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FTC Settles Charges with Two Professional Associations over Anticompetitive Code of Ethics Provisions
Practical Law Legal Update 2-552-2965 (Approx. 4 pages)
FTC Settles Charges with Two Professional Associations over Anticompetitive Code of Ethics Provisions
by Practical Law Antitrust
| Published on 17 Dec 2013 • USA (National/Federal) |
The FTC and two professional services associations settled allegations that the professional associations maintained anticompetitive provisions in their Codes of Ethics.
On December 16, 2013, the FTC announced that it reached settlements with two non-profit professional services associations over charges that the associations' Codes of Ethics contained provisions restraining competition.
Music Teachers National Association, Inc.
In its complaint against Music Teachers National Association (MTNA), the FTC alleged that a provision in MTNA's Code of Ethics restrained competition by preventing members from soliciting customers of competing member music teachers. MTNA, a professional association of music teachers, has over 20,000 members and annual revenues of approximately $500 million. The FTC alleged that the provision unreasonably restrained competition and injured customers in violation Section 5 of the FTC Act by:
- Restricting and discouraging competition among music teachers.
- Eliminating the benefits for consumers of competition among music teachers.
In its decision and order, the FTC required MTNA to, among other things:
- Cease and desist from:
- regulating, restricting or otherwise interfering with solicitation of music teaching work; and
- working with any affiliate that MTNA knows to use similar anticompetitive restrictions.
- Post on its website and maintain for five years:
- an announcement regarding the change in their Code of Ethics;
- the FTC settlement statement; and
- a link to the FTC press release for the matter.
- Implement and maintain an antitrust compliance program.
California Association of Legal Support Professionals
In its complaint against California Association of Legal Support Professionals (CALSPro), the FTC identified Code of Ethics provisions that restrained competition by denying its 350 members the ability to:
- Compete on price.
- Solicit legal support professionals for employment.
- Advertise.
The FTC alleged that the provision unreasonably restrained competition and injured customers in violation of Section 5 of the FTC Act by:
- Impeding and discouraging competition among legal support professionals.
- Eliminating the benefits for consumers of competition among legal support professionals.
In its decision and order, the FTC required CALSPro to, among other things:
- Cease and desist from regulating, restricting or otherwise interfering with members':
- price competition;
- employee solicitation; and
- advertising or publishing.
- Post on its website and maintain for five years:
- an announcement regarding the change in their Code of Ethics;
- the FTC settlement statement; and
- a link to the FTC press release for the matter.
- Implement and maintain an antitrust compliance program.
These two settlements demonstrate that the FTC will use its power under Section 5 of the FTC Act to identify and challenge anticompetitive behavior of trade associations and other competitor collaborations. In recent testimony to the US House of Representatives Subcommittee on Commerce, Manufacturing and Trade about the MTNA investigation in particular, the FTC Commissioners stated that the FTC:
- Properly used its resources to conduct the investigation into the alleged Code of Ethics violation.
- Has jurisdiction over non-profits like MTNA when the organization exists to profit its members.
- Seeks to provide guidance and send a strong message to other trade associations regarding their codes of ethics.