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Antitrust Policy Frequently Asked Questions
By Paula Cozzi Goedert, Esq.
Why does MSA have an Antitrust Policy?
It comes as a surprise to some that nonprofit associations — and their nonprofit members —
are subject to antitrust laws. Nonprofits, including museum stores affiliated with nonprofit
organizations, are buyers and sellers of goods and services. The law is clear that the antitrust rules
apply to all buyers and sellers, including nonprofits.
In fact, associations have been prime targets of antitrust regulators. Sometimes the exchange of
ideas which take place at association meetings leads competitors to work together in ways which violate
the antitrust laws.
For example, competitors could agree to split markets. An art museum could agree with a nearby
zoo to have its store stay away from children's items if the zoo stays away from calendars and note cards.
As another example, two vendors who sell to museum stores could agree that one will refrain from marketing
soaps if the other agrees not to market candles. These kinds of market sharing agreements could violate
the antitrust laws.
Even more common are "group boycotts". If two parties agree not to buy from or sell to another
party, that agreement could be a group boycott. For example, if a group of museum stores agreed they
wouldn't do business with a particular vendor unless he extended his payments terms from 10 days to 30
days, that agreement could be considered a group boycott and violative of the antitrust laws.
Why is the MSA Antitrust Policy read at the beginning of business meetings?
Because associations are prime targets of antitrust regulators, associations must go the extra mile to
make sure that their meetings are not used as forums for discussions which might be construed as
violations of the antitrust laws. Associations have a duty to warn their members about what kind of
activity is illegal. In addition, if an antitrust violation occurs without the knowledge or permission
of the association, the association can help defend itself by showing that it has an antitrust policy
and that its members are frequently reminded of the policy.
What can't an MSA member say because of the Antitrust Policy?
All MSA members should review the Antitrust Policy and think about how the rules apply to their typical
interactions at MSA meetings. Some types of "don'ts" are easy to spot: "I think we should all agree to sell
beanbag dolls at the suggested retail price and not charge a premium" is an obvious example of price fixing.
"If we all stay away from that vendor this year, maybe he'll get the idea that his prices are too high,"
is another fairly obvious example. The only way to make sure that you are not violating antitrust laws with
your activity, however, is to give some careful thought to the rules and how they could apply to you.
Can I tell my peers if I've had a bad experience with a vendor? If not, why?
Talking about vendors by name at an association meeting is a bad idea, for two reasons. If a member makes
an unfavorable statement about a vendor, a few more members chime in with statements such as "yeah, let's
not do business with him," the association could be on its way to a group boycott claim. How would the
vendor find out? Somebody always tells. Besides, if you are asked in court, you must tell the truth.
The second reason is that MSA members want to avoid charges of business defamation. If you say
something untrue about a vendor and it damages his business, you could be liable. Truth is a defense, but
truth is sometimes hard to prove. Besides, there is always the chance that you are mistaken. The safest
course of action is to avoid all specific discussions of vendors which might be viewed as reflecting
poorly on them.
Can I ask my peers what they pay for products? Why?
Sharing information about the price at which competitors buy and sell products is very tricky. Antitrust
regulators view the sharing of information among competitors on price or terms of sale to be a possible
element in an antitrust conspiracy. The FTC has issued guidelines requiring the sharing of price
information to include only "old and cold" information (information that is more than three months old).
Furthermore, the FTC requires that the information be shared on an anonymous basis. Outside parties, like
accounting or law firms, generally collate the information and distribute a report drawing aggregate
conclusions or identifying survey respondents only by letters or numbers.
Why doesn't MSA have "product quality" guidelines for vendors?
Associations can issue guidelines if they are truly voluntary, and don't appear to be a coercive effort
to require vendors to act in a certain way or require members to purchase only from cooperating vendors.
Our American economic system is based in part on the freedom to produce goods of varying quality, on the
theory that a variety in the quality of goods will also lead to a variety of the price in goods. Some
consumers may prefer buying poor quality but less expensive merchandise. Each purchaser, including each
museum store, is free to decide on the level of quality which it wants to require from its vendors. It is
only when museum stores band together and require a level of quality from any vendor selling to a member
museum store that antitrust rules come into play.
Paula Cozzi Goedert is a lawyer with Jenner & Block in Chicago.
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