So you may be aware by now that the FTC does not like trade or professional associations setting rules limiting the way that association members compete, particularly when those rules limit the ability of the members to provide useful and non-deceptive information to consumers. They really do not like it. Since last Spring alone, there have been nearly a half dozen different complaints by the FTC where the FTC describes the allegedly anticompetitive rules (often termed “ethics rules”) in association industries as far apart as music teaching, legal support professionals in California, electricians who specialize in commercial lighting and electrical sign installation and maintenance and coaches for ice skating. And now there is even more evidence that the FTC doesn’t like associations setting the rules limiting how its members compete. But this time it has to do with rules limiting the ability of members of an association to do comparative advertising or price based advertising. And also it has to do with AI. That’s right – artificial insemination.
You see the National Association of Animal Breeders (NAAB), whose members collect, process, market, and sell dairy and beef cattle semen for “AI,” allegedly had ethical rules limiting competition among NAAB members by prohibiting comparative advertising and limiting price-based advertising. The Commission’s complaint alleged that the NAAB code of ethics restricted competition in those markets by regulating the advertising used by NAAB members. Specifically, the NAAB code of ethics prevents its members from (1) naming members or other competitors when making statements comparing the products and services of a member with the products and services of any other member or competitor; and (2) publicizing or disclosing price information relating to the purchase or sale of animals.
The proposed consent order has a number of the usual terms that the Commission imposes in cases like this, a twenty-year term, a requirement that the association appoint antitrust counsel for that period, and requirements that the association train its board members, staff and others regarding compliance with antitrust laws and conduct a presentation on the order and antitrust compliance at the NAAB annual convention. As always, the proposed consent order is subject to public review. And comments for that are due by October 26.
For more information about the complaint and for some sober and useful comments on the best practices to minimize potential legal risk, see the linked client alert.