Anti-Trust Considerations for Wholesale Auto Auctions and the National Auto Auction Association

Any type of gathering of cost or price information by NAAA members or by auctions in competition with each other should be undertaken only with the advice of counsel. Something which seems completely innocent on its face would expose the NAAA or some of its members to antitrust violations which could have been avoided with very little time and effort. The cost of prevention is very insignificant compared to the upside risk.

4/93 by Counsel

Trade associations, being groups of competitors joined together to discuss issues affecting the industry as a whole, provide a fertile ground for antitrust violations. Many seemingly innocent activities can subject the NAAA and its members to civil or criminal liability.

The most common antitrust problem facing trade association members is PRICE FIXING. Any agreement among horizontal competitors which tends to fix or stabilize prices, even if the prices are reduced, will usually be viewed as a violation of the antitrust laws.

Although simply discussing prices without an agreement among competitors does not violate the antitrust laws, this SHOULD be avoided because perception is frequently more important than fact, and even if you are completely innocent, THE EXPENSE OF DEFENDING A CIVIL OR CRIMINAL ANTITRUST PROCEEDING CAN SEVERELY DAMAGE OR DESTROY YOUR BUSINESS.

Discussion of prices should NEVER be undertaken without the prior advice of counsel.

You should AVOID the following topics of discussion at all NAAA meetings or gatherings of auctions you compete with:

• Current or future prices.
• What constitutes a fair profit level.
• Possible increases or decreases in price.
• Standardizing or stabilizing prices.
• Pricing procedures.
• Cash discounts.
• Credit items.
• Control of sales.
• Allocation of markets or customers.
• Refusal to deal with a company because of its pricing or distribution practices.
• Whether or not the pricing practices of any industry member are unethical or constitute an unfair trade practice.