Antitrust Guidelines

General Comments

The Hydraulic Institute is a trade association of pump manufacturers and suppliers in North America.  As an industry organization the Hydraulic Institute serves a legitimate and useful purpose, and may legally engage in a wide variety of activities which serve the industry — so long as they do not violate antitrust laws.  Antitrust considerations require that Institute activities be structured so as to promote competition and the Institute must refrain from any activity that might be construed as unlawfully limiting competition among its members or with nonmembers of the Institute.

There are activities which the Institute can and should undertake which might later become illegal if they transform into devices for violating the antitrust laws.  Because of the difficulty of determining what activities might become violations of antitrust, the following guidelines are presented so that no member of the Institute Staff, representative of an Institute member, or Institute committee member will knowingly or willfully further any questionable activity under the umbrella of the Institute.

Representatives of members of the Institute and committee members should know enough about antitrust laws to be able to avoid doing or discussing things in their work for or with the Institute that might raise questions.  Representatives of Institute members, whether they be voting or non-voting, are urged to avoid not only actual violations of the law, but also any appearance of violation that might invite suspicion or investigation on the part of the enforcement authorities.  A reasonable amount of common sense and good judgment must be used by those who serve the Institute, so that no risk will be created of violations of law.  To protect the Institute, its members and non-members who participate in Institute activities, the Institute has adopted and observes several basic policies:

• The Institute has well-defined, constructive objectives and activities as set forth in its Constitution and By-Laws.  Institute programs and activities are designed to promote the over-all interests of the industry and the public.
• Any activities concerned with pricing or unlawful marketing practices are scrupulously avoided.
• The Institute maintains various procedural safeguards relating to its programs for promulgation of standards, its dissemination of industry statistics and the operations of all Sections and committees, among others.
• The Institute retains a General Counsel to assist the Institute staff to ensure full observance of all Institute policies and to provide guidance and protective advice as to all Institute operations from an antitrust standpoint.

• Antitrust Laws in General

  Antitrust laws are not intended to inhibit legitimate business activity.  Their objective is to help preserve a free economy by encouraging competition in the marketplace.  They outlaw artificial restraints on competition.  The laws are maintained because certain unlawful business practices can threaten to distort the marketplace.  Most experts believe that if these laws should fail to do their main job, they might be replaced by a much more inflexible system of government regulation and controls over business.

  Antitrust suits fall into several categories:

  1. Those aimed at prohibiting conspiracies, such as those to fix prices, that are subject to criminal actions.  They prohibit contracts, combinations or conspiracies in restraint of trade or commerce.  They include agreements of all kinds, whether written or oral, formal or informal, which restrain competition.
     Some of these restraints are deemed unreasonable per se, including those which have the purpose or effect of fixing prices, limiting production, allocating markets, or boycotting third parties.
  2. Those aimed at prohibiting “monopolization” of any part of trade or commerce.  Their main thrust is to prevent a single company from acquiring or holding sufficient power to control prices or to foreclose access to the market.
  3. Those aimed at prohibiting “unfair methods of competition” and “unfair or deceptive acts or practices” in commerce.  This includes various forms of “unfair” business conduct such as false advertising.
  4. Specific forms of business restraints such as exclusive dealing and “tie-in” sales, acquisitions and mergers and interlocking directorships.
  5. Those aimed at prohibiting discriminations in prices or services which have anticompetitive effects.
• Activities to be Avoided

  To avoid possible problems, the following “don’ts” should be kept in mind by all Institute Staff, representatives of Institute members, and committee members when meeting for Institute activities:

  1. DON’T agree with your competitors or anyone else:
     a.    to fix the prices of products or their conditions of sale;
     b.    to limite your production, fix production quotas, or otherwise limit the supply of any product reaching the market;
     c.    to divide up any market, either geographically or by class of customer; or
     d.    to blacklist or boycott customers, competitors or suppliers.
  2. DON’T discuss or exchange information with your competitors on any subject relating to the “per se” restraints mentioned above.  For example, don’t have formal or informal discussions on the following:
     a.    individual company prices, price changes, terms of sales, etc.;
     b.    industry pricing policies, price levels, price changes, etc.;
     c.    price differentials, price mark-ups, discounts, allowances, credit terms;
     d.    costs of production or distribution, cost accounting formulas, methods of computing costs;
     e.    individual company figures on costs, production, inventories, sales, etc.;
     f.    information as to future plans of individual companies concerning the design, production, distribution or marketing of particular products including proposed territories or customers; or
     g.    matters relating to individual suppliers or customers, particularly in respect to any action that might have the effect of excluding them from a market.
  3. DON’T meet in “rump” sessions to discuss matters relating to any of the above.  If such a discussion starts, leave the room and ask that it be noted in the minutes of the meeting that you objected to the discussion and left the meeting for that reason.

  The above comments are intended as guidelines and not as rules.  Every individual must use his or her own judgment in activities relating to the Institute.  If ever there is doubt in your mind regarding the legality of an activity or discussion — if there is a question in your mind that you might be violating the antitrust laws — discuss the matter with your corporate legal counsel or with the Institute’s staff and legal counsel before proceeding.