United States: FTC Continues Focus On Antitrust Violations In Association Codes Of Ethics

On September 24, 2015, the Federal Trade Commission (FTC) announced a proposed consent order against the National Association of Animal Breeders (NAAB). NAAB's members collect, process, market, and sell dairy and beef cattle semen for artificial insemination (AI). In the complaint accompanying the order, the FTC alleges that NAAB's code of ethics limits competition among NAAB members by prohibiting comparative advertising and limiting price-based advertising. The FTC's proposed consent order eliminates those provisions and requires that NAAB adopt certain safeguards to avoid further potential anticompetitive conduct.

Although trade and professional association codes of ethics—and similar well-intentioned restrictions on association members, or on certificants or accreditants (if a certification or accreditation program is involved)—are generally viewed as promoting competition, the FTC and the U.S. Department of Justice (the primary federal antitrust enforcement agencies) continue to scrutinize association restrictions that directly or indirectly prevent members from competing against each other—regardless of the size of the association. In January 2015, for example, the FTC announced consent orders against the Professional Lighting and Sign Management Companies of America and the Professional Skaters Association, finding that the associations' bylaws restricted solicitation of a competing member's customers, and, in the case of the Professional Lighting and Sign Management Companies of America, the association's bylaws restricted price competition.

With respect to NAAB, the Commission's complaint alleged that the NAAB code of ethics restricted competition in those markets by regulating the advertising used by NAAB members. Specifically, the NAAB code of ethics prevents its members from:

  1. Naming members or other competitors when making statements comparing the products and services of a member with the products and services of any other member or competitor; and
  2. Publicizing or disclosing price information relating to the purchase or sale of animals.

The FTC attached to the complaint several comparative advertisements published by NAAB members to demonstrate how the code of ethics had resulted in members publishing advertisements that avoided naming competitors.

The Commission also alleged that NAAB established a dispute resolution system to enforce its code of ethics. Accordingly, the FTC found that advertising limitations in NAAB's code of ethics restricted trade by prohibiting the disclosure of truthful and nondeceptive information by restricting comparative advertising among AI organizations.

The FTC's proposed 20-year consent order prevents NAAB from regulating its members' advertising or otherwise restricting or guiding members' publication of information. In addition to standard injunction relief and notification requirements, the order also contains provisions requiring that NAAB: (1) appoint antitrust counsel for the duration of the order; (2) enable members to confidentially report violations and discipline NAAB personnel who violate the order; (3) train its board members, staff and others regarding compliance with antitrust laws; and (4) conduct a presentation on the order and antitrust compliance at the NAAB annual convention. The proposed consent order is subject to public review, with comments due by October 26, 2015.
Suggested Best Practices to Minimize Potential Legal Risk

As has been covered in previous Venable articles (available  here and here), trade and professional associations' codes of ethics and other membership restrictions have been a recent focus of FTC antitrust enforcement. However, there are a number of best practices that an association can follow to limit potential risk when implementing a code of ethics or similar program or structure imposing competitive restrictions on the association's membership, certificants, or accreditants (through the bylaws or otherwise). At the top of the list is adopting an antitrust compliance policy and working with antitrust counsel to review and clear any proposed codes of ethics or similar membership restrictions.

A formal antitrust policy should include, at a minimum, the following provisions:

  • An overview of antitrust laws and explanation of prohibited types of conduct;
  • Affirmation of the association's commitment to compliance with federal and state antitrust laws;
  • Requirements for employee training and distribution of the policy to the association's officers, directors, employees, and, in certain cases, committee members and other volunteers, consultants, and other representatives;
  • Requirements that association meetings have an agenda circulated in advance, and that minutes of all meetings properly reflect the actions taken at the meeting; and
  • A requirement that any committee, board, or staff recommendations or decisions that potentially impact competition be reviewed in advance by in-house or outside legal counsel.

With regard to membership codes of ethics and other, similar restrictions on the association's membership, the association should keep the following best practices in mind:

  • Codes of ethics or other membership restrictions should never be created or used for the purpose of raising, lowering, or stabilizing prices or fees; excluding competitors from the market; or limiting the supply of products or services;
  • There should be a valid, objective reason for each code or membership provision. The association should document the development and reasonableness of the proposed code or membership restrictions. Code of ethics, membership criteria, and similar provisions should be no more stringent or rigid than necessary to ensure that minimum acceptable levels of conduct are met;
  • The code of ethics and other restrictions on the association's membership should be reviewed and updated periodically to ensure that they are current. In addition, associations should document any and all complaints or concerns about these documents and resolve them as appropriate;
  • A code of ethics and other restrictions on the association's membership should be clear and unambiguous, reasonable, fair, and objective. Equally importantly, the process for enforcing them must be objectively and uniformly administered without subjectivity, favoritism, or discrimination. The rules of the process must be scrupulously, consistently, and objectively followed by those administering the program. Due process should be built into the program; and
  • Associations should maintain strict confidentiality with respect to all adverse allegations, complaints, actions, and proceedings that arise in connection with the process.

Finally, it is important for associations to recognize that codes of ethics and other membership restrictions can raise legal concerns in the areas of due process, defamation, and tortious interference. Common law due process, for example, requires associations to provide notice of potentially adverse decisions to members or prospective members, an opportunity for such persons to defend themselves, and an opportunity to appeal any adverse decision.

Any association that has a code of ethics or other competitive restrictions on the association's membership, or certificants or accreditants, or is looking to implement such restrictions, should take steps to ensure that the restrictions serve a legitimate and pro-competitive function, are not structured any more restrictive than necessary to further this function, and do not expose the association to potential antitrust or other legal risk. Spending time on these issues upfront can save costs and headaches in the long run.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions