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Dec 01 2017
Antitrust Compliance
Denise Burnside, CBF, A & K Railroad Materials

When we reviewed the U.S. Antitrust laws in Credit Law class, especially the Sherman, Clayton, Robinson-Patman and Federal Trade Commission Acts, it reminded me of the many hours that were spent at my work place, reviewing customer files and making computer system changes in order to better address compliance issues with these Acts.

In class we learned that antitrust laws have been around for a long time as the Sherman Antitrust Act was created in 1890. This act prohibits conspiracy or contracts among two or more persons in restraint of trade, in interstate commerce or with foreign nations. Since this statue is so hard to regulate and enforce, (per se violations), a "rule of reason testwas established. In essence, the laws attempted to establish a level playing field for all sellers. The acts outlined rules and regulations for commercial trade that prohibited exchanges of pricing information, conspiracy in restraint of trade, price fixing and group boycotting.

Several years later, the Clayton Act was created in 1914. Its purpose was to correct some errors and defects in the Sherman Act as well as supplement it. Among other things, the Clayton Act prohibited the creation of monopolies by large corporations aimed at deterring business from smaller companies or competitors.

In 1936, The Robinson-Patman Act further amended the Clayton Act to include price discrimination practices that adversely affected free competitive enterprise, to preserve competition in general, and to protect small businesses which usually find it difficult to compete with larger competitors. Specifically, price discrimination was defined in the Robinson-Patman Act as:

* Having different prices for different purchasers

Allowing similar customers to have significant differences in terms and conditions of sale

* Dealing in preferential credit terms

In addition to the Clayton Act, the Federal Trade Commission Act was passed in 1914. This Act was the broadest of all the antitrust statutes. It outlawed all "unfair methods of competition in affecting Commerce, and unfair or deceptive acts or practices in or affecting commerce.It also prohibited deceptive business approaches that are designed to deceive the public.               

Reflecting back to my workplace experience of addressing compliance to these Antitrust laws, I recall it was necessary to tackle this project in several phases. First, we had to create customer groups such as an Industry, Main Line Railroads, or Contractors, etc. Then, with the help of our IT Department, we reviewed over 5000 customers, sorting them into their appropriate customer groups. Finally, we had to establish the same terms and conditions, as well as pricing for all customers within each group.

It would be nice to report that this project resolved all issues but that is not the case. Frequently we will have large customers set up with certain payment terms, yet they try to ignore them and attempt to make us accept their Terms and Conditions. Often this requires some negotiations with the client in addition to an explanation that we are sensitive to antitrust laws which prohibit offering various terms to the same type customers. It would seem, in my opinion, the antitrust law regarding terms and conditions should be reviewed and updated to match today's market.