoned for up to three years. If your company or the Guild is convicted, each could be fined up to $10 million.
First, an agreement does not need to be in writing to be illegal under the antitrust laws. Agreements can be oral or written, formal or informal, expressed or implied. In fact, agreements can be inferred from similar behavior following even a general discussion of a particular matter such as prices or output. For this reason, the mere discussion of certain topics must not be permitted at Guild meetings or events. Should an improper discussion be initiated, it is the responsibility of any Director or Officer to advise that it be terminated and to move on to another, appropriate topic. Should those present not heed the advice, it is the responsibility of the present Director or Officer to terminate the meeting and recommend that all persons leave.
Price fixing is an agreement among competitors which tends to standardize (to raise, maintain or even lower) prices or price levels. Agreements which go even to individual elements of price such as discounts, credit terms, warranties or profit margins are violations of the antitrust laws and are not permitted.
Agreements to limit production are viewed as an equivalent of price fixing because the end result is the same. Since price is a result of supply and demand, agreements to limit production (to restrict supply) result in price increases if demand remains constant.
Agreements to divide customers or market areas also eliminate price competition. For example, discussion among manufacturers of who will serve a particular geographic market, or of who will sell to a particular dealer or group of dealers, or of who will advertise in the newspaper serving the north side of town and who will advertise in the newspaper serving the south side of town, is inappropriate at a Guild meeting.
Boycotts involve agreements among manufacturers not to sell to a particular dealer or group of dealers, or to sell only on certain terms.
To summarize when attending an organization meeting, your personal red flag should go up when any of the following is mentioned or the conversation seems to be headed in that direction:
- Current or future prices. Great care should also be taken in discussing past prices. Rarely are such discussions appropriate.
- What constitutes a “fair” profit level.
- Possible increases or decreases in prices.
- Standardization or stabilization of prices, price levels, or price points, including the elimination of products in any price range.
- Pricing procedures. While a discussion of cost accounting methods is appropriate, discussion of pricing formulas is potentially inappropriate.
- Cash discounts. Warranty terms.
- Manufacturer return policies.
- Credit terms or rejection of customers.
- Individual company market share, sales or production information.
- Production limits or quotas.
- Allocation of markets or customers.
- Refusal to deal with a customer or to deal only on certain terms.
- Whether or not the pricing practices of any industry member are unethical or otherwise inappropriate.
If any of these subjects are raised and an organization leader does not terminate the discussion, Guild members should first ask that the matter not be further discussed and, failing that, should leave the room.
Finally, it is important for all to understand that antitrust liability may arise other than at a Guild meeting. It is equally unlawful, for example, for two competitors to talk about pricing trends over the phone, completely independent of a Guild event.