The two current commissioners of the Federal Trade Commission (FTC) approved another final order and consent agreement with a trade association, this time with the National Association of Animal Breeders, Inc. (NAAB).

WHAT HAPPENED:

• NAAB is a non-profit corporation of approximately 24 member businesses that compete to sell dairy cattle semen to US dairy farms for artificial insemination of dairy cows. Together, the NAAB membership accounts for more than 90 percent of sales to US farms.

• In 2006, NAAB entered into an agreement with the United States Department of Agriculture (USDA) to develop genomic testing of dairy bulls to predict a bull’s ability to pass along commercially important traits to its daughters, like high milk yield.

• The new technology, called Genomic Predicted Transmitting Ability (GPTA) was developed by mid-2008.

• In late 2008, NAAB implemented rules limiting access to the GPTA technology. Specifically, (1) only a NAAB member could obtain a dairy bull’s GPTA; and (2) the NAAB member obtaining a GPTA must have some ownership interest in the dairy bull.

• These rules prevented the GPTA technology from being used as a means to value a dairy bull prior to its purchase because it did not allow individuals without a preexisting ownership interest in a bull to obtain GPTA information. The FTC believes this rule impeded competition and hindered the use of technology that would have allowed a bull’s market price to more accurately reflect its commercially important traits. The rules expired in February 2013.

• The Proposed Order requires NAAB to cease and desist from limiting a member’s access to any technology resulting from a research project that the association is a party to or conducts, and from interfering with price-related competition among its membership for the sale or acquisition of bulls or bull semen. In both cases, NAAB is not prohibited from engaging in any conduct that is reasonably necessary to achieve procompetitive benefits or efficiencies. The Order also requires NAAB to post certain information on its website and undertake certain antitrust compliance measures.

WHAT THIS MEANS:

• This decision further highlights the FTC’s continued enforcement relating to trade association rules that it sees as unreasonably limiting competition. In particular, if a trade association acquires new or unique technology, it should be wary to implement rules surrounding that technology that could be viewed as restrictive or impeding competition.