ESTC, the EMEA Synthetic Turf Council, serves many legitimate and useful purposes and may legally engage in a wide range of activities, provided it operates within the laws of the EEC and the various countries in which ESTC Members operate. It is ESTC’s policy to abide by all such laws, including the antitrust laws, and to require its Members to follow this policy in respect of association business and activities.
II ANTITRUST LAWS
The principal purpose of the antitrust laws is to maintain a free enterprise system by prohibiting business activities that unreasonably restrain trade or lessen competition. The laws are based on the proposition that the public benefits by getting the highest quality products at the lowest prices through vigorous competition.
In general, the Antitrust laws of the EEC and its member-states are aimed at acts and practices that interfere with the normal operation of the free market place, particularly those affecting prices, volume of production, marketing territories, sources of supply or channels of distribution. While individual concerns are generally free to act on these matters individually, agreements, understandings of efforts to co-ordinate actions amongst competitors in these areas are likely to be illegal. Moreover, since circumstantial evidence is frequently the basis upon which Antitrust liability is found, contacts between competitors always involve Antitrust risks.
These guidelines have been developed to help ESTC Members recognise Antitrust problems and avoid objectionable activities. All Members should be acquainted with and abide by the principles outlined herein.
III WHAT IS PROHIBITED
Agreements or understandings amongst competitors formal or informal, oral or written, express or implied, that directly or indirectly relate to price, volume of production, limitation of territories, allocation of markets or limitation of quality are likely to be illegal. It made no difference that the understanding reached seemed to have a reasonable purpose to the parties, such as to stabilise chaotic prices or prevent overproduction.
1. Agreements of understandings concerning prices and terms of sale
Price fixing agreements are the most frequently prosecuted type of Antitrust violation. Any agreements by which two or more competitors raise, lower, peg, fix or stabilise the price of their products is likely to be unlawful, regardless of the form or the claimed justification. Agreements between manufacturers fixing prices to be paid by them for raw materials or supplies are also likely to be unlawful because such agreements interfere with the determination of prices by normal operation of supply and demand.
Agreements with competitors that indirectly tamper with or affect prices have also been found to be unlawful. For example, agreements fixing uniform credit terms or shipping charges would be illegal because these are elements of price. Likewise, an agreement setting a uniform industry discount structure would be illegal. Furthermore, other types of understandings between competitors, which relate to pricing, may be illegal. For example, an agreement to change prices at the same time would probably be unlawful even though there is no agreement on what the prices will be. The rational is that competitors should remain free to react to normal market pressures and not surrender their ability to decide individually when and how prices should be determined.
2. Agreements or understandings on production, marketing, technical development or investments
Arrangements whereby competitors limit or control production (volume of production, plant expansion or erection of new plants, etc.) are usually considered unlawful since they interfere with the normal supply and demand pressures of the market place and consequently affect prices. Similarly, agreements between competitors to suppress new technological developments or to limit the quality of their products are also generally considered to be illegal.
3. Allocation of market or territories among competitors
Agreements or understandings between competitors to divide markets are almost always found to be illegal since they inherently eliminate or prevent competition by assuring that the parties to the arrangements will not be rivals in the designated market. This prohibition applies to division of geographic markets (e.g., one competitor agrees not to sell in particular states or areas in return for assurances from other competitors not to sell in other designated areas), as well as market divisions based on allocating customers or products to be sold. The prohibition also covers the division of a single market on quota basis.
4. Discriminations, boycotts and refusals to deal
Another category of Antitrust violation is the group boycott or concerted refusal to deal. If a group of manufacturers agrees to refuse to sell their products to a buyer or class of buyers, this would likely be considered an unlawful boycott. It is generally no excuse that there is a sound reason for refusing to sell to the boycotted concern. For example, the fact that a buyer is a poor credit risk would give each manufacturer, acting independently, a right to refuse to sell. Nonetheless, it would probably be unlawful for the group to take collective action against the buyer. Each company should be left free to decide its own course of action independently. Similarly, a group of manufacturers must not combine to refuse to buy from a particular supplier of raw materials. While manufacturers clearly have the right to decide from whom they will buy, each must act individually and should not attempt to persuade others to follow their course of action.
5. The concept of Agreements and concerted practices
No formal offer or acceptance is required to prove any of the illegal agreements or understandings outlined above. Such conduct can be inferred from a course of business activities that may not even involve direct communication by the participants. In a 1975 judgement rendered by the EEC Court of Justice against several European sugar producers, the concept of “concerted practice” was summarised as follows:
“The criteria of co-ordination and co-operation laid down by the case law of the Court, which in no way require the working out of an actual plan, must be understood in the light of the concept inherent in the provision of the treaty relating to competition that each economic operator must determine independently the policy which he intends to adopt on the common market including the choice of the persons and undertakings to which he makes offers or sells.
Although it is correct to say that this requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market”.
The preceding quote clearly indicates that inferences of illegal concerted practices may be drawn from formal or informal discussions amongst competitors, particularly if there is parallel action shortly thereafter. Therefore, it is important not only to avoid antitrust violations but to avoid as well conduct from which incorrect inferences might be drawn.
The following guidelines have been prepared to protect the interests of both the Association and its Members:
A. General Conduct
- Members should not enter formal or informal discussions related to the following areas:
- a) Individual company purchase or sales prices, price changes, terms of sales (including credit terms, shipping charges, quantity or quality discounts, bonuses or mark-ups).
- b) Individual company figures on costs of production or distribution.
- c) Individual company figures on volume of production, inventories and information on investment and marketing policies.
- d) Present and future sources of supply and customers, including sales territories.
- Similarly, any general conversations among or statements by Members about needs for responsive or stable prices or any indication about what prices, production level or market shares are to be avoided.
B. Reporting and Statistical activities
A major activity of most trade associations is statistical compilation and reporting. This activity in and of itself is not unlawful: however, in order to avoid Antitrust risks, the following Guidelines should be followed:
- No individual company’s data should be disclosed to any other company and reports should not identify the statistics of individual companies, nor made in such a way as to permit identification of individual companies.
- There should be no penalties for failure of Members to furnish date.
- Price reporting should be very limited and then only to past transactions. Customers and sellers should not be identified.
- There should be no editorial comment or analysis of data relating to price, output or costs.
- Statistics disseminated should be made available upon reasonable terms to both Members and non-Members and to both sellers and buyers.
C. Standardisation programme
Trade Associations often initiate programs to promulgate standards for industry products. In order to avoid Antitrust risks in this area, the following guidelines should be followed:
- No standardisation programme should have penalties or other coercive means of compelling adoption.
- Standardisation should not be made on a product requiring use of a patent or on technical information not available to all Members of the industry on equal terms or on a raw material that is scarce or difficult for non-members to obtain.
- Agreements to conform to standards should be avoided so that all companies remain free to conform or not.
- Standards that eliminate incentives for product improvement or research should not be adopted.
- Standards that deprive consumers of legitimate options, eliminate less expensive product lines or limit price competition should not be adopted unless there is exceptional technological justification, such as elimination of dangerous products.
All Association meetings should have a genuine agenda of business to be transacted which should be prepared and given to participants in advance of the meetings. Additionally, adequate minutes of all meetings should be kept.
NOTE OF THE ESTC Executive Director
It is the responsibility of every Member to be sensitive to the implications of its conduct.
ESTC has retained legal counsel to help ensure compliance with these guidelines and to provide assistance and advice to the Association and its Members.