The Federal Trade Commission issued a decision last week illustrating that even sophisticated executives need reminding that emails and texts will be “Exhibit A” of an antitrust violation.
After a multi-week trial, an FTC Administrative Law Judge found in an initial decision that two dental-supply companies unlawfully conspired by jointly refusing to deal with or offer discounts to dentists’ buying groups (GPOs). The decision in FTC v. Benco Dental Supply et al. is a reminder that competitors are prohibited by the Sherman Act from agreeing not to deal with certain customers – a classic group boycott, which is a per se (i.e., automatic) antitrust violation.
The decision, available here, offers colorful examples for how not to communicate with and about your competitors. The decision is long and detailed, but pages 6 to 10 of the complaint succinctly highlight what seems to have most effectively proven the case against the defendants: emails and texts between executives that may have prompted one company to follow the other in how to deal with buying groups. In one email example, an executive encouraged his counterpart at a competitor to tell a third competitor to “knock this s*** off” by not discounting to buying groups. In another, in response to a “heads up” from his competitor about rumors in the market that he was offering discounts to buying groups, an executive replied, “Don’t want to call because it might be construed as price fixing.” This was punctuated by a text message from an executive to one of his staff, informing him that “we’ve signed an agreement that we won’t work with GPO’s.” Other emails also indicated that sales personnel were talking with their competitors’ counterparts about not dealing with the buying groups.
The decision provides a great opportunity to remind executives, sales and marketing teams, and other staff about the risks of communicating with a competitor about market strategies, and that compliance with the antitrust laws can be greatly enhanced if everyone were to assume their communications with a competitor will one day be viewed in the worst light by a judge.
