Antitrust issues explained: in NACM Teleconference.(National Association of Cedit managment)(Wanda Borges)

Those who attended an NACM teleconference on September 20 learned some valuable information on how to steer clear of possible violations of antitrust laws. The teleconference entitled, "Navigating the Antitrust Rules: Myths to Dispel and Realities to Understand," was presented by Wanda Borges, Esq. of Borges and Associates, LLC, who is an advisor to NACM on a range of legal issues relevant to business credit.

Borges discussed the three main federal statutes that pertain to antitrust and restraint of trade practices. They are the Sherman Antitrust Act of 1890, the Clayton Act of 1914, and the Robinson-Patman Act of 1936. She said the Sherman Antitrust Act prohibits contracts, combinations and conspiracies in restraint of trade in interstate commerce or with foreign nations. The act makes it a felony to conspire to restrain trade; or to monopolize (or attempt to monopolize). The Clayton Act was passed, she noted, to correct defects in the Sherman statute and further makes it unlawful to enter into any of several specified types of prohibited transactions whose purpose or effect would be to restrain trade or injure a competitor. Robinson-Patman was partially an amendment to The Clayton Act, making it unlawful to "discriminate in price between different purchasers of commodities of like grade and quality" or knowingly to induce or receive a prohibited discrimination in price. She added that violations of this act could result in civil or criminal penalties.

Credit terms are tantamount to price, Borges noted, according to a 1980 Supreme Court decision. "Anytime you fix or adjust credit terms you are fixing a price," Borges said. She pointed out that allowing a customer to pay in 30 days gives that customer the use of that money for that period and is of monetary value. "There is a big difference between C.O.D. and credit terms."

In determining if an action constituted a conspiracy to commit an action that resulted in a restraint of trade, Borges pointed to four elements that must exist: (1) there must be knowledge of all the parities; (2) a common purpose; (3) an actual restraint of trade; and (4) intent to restrain trade. She presented an actual example--where a movie distributor, in a written communication to seven movie theaters, required a $2 increase in movie ticket prices in order to continue getting first-run movies. She noted that six of the theaters complied by raising their prices while the seventh resisted and sued the other theaters and distributor for restraint of trade. The argument presented to the court by that theater was that the economic status of the neighborhood in which the ...