ANTITRUST CONSIDERATIONS

Maryland Chapter of the AGC of America is committed to conducting its affairs in strict compliance with the antitrust laws. Maryland AGC expects that no Maryland AGC-related activities shall create even the appearance of a violation of the letter or spirit of the antitrust laws. Below is an overview of the antitrust laws and Maryland Chapter of the AGC of America’s policy on antitrust compliance. If you have any questions concerning these laws and/or Maryland AGC’s policy, you are encouraged to contact Maryland AGC’s General Counsel.

Overview of the Antitrust Laws

A. Key Statutes and Legal Tests

The “antitrust laws” include a number of federal and state laws that foster competition and the free play of market forces. Like all other trade associations, Maryland AGC  has to pay particular attention to these two:

• The Sherman Act. Section 1 makes unlawful every contract, combination or conspiracy in unreasonable restraint of trade or commerce.

• The Federal Trade Commission Act. Section 5 makes unlawful unfair methods of competition in, or affecting, commerce.

These laws prohibit joint action between or among competitors in unreasonable restraint of competition. Moreover they presume that certain joint actions always have an unlawful effect. The joint actions presumed to restrain trade to an unreasonable degree are unlawful per se.

Other joint actions are subject to the so-called rule of reason. While not unlawful per se, they may still invite antitrust scrutiny. The rule of reason requires a balancing of several factors, such as the business reasons for the joint action, the degree to which it reduces competition and any “pro-competitive” effects it may have, including any efficiencies that it may yield (e.g. better quality or lower prices).

Maryland AGC has to be attentive to both prongs of the law. Antitrust enforcement authorities and the courts normally assume that all of the members of a trade association are competitors.

B. The Per Se Violations

It is critical to avoid the following activities because the antitrust laws presume that these activities always restrain competition to an unreasonable degree. The list of per se violations includes:

• Price Fixing. It is always unlawful for competitors to reach an agreement or understanding about prices, whether it is to raise, lower or stabilize prices. The same restriction applies to agreements and understandings regarding certain other terms and conditions of sale that affect price, such as discounts, payment terms, credit and allowances. In addition, it is unlawful for competitors to reach any agreement or understanding regarding bidding or refraining from bidding. Competitors should never discuss prices, profit margins, const factors, discounts or credit terms for any particular company or project. Nor should they discuss their future intentions regarding any of these, or non-public price schedules or notices of price changes.

• Allocations of Territory, Customers or Products. It is always unlawful for competitors to reach an agreement or understanding about:

• Any division or allocation of markets or territories;

• Any division or allocation of the customers for whom competitors will work; or

• Any competitor’s volume of work or any restrictions on the volume of work anyone intends to perform.

In addition, competitors should never discuss or exchange information regarding any of these subjects.

• Boycotts. A boycott is an agreement by any two or more parties (not necessarily at the same level of competition) to deny business, supplies or other competitive advantages to a third party. Boycotts frequently involve agreements between or among competitors to coerce their customers not to deal with another competitor, or to deny it access to crucial competitive resources. Boycotts are also per se violations of the antitrust laws. Among competitors, there should be no discussions of refusing to deal with either suppliers or customers. Nor should there be any discussion of agreements with either suppliers or customers not to deal with a competitor.

Maryland AGC Policy on Antitrust Compliance

Maryland AGC  will conduct its affairs in strict compliance with the antitrust laws. No Maryland AGC activities shall create even the appearance of a violation of the letter or spirit of the antitrust laws.

Don’ts:

• Don’t discuss prices, pricing methods, terms or conditions of sale, territories or customers with competitors.

• Don’t discuss pricing practices or strategies with competitors, including methods, timing, or implementation of price changes.

• Don’t discuss discounts or rebates with competitors.

• Don’t discuss price advertising or cooperative advertising practices with competitors.

• Don’t discuss with competitors what is a fair, appropriate, or “rational” price or profit margin for suppliers, distributors, or retailers.

• Don’t discuss with competitors whether or not to deal with certain customers or in certain markets, countries, or channels of trade.

• Don’t discuss with competitors, suppliers, or customers cutting off or not dealing with certain companies.

• Don’t agree with customers about minimum resale prices, or exert coercion on customers to resell at a certain price.

• Don’t refuse to sell one product to a customer unless it agrees to buy a second product or service.

Dos:

• Do know the purpose of Association meetings.

• Do ask for an agenda if you do not receive one with your meeting notice. If you have any questions about any agenda item, contact an attorney before attending.

• Do request that counsel be present at any Association discussion that involves potentially competitively sensitive information.

• Do seek legal review of any “code of ethics,” “industry guidelines,” “standards,” or the like sponsored which are sponsored by the Association.

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