United States: FTC Challenges Trade Association's Rules Restricting Access To Jointly Developed Technology

On August 18, 2017, the Federal Trade Commission (FTC) announced a consent decree settling charges that the National Association of Animal Breeders (NAAB) violated Section 5 of the FTC Act by adopting restrictions on its members' use of certain technology rights held by NAAB. 1 The technology, jointly developed by NAAB and the Department of Agriculture, is a genetic testing technology that predicts the transmission of commercially valuable traits by cattle sold for breeding. While NAAB had exclusive rights to the technology, the FTC alleged that it "acted as a combination of its Members" when it prohibited individual members from using the technology with respect to bulls they did not own, at least in part. The FTC alleged that NAAB's rules were a method of unfair competition under the Act that unlawfully "impeded" the development of a market for the sale of access to the technology and "dampened" competition in cattle transactions conducted without access to the technology by keeping the price of bulls from being driven "toward its true value."

This enforcement action raises important issues for trade organizations and professional associations as well as others that engage in competitor collaborations and joint research and development efforts.


NAAB is a non-profit trade association of firms that provide cattle artificial insemination, comprising about ninety percent of that market, according to the FTC. 2 In 2006, NAAB entered into a Cooperative Research and Development Agreement (CRADA) with the Department of Agriculture (USDA) for the development of a technology that predicts the transmission of commercially valuable traits by dairy bulls called genomic predicted transmitting ability (GPTA). According to the Complaint, NAAB provided funding and logistical support to a USDA laboratory, which substantially developed the technology. The FTC characterized GPTA technology as the best indicator of bulls' genetic merit, noting that the "traditional" method to estimate bulls' genetic merit is to observe the milk production of the bulls' offspring and takes four to five years. 3

NAAB had exclusive access to the GPTA technology under the CRADA from March 2008 until February 2013. 4 In late 2008, the FTC alleged that NAAB acted "as a combination of its members" to pass a resolution requiring members to have an interest in a dairy bull before being allowed access to the GPTA of the bull through NAAB. 5 The FTC also alleged that, in effect, members were prohibited from selling access to GPTA technology to non-members. 6 These restrictions remained in effect until NAAB's exclusivity period ended in 2013, after which time non-members could purchase GPTA through an industry organization for a fee. 7

FTC Enforcement Action

The FTC challenged NAAB's GPTA restrictions as a method of unfair competition in violation of Section 5 of the FTC Act. 8 The FTC alleged that NAAB's restrictions stifled competition in the sale of bulls because they allowed NAAB members to acquire GPTA of a particular bull only after purchasing an interest in the bull and "impeded" development of a market for NAAB members selling GPTA access to nonmembers. According to the FTC, this "dampened competition among NAAB Members when buying dairy bulls" as "[a]ccess to GPTA information would tend to drive the price of the bull toward its true value." 9

NAAB settled the charges by agreeing to certain conduct for a period of twenty years. Specifically, the consent decree prohibits NAAB from restricting its members' ability to sell technology or information from "research projects," defined to include both CRADA research conducted with a government agency as well as any research and development conducted by NAAB independently. 10 The consent decree also prohibited NAAB from adopting any regulations that might limit price-related competition among its members. 11 However, the consent decree specifically noted that NAAB would still be permitted to engage in "reasonably necessary" conduct to achieve "procompetitive benefits or efficiencies." 12

The FTC also required that NAAB maintain an antitrust compliance program until 2020 and provide the agency with notice if it adopts or modifies any regulations that might restrict the ability of its members to sell or use technology resulting from NAAB research projects. 13

Lessons for Trade Associations & Competitor Collaborations Generally

Trade associations serve an important, procompetitive purpose. They often allow for development of new technology, standards, or better sources of market information and benchmarking services, all of which can promote and enhance competition. However, when competitors collaborate, whether through a trade association or other means, they need to be careful not to enter into restrictive agreements that outweigh such procompetitive benefits and violate the antitrust laws.

The NAAB case presents three key lessons that should be heeded by trade associations, their members, and competitors otherwise engaging in collaborations and other joint development activity.

  • Restraints ancillary to procompetitive benefits must be narrowly tailored. The Antitrust Guidelines for Collaborations Among Competitors, published jointly by the US Department of Justice (DOJ) and the FTC, recognize that some restrictions on access to jointly developed technology or benefits encourage procompetitive research and development efforts, but these restrictions must be balanced against the procompetitive benefits. In particular, the DOJ and the FTC will consider whether restraints are "reasonably related to the integration and reasonably necessary to achieve its procompetitive benefits" in determining whether a violation of the antitrust laws has occurred with a competitor collaboration. 14

Trade associations and individual market participants alike need to make sure that any competitor collaborations properly balance procompetitive benefits against potential restraints on competition. Here, NAAB and its members were arguably engaged in procompetitive activities by conducting joint research and development with USDA. However, NAAB's restraints appear to have gone too far in the FTC's view, despite only being in existence during the period of NAAB's exclusive rights to GPTA technology. Notably, the FTC did not go so far as to say NAAB could impose no restrictions on GPTA access—the consent decree made specific allowance for restraints reasonably necessary to achieve the research project benefits, consistent with the Guidelines. Accordingly, trade groups and others engaged in competitor collaborations should thoroughly consider the scope of any restraints when first establishing a joint program and potentially revisit existing programs periodically to ensure compliance with the antitrust laws.

  • Trade associations remain subject to the antitrust laws, the same as their members. While a professional organization or trade association is typically not an active market participant, it is important to remember that its activities still can have an impact on competition, in part, due to the make-up of its membership. As a result, trade associations can be directly liable for violations of the antitrust laws in the same manner as their members. Indeed, the FTC's Complaint noted that when NAAB passed the resolution restricting access to the GPTA, the organization "acted as a combination of its Members." 15

And this is not the first time that NAAB policies have been subject to antitrust scrutiny. In 2015, the FTC challenged NAAB's Code of Ethics as improperly restricting competition among members by prohibiting certain advertising practices.16 Trade associations must carefully consider the antitrust implications of their rules and programs, particularly when access to membership benefits can have a significant impact on competition in the members' industries.

  • Heightened scrutiny may occur when government resources are involved. In its Analysis to Aid Public Comment, the FTC characterized this case as "illustrating" that "industry groups that obtain valuable and unique technology from the government may not establish rules or regulations regarding that technology that unreasonably restrain competition." 17Thus, it appears that the fact that the GPTA was jointly developed by USDA may have led to heightened scrutiny in this case.

Notably, the case presents somewhat atypical theories of harm to competition. First, the FTC's concerns were framed around a potential market for the sale of GPTA information to non-members. Although the antitrust authorities are clear that they will challenge behavior that reduces potential competition, this case is notable in that it does not present allegations that NAAB members actually had plans to enter this type of business. Second, the FTC alleges that selling the bulls "in this environment–without the NAAB Member or the Non-Member knowing the GPTA–dampened competition," specifying that the bulls would not be sold for their "true value." 18 Typically, US antitrust enforcers are not concerned with having any particular price value prevail. Rather they typically focus on whether there is an effect on competition between parties. Here, it is not clear from the Complaint how competition, rather than particular prices, was affected given that the FTC seemed focused on a situation where all parties to a potential bull transaction lacked the GPTA information.

The proper scope of "unfair competition" under Section 5 of the FTC Act has been the subject of renewed debate in recent years. In 2015, the FTC issued a policy statement that described Section 5 as encompassing conduct that "contravene[s] the spirit of the antitrust laws" and said that the FTC would be more likely to bring Section 5 cases when enforcement under the Sherman or Clayton Acts would be insufficient.19 While the FTC might have brought a Section 5 case here regardless of the role USDA played due to a perceived impact on competition among the NAAB members, its comments in the Analysis to Aid Public Comment suggest that the involvement of the USDA may have contributed to a heightened concern. Thus, trade associations and their members should exercise additional caution when designing membership programs, activities, or benefits that rely on or stem from government resources to ensure their compliance with the antitrust laws.


1 Federal Trade Commission, National Association of Animal Breeders, Inc. Agreed to Refrain from Adopting Rules that Restrict Competition Among Members, FTC, Aug. 18, 2017, (NAAB GPTA Press Release).

2 Complaint, at 1-2, In the Matter of National Association of Animal Breeders, Inc., FTC 151-0135 (Aug. 18, 2017), (NAAB GPTA Complaint).

3 NAAB GPTA Complaint, at 3; Analysis to Aid Public Comment, at 4, In the Matter of National Association of Animal Breeders, Inc., FTC 151-0135 (Aug. 18, 2017), (NAAB GPTA Analysis).

4 NAAB GPTA Complaint, at 3.

5 The member could either (1) own the bull; (2) have an agreement to purchase at least 30% of the bull; (3) have a lease on the bull; or (4) have an exclusive marketing agreement for the bull. NAAB GPTA Complaint, at 3.

6 NAAB GPTA Press Release ("NAAB's Board of Directors adopted a resolution that remained in effect for five years and required that only NAAB members could obtain GPTAs.").

7 NAAB GPTA Complaint, at 4.

8 NAAB GPTA Analysis, at 2.

9 NAAB GPTA Complaint, at 3.

10 Decision and Order, at 2-3, In the Matter of National Association of Animal Breeders, Inc., FTC 151-0135 (Aug. 18, 2017), (NAAB GPTA Order).

11 NAAB GPTA Order, at 2.

12 NAAB GPTA Order, at 3.

13 NAAB GPTA Order, at 5.

14 Fed. Trade Comm'n and US Dep't of Justice, Antitrust Guidelines for Collaborations Among Competitors, at 3.2 (2000).

15 NAAB GPTA Complaint, at 3.

16 Analysis to Aid Public Comment, at 1, In the Matter of National Association of Animal Breeders, FTC 141-0215 (Sept. 24, 2015); Complaint, at 3, In the Matter of National Association of Animal Breeders, FTC 141-0215 (Nov. 6, 2015). To resolve these claims, NAAB signed a consent decree and agreed to lift some of the restrictions on its members' advertising practices. Decision and Order, at 3, In the Matter of National Association of Animal Breeders, FTC 141-0215 (Nov. 6, 2015). NAAB was also required to design and maintain an antitrust compliance program, including providing annual training to its directors, officers, and employees. Id. at 5.

17 NAAB GPTA Analysis, at 1.

18 NAAB GPTA Complaint, at 3.

19 Statement of Enforcement Principles Regarding "Unfair Methods of Competition" Under Section 5 of the FTC Act, Federal Trade Commission, Aug. 13, 2015.

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