AALL Boston Program G-4: Antitrust and the Association

Speakers: Shaun Esposito, CRIV chair 2011-2012,
University of Arizona College of Law; Stephen W.
Armstrong, Montgomery, McCracken, Walker &
Rhodes, LLP; Margaret Maes, AALL vendor liaison,
executive director of the Legal Information
Preservation Alliance (LIPA).

There is not much dispute that AALL is the sort of organization whose activities the ShermanAntitrust Act was intended to regulate.The United States Supreme Court held in American Society of

Mechanical Engineers, Inc. v. Hydrolevel Corp.,
456 U.S. 556 (1982) that a professional organization
can be held liable for the anticompetitive activities
of its members acting under the apparent authority
of the organization.

The question, therefore, is not whether the actions
of AALL staff and members are within the ambit of
antitrust law. The question is what behavior might
be considered by courts to be anticompetitive. This
question is of particular interest to members of
CRIV, whose official charge involves educating
the Association about the practices, including the
sometimes dubious practices, of information vendors.
It is certainly possible that something written in The
CRIV Sheet or on the CRIV Blog or sent to a listserv
by the CRIV chair could have an effect, maybe even a
substantial effect, on the market for legal information.
When does communication by CRIV about vendor
practices become anticompetitive? Under the Sherman
Act, what is CRIV permitted to say and do on behalf
of the AALL membership? Can CRIV effectively serve
the members of AALL under these strictures?
My conclusion after having attended this session is
that CRIV is not meaningfully hobbled by federal
antitrust law and that it can absolutely meet its charge
without running afoul of that law. CRIV can discuss
violations of the Code of Fair Business Practices and
can even engage in discussions about the price of
vendor products and services without violating the
Sherman Act. As with any law, the issue is fraught
with exceptions and provisos. But generally speaking,
open and honest dialogue about issues relating
to vendor activity, including pricing, is protected
under the first amendment and is not, by itself,
anticompetitive. The Sherman Act punishes collusion
in restraint of trade, not the dissemination of
information that might have the effect of
discouraging a buyer from doing business with
a particular vendor.

In the program’s longest and most revealing section,
Stephen W. Armstrong, a lawyer who is an expert
in antitrust, delivered a primer on how the primary
federal antitrust statute, the Sherman Act, affects
the activities of professional associations like AALL.
Very simply, Armstrong explained, the Sherman
Act prohibits combinations in restraint of trade.
Professional associations are combinations. These
combinations can violate the law in ways that are
per se anticompetitive, e.g. price fixing, limiting
production, or refusing to deal. Associations can also
violate the law if they engage in joint acts that are
not per se unlawful but have the effect of harming
competition. Many joint activities commonly entered
into by professional groups, such as forming
purchasing consortia, publishing salary surveys, and
lobbying, are not unlawful on their face but could
be considered restraints of trade if their effect on the
market is found to be anticompetitive.
What can AALL members, staff, and officers do, then,
to avoid violating antitrust laws? Avoiding per se
restraint of trade is relatively straightforward.
Members of the Association cannot agree to set the
price that they are willing to pay for a particular
service or product. They cannot conspire to refuse to
purchase a particular product or service or agree to
purchase it only under certain conditions. Neither the
Association nor a group of its members can solicit
or invite a group action such as a boycott. Joint
activities that are not per se unlawful can be engaged
in by the Association if they are carefully crafted to
encourage competition rather than restrain it. The
Association can publish wage and pricing surveys as
long as they are voluntary, aggregated rather than
specific, and do not reveal current or projected
pricing. Joint purchasing agreements are acceptable
if they do not control an overly large portion of the
market. Guides to fair business practices must be
voluntary, cannot be used to fix prices, and must
be prepared with the participation of all interested
parties. Lobbying is acceptable if it is consistent with
a competitive market.

Following Armstrong’s review of antitrust law and
its significance to AALL, Margie Maes and Shaun
Esposito offered hypothetical situations involving
activities by law librarians and asked Armstrong
to give his opnion on whether he thought these
activities were violations of antitrust law. Rather than
go through each hypothetical here, I will summarize
what I learned from the opinions the lawyer offered:
• Consortial purchasing arrangements like NELLCO
are not anticompetitive if they are limited (i.e.,
do not control the entire industry), if they create
demonstrable efficiencies for both buyers and
sellers, and if they allow active participation by
all parties.
• CRIV can report on particular vendors violating
fair business practices and can tell readers
about vendors that abide by those practices.
Disseminating valid information that has the
effect of harming a particular vendor’s business
is not a per se antitrust violation. CRIV cannot
solicit joint action against the violator, and it
should allow the violator to participate in the
discussion and present its side of the story.
• A small group of library directors can sit around
and complain about a particular vendor without
raising the specter of an antitrust violation. But it
would be a violation if the members of that group
agreed among themselves not to pay more than a
specific price for a service or product.
• Parallel conduct is not collusion. It is not an
antitrust violation for two or more AALL members
to make the same decision with regard to a price as
long as they did not make that decision in concert
with one another.
• Vendors must be meaningfully included in the
membership of AALL. An organization is less likely
to engage in, or be seen to engage in, a restraint of
trade if both sides of any potential transaction are
represented by that organization.

Large organizations tend to be risk-averse. They
want to err on the side of caution with regard
to antitrust law because the costs of defending
against an antitrust suit and the cost of paying
damages in the event of an adverse judgment
can be considerable. But an organization must
not be so averse to risk that it regulates itself into
irrelevance. What I take away from this session—
and this is my personal opinion and not a matter
of CRIV or AALL policy—is that a free and open
exchange of information participated in by both
vendors and librarians is not likely to lead to a
successful antitrust case against AALL. No AALL
member, officer, or staff member should ever
engage in per se restraints of trade or call for or
encourage boycotts or joint action of any kind.
But free and open exchanges of information,
even about matters of price, have a place at our
conferences and in our publications.

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