A recent federal court decision regarding the antitrust effects
of an industry salary survey highlights just how important it is for
associations to implement and adhere to appropriate procedures for
engaging in any information exchange.
The dispute at issue in this case centered on salary surveys conducted by some 14 major oil companies. The plaintiffs in this class action case alleged that the participating companies used the information gained from these surveys to keep salaries among certain nonunion employees artificially low. A lower court had dismissed the lawsuit, saying that the plaintiffs did not plead sufficient information to merit moving forward with the case. The December 20, 2001 opinion by a judge from the U.S. Court of Appeals for the Second Circuit reinstated the plaintiffs' case, holding that the lower court was wrong in granting the oil companies' motion to dismiss.
According to the Second Circuit opinion, the surveys were conducted regularly and were frequently discussed at meetings of human resources professionals and other staff of the participating companies. The information was not available publicly and was not available to employees who held the positions that were the subject of the survey. The surveys included information about salaries paid in the past and present, as well as information about what the companies expected to pay in the future.
The court held that the case should continue — thus passing the dispute back to the lower court for further action. Some of the key reasons the court gave for siding with the plaintiffs were: (1) much of the data collected and disseminated concerned current and future salaries; (2) the data was broken down in certain ways so that it was an aggregate of as few as three companies; (3) the information was not publicly available and was not disseminated to employees; and (4) the information was discussed among participating companies at meetings.
While this dispute does not involve a trade or professional association per se, it is not difficult to see that association surveys of salaries and other sensitive, price-related information might also be collected and disseminated in a similar anticompetitive manner. Thus, it is important for associations to make certain that they adhere to the following policies and procedures that will help them avoid significant antitrust risk:
Have a third party manage the process: In a joint statement released several years ago by the U.S.
Department of Justice Antitrust Division ("Antitrust Division")
and the Federal Trade Commission ("FTC") regarding antitrust in
health care, the use of a "trade association" to serve as a third
party to collect and disseminate sensitive survey information is
specifically approved. Still, associations must take care to
ensure that those handling the raw data from the survey are
association staffers and not volunteers who work for members or
other participants in the survey.
Make the data available: While not
always required, it is often advisable for an association to make
its salary survey results and other industry research available to
both members and nonmembers.
Stick to the past: The Antitrust
Division and FTC recommend that to qualify for an "antitrust
safety zone," wage and price surveys should ask only about wages
paid or prices charged at least three months prior to the date
survey participants complete the survey. Asking about current
prices charged or wages paid will be viewed with a scrutinizing
eye by antitrust regulators and would-be plaintiffs, and surveys
of future prices or future compensation are very likely to be
considered anticompetitive.
Aggregate data only: Having at least
five different competitors respond to a survey of wage or
price-related information is recommended by the FTC and Antitrust
Division. Further, the agencies recommend that any information
disseminated is sufficiently aggregated such that it would not
allow recipients to identify the prices charged or compensation
paid by any particular company.
Avoid unregulated discussions of survey results:
Generally, the problem with salary and price surveys is not
the surveys themselves, but what competitors do with the
information they receive. Thus, it is important for associations
to take the initiative to prohibit improper discussion of the
survey results at association meetings as well as on
association-sponsored chat rooms or listservers.
The dispute at issue in this case centered on salary surveys conducted by some 14 major oil companies. The plaintiffs in this class action case alleged that the participating companies used the information gained from these surveys to keep salaries among certain nonunion employees artificially low. A lower court had dismissed the lawsuit, saying that the plaintiffs did not plead sufficient information to merit moving forward with the case. The December 20, 2001 opinion by a judge from the U.S. Court of Appeals for the Second Circuit reinstated the plaintiffs' case, holding that the lower court was wrong in granting the oil companies' motion to dismiss.
According to the Second Circuit opinion, the surveys were conducted regularly and were frequently discussed at meetings of human resources professionals and other staff of the participating companies. The information was not available publicly and was not available to employees who held the positions that were the subject of the survey. The surveys included information about salaries paid in the past and present, as well as information about what the companies expected to pay in the future.
The court held that the case should continue — thus passing the dispute back to the lower court for further action. Some of the key reasons the court gave for siding with the plaintiffs were: (1) much of the data collected and disseminated concerned current and future salaries; (2) the data was broken down in certain ways so that it was an aggregate of as few as three companies; (3) the information was not publicly available and was not disseminated to employees; and (4) the information was discussed among participating companies at meetings.
While this dispute does not involve a trade or professional association per se, it is not difficult to see that association surveys of salaries and other sensitive, price-related information might also be collected and disseminated in a similar anticompetitive manner. Thus, it is important for associations to make certain that they adhere to the following policies and procedures that will help them avoid significant antitrust risk: