Antitrust Policy of Coalition for Government Procurement
The Coalition for Common Sense in Government Procurement, Inc., dba Coalition for Government Procurement (the “Coalition”) is a national trade association representing commercial contractors in the Federal market. The Coalition advocates for common sense policies that improve the acquisition environment for government, industry and ultimately the American taxpayer.
Through its committee and board meetings and other activities, the Coalition brings together representatives of competitors. Although the purpose of the Coalition and its members is to promote the common business interests of the companies who sell to or provide services to the Federal government, the Coalition and its members nevertheless recognize the possibility that the Coalition, its members and its activities are subject to the antitrust laws. It is the Coalition’s mandate to engage only in lawful methods of cooperative activity. For this reason, the members seek to emphasize, through this Antitrust Policy (the “Policy”), its unequivocal support for the policy of competition served by the antitrust laws and the Coalition’s uncompromising intent to comply strictly with all respects of these laws.
It is the responsibility of each Coalition member and each representative of a Coalition member to understand and comply with the principles set forth in this Policy and to preclude any activity that may give even the appearance of improper conduct. In addition, all non-members invited to a meeting of the Coalition shall be informed of the need to comply with this Policy. Any knowing violation of this Policy by a Coalition representative will result in the member’s immediate suspension from the Coalition. Any non-member participant who violates the Policy will be immediately removed from the meeting where the violation occurred.
During informal discussions at the site of any meeting of the Coalition, but beyond the control of the President of the Coalition, all members are expected to observe the same standards of personal conduct as are required of the Coalition and its members during formal meetings.
In general, the Coalition members are subject to strict examination by both state and federal agencies to ensure compliance with antitrust laws. By virtue of its composition of competing firms joined for a common purpose, the Coalition and its members must proceed with extreme caution in its activities to preclude violation of these laws.
The most important antitrust statutes governing the Coalition’s activities are Section 1 of the Sherman Act and Section 5 of the Federal Trade Commission Act. Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.” The Sherman Act prohibits any understanding that may restrain trade or impair competition, regardless of the purpose of such understanding. The Sherman Act is a criminal statute and extends to both active and inactive participants in any illegal discussion concerning price fixing or other restraints of trade. Thus, participants who merely attend a meeting may be criminally liable and subject to as great a penalty as those who might actively have agreed in that meeting to fix prices.
Section 5 of the Federal Trade Commission (FTC) Act declares as unlawful “unfair methods of competition” and “unfair or deceptive acts or practices” in, or affecting, commerce. In contrast to the Sherman Act, the FTC Act empowers the Commission to reach anti-competitive activities committed by individual persons or companies whether or not there is any agreement or “combination.” The FTC Act, like the Sherman Act, covers joint actions.
Penalties under both federal statutes are severe and may be enforced against the Coalition members and by both representatives of the government and by private parties utilizing treble damage remedies. Penalties under the Sherman Act include a fine of up to $350,000 and imprisonment for up to three years for individual convictions and a corporate fine as high as $10,000,000. Violations of the FTC Act are subject to cease and desist orders. Violations of these provisions can result in fines as high as $10,000 per day.
Potential antitrust problem areas include: (1) price fixing; (2) agreements to divide territories or customers (even an agreement to keep out of another’s territory); (3) membership restrictions, where members of a group derive economic benefit and the denial of membership to an applicant would limit that applicant’s ability to compete; (4) voluntary industry standards that favor some competitors and discriminate against others; and (5) industry self-regulation through establishment of codes of ethics where efforts to enforce such codes would result in economic injury to certain members.
An agenda is required in advance for each meeting of the Coalition and any committee of the Coalition. At the beginning of each meeting the attendees should be reminded of Coalition’s Antitrust Policy and should receive a copy of the Policy. Minutes covering the subject discussed at each meeting must be prepared, distributed to all attendees and approved at the next meeting. A designated representative at the direction of the President of the Coalition should attend each meeting in order to address any concerns or answer any questions regarding antitrust issues from any member of the Coalition or any other attendee of a the Coalition meeting.
There are certain basic topics which member company representatives should not discuss with other the Coalition member representatives. These include:
- What constitutes a “fair” profit level
- Possible increases or decreases in prices
- Standardization or stabilization of prices
- Pricing procedures
- Cash discounts
- Credit terms
- Control of sales
- Allocation of markets, territories or customers
- Refusal to deal with a corporation because of its pricing or distribution practices
- Whether the pricing practices of any industry member are unethical or constitute an unfair trade practice
- Any standard whose purpose or effect is to prevent the manufacture, sale, or use of any product not conforming to the standard
- Any discussion of what might be construed as an agreement or understanding to refrain from purchasing or selling any materials, equipment, services, products or other supplies from any supplier or to any purchaser.
Participants in any the Coalition meeting or activity are invited to immediately raise any antitrust questions or concerns he or she may have and the President of the Coalition and all chairpersons of the Coalition committees are directed to respond to the inquiry immediately before continuing. A lawyer representing the Coalition is available to respond to any antitrust issues raised at the Coalition sanctioned meetings and activities.