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The perils of mailing lists2001 Twice I've been on mailing lists with other web professionals when the issue of rates has come up. The first time, it was me who caused a furore; I replied to a question from someone in Argentina with a suggested price for their proposed service. The subsequent events determined what I did the next time the subject of rates came up on another mailing list 20 months later. I did a lot of reading and eventually changed my mind about discussions of rates. As they say, I Am Not A Lawyer, and this article is not legal advice, but I now believe that it is not safe to discuss rates on a mailing list with other professionals. The nature of mailing lists and online discussions is that people will often try to change someone else's opinion through a reasoned debate. In the case of U.S. antitrust law I'm afraid that, unless you're in the legal profession, your opinion of how things should be or must be probably won't get you very far in a court room. Given that there's a chance that just witnessing a discussion of rates is illegal, I'm making my notes available as a starting point for your own reading on the subject. When I was first told that it was illegal to discuss rates on the list, because it could be seen as price-fixing, my initial thoughts were:
and, finally,
I couldn't find any legal documents specifically about electronic mailing lists. However, I did read enough from expert sources to create sufficient doubt in my initial "rational" reaction. These notes were initially prepared March 2001; the links were checked and updated in December 2002. I am not a lawyer. These notes don't summarise the whole subject, but they can act as a starting point. Nevertheless, you must do whatever extra reading or consulting with legal advisors you need to in order to satisfy yourself. Is it really illegal to discuss rates on a mailing list?I started out on my hunt for reliable information by questioning the leap from this quote from the HTML Writers Guild Pricing FAQ[2]: "The U.S. law specifically makes discussion of pricing between competitors (all or some) a federal offense." to this conclusion from the same source: "Any discussion of pricing by a group of people within the same industry is illegal in the U.S.." Perhaps the leap can be made by just these four compelling quotes by three lawyers: Richard M. Steuer[3], 1999: "[...] the courts have developed a doctrine of 'per se' illegality which conclusively presumes such practices to be unreasonable. In other words, when a per se offense (such as price fixing among competitors) is charged, all the government or the private plaintiff must establish to make out a Section 1 violation is that the defendant has, in fact, engaged in the proscribed practice; illegality follows as a matter of law, no matter how slight the anticompetitive effect, how small the market share of the defendants, or how proper their motives."
"A famous story locally in Washington DC involved a group (substitute 'guild') of real-estate brokers who went out to dinner together to celebrate a birthday of one of them. At the end of the dinner, one broker announced that he was raising his commission from 5% to 6% and wanted them to hear it from him before reading about it in the trade press. No further discussion ensued. Over the next year, several of the others also raised their commissions to 6%. All of them were indicted, even those who did not raise their prices, for price fixing. Criminal indictments, I might add."
"The legal way to do this is to have a journalist independently investigate and post prices. There just can't be a discussion between those who may otherwise be competitors. And for those who have argued and will argue we're not competitors the prosecution can make a prima facie case that you are and then shift the burden to you to prove otherwise, and then we're talking the big bucks in legal fees Jack mentioned."
"When does a discussion imply an agreement? When a judge says so. Sorry, there is no easy response to that. But the issue really is, what is the pro-competitive justification for such a discussion? How does it help competition for competitors to discuss how to price for their services and to discuss specific prices? Sure, it makes it easier for one or another of you to determine whether your price is fair, but that justification will be condemned. Indeed, it is fair to say that the DOJ, FTC, state attorneys-general will be hard-pressed to find any justification for such a discussion." The following extracts aren't intended to summarise the source documents, let alone antitrust law. They are included here without comment as starting points for your own investigation of this subject. Source: Federal Trade CommissionSee Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws. http://www.ftc.gov/bc/compguide/ "A practice is illegal if it restricts competition in some significant way and has no overriding business justification. Practices that meet both characteristics are likely to harm consumers - by increasing prices, reducing availability of goods or services, lowering quality or service, or significantly stifling innovation." [7] "Agreements among parties in a competing relationship can raise antitrust suspicions. Competitors may be agreeing to restrict competition among themselves." [8] Source: FindLaw ProfessionalsSee Executive Summary of the Antitrust Laws by Richard M. Steuer of Kaye, Scholer, Fierman, Hays & Handler, LLP (1999) http://profs.lp.findlaw.com/antitrust/ "Section 1 of the Sherman Act prohibits 'every contract, combination... or conspiracy in restraint of trade...' Such a sweeping interdiction, if applied literally, would invalidate practically every commercial arrangement. Accordingly, as early as 1911 the Supreme Court ruled that, despite the all-embracing statutory language, the Sherman Act reached only those trade restraints which are unreasonable." [9] "[...] the courts have developed a doctrine of 'per se' illegality which conclusively presumes such practices to be unreasonable. In other words, when a per se offense (such as price fixing among competitors) is charged, all the government or the private plaintiff must establish to make out a Section 1 violation is that the defendant has, in fact, engaged in the proscribed practice; illegality follows as a matter of law, no matter how slight the anticompetitive effect, how small the market share of the defendants, or how proper their motives." [9] "Horizontal restraints of trade - that is, concerted actions among entities in actual or potential competition with one another - have traditionally been considered the most serious of antitrust infractions and constitute that category of violations most susceptible to criminal penalties." [10] "[...] competitors may not agree on the actual prices they will charge or pay for a product or service. But this self-evident example is only the beginning. As the Supreme Court has made explicit, horizontal agreements that affect prices are as unlawful as those that actually set them. Competitors may not agree on a price range within which they will compete, on a common list or book price from which discounts are free to vary, or on the discounts themselves." [10] Source: AntiTrust.org"Do not discuss prices with your competitors. That is one of those black-and-white areas. The enforcement authorities can be counted on to bring a criminal prosecution if they learn that you have met with your competitors to fix prices or any other terms of sale. Jail time is increasingly common. [11] Source: HTML Writer's GuildSee the Pricing FAQ. It includes answers to questions such as:
http://www.hwg.org/resources/faqs/priceFAQ.html Source: Antitrust Division - Department of Justice (U.S.)"American consumers have the right to expect the benefits of free and open competition, i.e., the best good and services at the lowest prices. [...] The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and subject to criminal prosecution by the Antitrust Division of the United States Department of Justice." [12] References
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