In 2011, the AALL Executive Board carefully considered a draft of an antitrust policy for the Association but ultimately did not adopt that draft, feeling the need for a broader knowledge base and ongoing discussion. The board subsequently approved the AALL and Antitrust Frequently Asked Questions (FAQ) in June to address questions regarding the need for a policy and to set the framework for some of the issues that such a policy might address.
AALL consulted with Stephen Armstrong, an antitrust lawyer, to develop this document. Armstrong was also the main speaker for the CRIV-sponsored program on Antitrust Considerations and the Association at the Annual Meeting in Boston, providing a basic introduction to antitrust law and responding to a set of fact scenarios with possible antitrust implications. Following is a brief summary of his remarks.
The Sherman Antitrust Act prohibits collective action by any company or association in consideration of restraint of trade or anticompetitive behavior, that is, action not benefitting consumers.
Plainly unlawful (per se) anticompetitive activities include price fixing, the agreement to limit production or capacity, allocation of customers or markets, and group boycotts or joint refusal to deal. Potentially unlawful activities depend on the facts and whether the actual impact results in harm to competition.
Possible anticompetitive issues for associations include membership issues (must have objective criteria); access to services; information collection and dissemination (e.g., pricing surveys and wage surveys that attempt to influence or direct future activities); joint purchasing; joint research activities; joint marketing or advertising; standards setting; certification; guides for business practices; and government affairs or lobbying.
Associations may be liable and required to pay damages for acts of members misusing association structure and authority in the industry to exclude a competitor or restrict competition in the industry (e.g., standards setting to exclude competitors under a structure condoned by the association).
Q1: Many law libraries participate in consortial arrangements such as NELLCO; why does this not give rise to antitrust concerns (or should it)?
A: Consortia are not considered to be unlawful or in violation of antitrust if they do not effectively control or dictate prices of the seller. As long as the agreements are not industry-wide, are open to partners, and are not intended to exclude specific vendors, they should not present a problem.
Q2: What if librarians from three state university law libraries in the same region, facing large budget cuts, decide to approach a database vendor as a group to renegotiate a database access agreement for all the libraries? Would this raise any antitrust concerns?
A: This is not all that different from the previous question. As long as the volume of impact in the marketplace is limited to a fairly small number of buyers, it is considered localized and not anticompetitive. In this scenario, the libraries are a small part of the marketplace, and they have geographic proximity and probably common interests with respect to the local budgeting environment, funding sources, etc. This provides a way for buyers to develop information on a joint basis and go to sellers or a group of sellers to negotiate a better deal. Joint purchasing arrangements are common in many industries and are generally considered pro-competitive.
Q3: On the CRIV Blog a CRIV committee member provides examples of how vendor Y’s practices violate the AALL Guide to Fair Business Practices for Legal Publishers. The blogger then lists several alternative information sources available from other vendors and questions why libraries continue to do business with vendor Y when similar information is available from vendors who comply with the Guide to Fair Business Practices for Legal Publishers. What antitrust concern does this raise?
A: There are several elements here. The forum is set up to share information broadly. If an individual decides to post to the forum, as long as it is an individual posting and there is not a response that proposes collective action, it is independent, unilateral conduct and merely provides information. If people then act independently, you don’t have joint action. The question also raises the role of the Guide to Fair Business Practices. If AALL didn't already have a history of working with fair business practices, then the development or marketing of a guide might be considered problematic. But there is a history, and the Federal Trade Commission (FTC) itself recognized the consumer protection aspect of fair business practices when it established the (now defunct) Guides for the Law Book Industry. The FTC’s stance seems to indicate support for the exchange of information between buyers and sellers and the development of guides to educate buyers and sellers.
Q4: During an AALL Annual Meeting, several academic law library directors gather for an informal unplanned dinner at a nearby restaurant. They share information about how much they each pay to access a database from vendor X in order to determine if their individual libraries are getting a good deal from the vendor. Does this raise antitrust concerns for the Association? For the library directors individually? For their institutions?
A: This is a classic description of a scenario that makes antitrust lawyers uncomfortable because it can lead to an anticompetitive market. As long as the individuals are merely engaged in sharing information and it is only "several" academic law library directors, this is not a large enough group to raise a problem. If they were all board members of an association, then you have to be concerned about perception. Generally speaking, though, until there is an agreement to take action in restraint of trade, this situation should not raise antitrust concerns. But individuals should be careful not to commit their employers to anything that would lead to problems. As written in this scenario, the fact of sharing information is not in itself a problem as long as it doesn't lead to collective action.
Q5: AALL has vendor members as well as library members. How does vendor participation in committees and other organizational activity affect the antitrust analysis?
A: Having active vendor participation and involvement should result in a situation where you have a dialog. It might involve some tensions, but with everyone in the same room, it should be a healthier situation. It also allows better information flow for both buyers and sellers.
Q6: At a vendor roundtable discussion at the AALL Annual Meeting, an AALL member who is not a part of any committee or other organizational unit of AALL comes to an open microphone and states that libraries should refuse to purchase from vendor X if it does not provide more transparent pricing information for its products. If the librarian includes a disclaimer that he or she is not speaking on behalf of AALL or his or her institutional employer, would this remove antitrust concerns for AALL? For the employer? For the librarian?
A: This scenario blends information exchange with a call to action. It’s a paradigm that antitrust lawyers deal with - individual statements can lead to group action even if such action is not explicitly proposed. This is such a real scenario, and you can envision this happening. But as long as it is an arm’s length discussion and the responses are individual decisions and you don't have a boycott, you don't have a problem. If the speaker makes a disclaimer, it at least recognizes on the speaker's part that there is a possibility of the comment being misconstrued, but it is far better in an open forum not to invite everybody to gang up. When you start inviting people to joint action, an antitrust lawyer is going to suggest that you go off and make your own decision. It is inevitable that people are going to share their concerns, but as long as you have an open and dynamic exchange of information, it is probably not going to cause any headaches.
The recorded program and the handouts from the program are available on AALL2Go. The recording includes Armstrong’s presentation slides, and the handouts include a timeline of activity related to the FTC’s Guides for the Law Book Industry and the antitrust FAQ. I encourage all members to learn more about antitrust and the association by listening to the program.