1 / 51

MODULE C - LEGAL

MODULE C - LEGAL. SUBMODULES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society. REVISIONS. DATE. SLIDE. CHANGE. 7/21/05. Editorial revisions made throughout to reflect ASME organizational restructuring. C2. Antitrust.

jmclelland
Download Presentation

MODULE C - LEGAL

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. MODULE C - LEGAL SUBMODULES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society ASME C&S Training Module C2

  2. REVISIONS DATE SLIDE CHANGE 7/21/05 Editorial revisions made throughout to reflect ASME organizational restructuring. ASME C&S Training Module C2

  3. C2. Antitrust

  4. OBJECTIVES This submodule will • Explain how antitrust laws affect ASME • Provide guidelines for avoiding antitrust violations in: • Codes and standards development • Conformity assessment ASME C&S Training Module C2

  5. AGENDA • The Antitrust Laws • A Brief History of ASME and Antitrust Cases • Related Antitrust Cases • General Guidelines • Basic Do’s and Don’t’s ASME C&S Training Module C2

  6. I. THE ANTITRUST LAWS ASME C&S Training Module C2

  7. ANTITRUST LEGISLATION • The Sherman Act (1890) • Regulates certain business activities in interstate commerce • Forbids “every contract, combination or conspiracy in restraint of trade or commerce” • Prohibits monopolization • Basis of most antitrust laws of today ASME C&S Training Module C2

  8. ANTITRUST LEGISLATION • Federal Trade Commission Act (1914) • Prohibits “unfair methods of competition” and “unfair or deceptive acts or practices” • The Clayton Act (1914) • Forbids specific kinds of business transactions, e.g. exclusive dealing and tying arrangements, and certain mergers, acquisitions, joint ventures ASME C&S Training Module C2

  9. PENALTIES - Government Action • Sherman Act violations considered a felony • Justice Department criminal prosecution can result in • Corporations • Up to $1 million fine • Individuals • Up to $100,000 fine • Up to 3 years imprisonment ASME C&S Training Module C2

  10. PENALTIES - Government Action • Justice Dept civil injunctive relief can result in • Sale of business or prohibition of conduct • For FTC Act violations • Administrative proceedings • Cease-and-desist order ASME C&S Training Module C2

  11. PENALTIES - Damaged Parties • Private Right of Action • Lawsuit for damages or injunctive relief • Three times actual damages proved ASME C&S Training Module C2

  12. THE COSTS OF ANTITRUST ACTIONS • Potential Costs • Conviction and/or damage award • Plaintiff’s attorneys’ fees and costs • Unavoidable Costs • Litigation expenses e.g. legal fees, expert witnesses • Lost productivity • Tarnished reputation ASME C&S Training Module C2

  13. INTERPRETING THE SHERMAN ACT • Section 1 forbids all joint action that affects interstate or foreign commerce. • Interpretations by the courts: • Most joint actions found to be legitimate when • The motive deemed worthy • Trade not unreasonably restrained • Arrangements between competitors relating to prices, volumes of production and sales territories—clearly forbidden NOTE: Proof of formal agreement not required ASME C&S Training Module C2

  14. INTERPRETING THE SHERMAN ACT • “Unreasonable” business activities • “Per se” violations are those that, if successful, seriously damage competition, for example: • Price-fixing between competitors • Agreements to divide sales territory, customers or products • Agreements to limit production • Acts that drive competitors out of market ASME C&S Training Module C2

  15. INTERPRETING THE SHERMAN ACT • The “Rule of Reason” • Requires examination of all facts and circumstances to determine: • Intent to restrain competition • Public unreasonably deprived of access to competing goods or services • Makes compliance difficult to determine ASME C&S Training Module C2

  16. INTERPRETING THE SHERMAN ACT • Section 2 • Forbids monopolization and any attempts to monopolize • Monopolization = deliberate acquisition or maintenance of power to control prices or foreclose access to a market ASME C&S Training Module C2

  17. POP QUIZ #1 Which of the following would most likely be allowed under the Sherman Act? • A friendly agreement between all competitors to put no more than two competing stores in any area. • Any joint action that has a worthy motive. ASME C&S Training Module C2

  18. ASME AND ANTITRUST • Scrutiny under the antitrust laws • Natural to societies and associations like ASME • ASME work less suspect than trade association efforts ASME C&S Training Module C2

  19. ASME AND ANTITRUST • Vulnerable ASME activities include codes & standards development and conformity assessment. • Legal, recognized as beneficial, often required by regulation • BUT may affect competition by • Limiting competition to those products that meet the standards • Increasing the cost of producing a product • Have enormous economic importance ASME C&S Training Module C2

  20. ASME AND ANTITRUST • The keys to avoiding antitrust problems are: • Ensuring a principled and controlled impact on competition • Reasonable, impartial, open programs that safeguard the rights of individual manufacturers and users • Commitment of volunteers and staff to participation consistent with antitrust laws ASME C&S Training Module C2

  21. POP QUIZ #2 Why are ASME’s codes & standards and conformity assessment activities potentially vulnerable to antitrust suits? _____ ASME C&S Training Module C2

  22. POP QUIZ #3(Extra Credit) • Name two ways in which C&S and conformity assessment activities can affect competition. • ____ • _____ ASME C&S Training Module C2

  23. II. A BRIEF HISTORY OF ASME AND ANTITRUST CASES ASME C&S Training Module C2

  24. U.S. v. ASME (1972) • Complaint • ASME accreditation available only to companies with plants in the U.S. and Canada • Foreign companies effectively prohibited from selling products in the U.S. and Canada • Outcome • ASME B&PV accreditation extended to manufacturers worldwide ASME C&S Training Module C2

  25. ASME v. HYDROLEVEL • Complaint • Two Standards Committee members issued an interpretation on ASME letterhead that effectively barred a competitor from marketing his product. • Outcome • ASME found liable under the antitrust laws for consequences of actions taken by individual volunteers acting with “apparent authority” ASME C&S Training Module C2

  26. ASME v. HYDROLEVEL • ASME’s response to the Supreme Court Decision • Enhanced due process and appeal rights • Interpretation committees • Publication and reconsideration of interpretations • “Agree to Adhere” form and Engineering Ethics material for new members • Leadership and training sessions for committee leaders and staff • “Conflict of Interest” policy ASME C&S Training Module C2

  27. III. RELATED ANTITRUST CASES ASME C&S Training Module C2

  28. INDIAN HEAD v. ALLIED TUBE & CONDUIT CORP • Complaint • Metal conduit manufacturers packed 1980 NFPA conference and voted down proposal to revise Fire Code to allow plastic conduit for building wiring • Proposal recommended by NFPA panel of experts ASME C&S Training Module C2

  29. INDIAN HEAD v. ALLIED TUBE & CONDUIT CORP • Outcome—Findings were • No “balance” of interest groups was observed. • All members of the association were allowed to vote on a proposal. • The recommendation of an unbiased panel of experts was unjustifiably ignored. • A proposal was allowed to fail without valid and objective criteria. • A manufacturer was precluded from selling its product on the open market. ASME C&S Training Module C2

  30. SESSIONS TANK LINERS v. JOOR MANUFACTURERS • Complaint • A manufacturer used his position as an NFPA Code Committee member to defeat a proposed revision allowing a competitor’s process. ASME C&S Training Module C2

  31. SESSIONS TANK LINERS v. JOOR MANUFACTURERS • Outcome: Findings of a member’s misconduct • Misrepresented data • Sent anonymous letters opposing the revision • Questioned the safety of the competitor’s process • Warned of legal implications • Called for a vote after the competitor had left the meeting, even though vote not on agenda ASME C&S Training Module C2

  32. IV. GENERAL GUIDELINES ASME C&S Training Module C2

  33. CODES AND STANDARDS DEVELOPMENT • Things to keep in mind • Adoption or revision may: • Increase the cost of a product • Make nonconforming products unacceptable to buyers. • If the standard or revision is reasonable and objective, and does not discriminate unfairly between products, it should not be found to be unlawful. • Every volunteer is responsible for ensuring that all provisions of codes and standards can be justified. ASME C&S Training Module C2

  34. (cont’d) CODES AND STANDARDS DEVELOPMENT • Ask yourself these questions: • Does the code or standard have a proper objective (e.g., safety or quality)? • Is the form the code takes suitable for the industry in question? • Is the code or standard based upon valid and objective criteria? • Is it the least restrictive standard possible? ASME C&S Training Module C2

  35. CODES AND STANDARDS DEVELOPMENT • Ask yourself these questions (cont’d): • Is the Standards Committee broadly based? • Are any potential conflicts of interest in the group considered and publicized? • Have opposing views been considered? • Are the procedures followed in developing or referencing a code or standard fair? ASME C&S Training Module C2

  36. FAIRNESS • Means the following: • Adequate public notice of the proposed adoption of a standard • An accurate record of the considerations available • A formal and publicized appeals process • Periodic review and revision of standards to reflect current technology • All industry members have an opportunity to conform to the standards ASME C&S Training Module C2

  37. ISSUING INTERPRETATIONS • Special consideration • Interpretations do not revise standard’s requirements; limited involvement by general public • Guidelines • Interpretations should not appear to have an unreasonable effect on competition. • Objectivity and technical accuracy are essential. • They must be supported by specific wording in the code or standard. • Volunteer should avoid even the appearance of conflict of interest. • Report doubts to next highest level. ASME C&S Training Module C2

  38. ACCREDITATION • Guidelines • Decision criteria must be objective, non-discriminatory and technically justifiable. • Safeguards against conflicts of interest are critical. NOTE: ASME procedures are in place for appeal upon denial of accreditation. ASME C&S Training Module C2

  39. V. BASIC DO’S AND DON’T’S ASME C&S Training Module C2

  40. BASIC DO’S AND DON’T’S Don'tattend any meetings under ASME auspices that do not a have a fixed agenda of matters to be covered. ASME C&S Training Module C2

  41. BASIC DO’S AND DON’T’S Don't take part in any "rump" sessions at which matters before a committee or other body as a whole are to be discussed. ASME C&S Training Module C2

  42. BASIC DO’S AND DON’T’S Don't discuss prices of competing or potentially competing products and don't disparage any particular product--whether or not it meets ASME standards. ASME C&S Training Module C2

  43. BASIC DO’S AND DON’T’S Don't attempt to influence ASME standards activities and programs to benefit your own business activities or those of your employer in a manner not available to the public. ASME C&S Training Module C2

  44. BASIC DO’S AND DON’T’S Don't discriminate against nonmembers of ASME or give preferential treatment to ASME Committee members. ASME C&S Training Module C2

  45. BASIC DO’S AND DON’T’S Do make your company's interest in the subject clear to other members of your committee, when revising or interpreting a code or standard. ASME C&S Training Module C2

  46. BASIC DO’S AND DON’T’S Do bring to the attention of ASME's officers or staff immediately any actual harm or potential harm related to a code, standard, revision, or interpretation. ASME C&S Training Module C2

  47. IN CONCLUSION • Points to remember • The antitrust laws are complicated. Compliance is largely a matter of common sense and fairness. Ask: • Does any action taken by ASME or its volunteers lead to an unreasonable restraint of trade? • Is any particular business hurt by a code, standard, or interpretation, when it need not be to achieve a justifiable technical or public interest objective? ASME C&S Training Module C2

  48. POP QUIZ #4 Which of the following could lead to antitrust problems? • An acquaintance mentions that a recent interpretation will have a devastating effect on a certain company. You say ho-hum and forget it. • A committee chairman uses his office to delay the approval of a revision to a standard • A committee member’s request for interpretation is moved up on the agenda, causing other items to be delayed due to lack of time. ASME C&S Training Module C2

  49. POP QUIZ #5(Extra Credit) Which of the following could lead to antitrust problems? • You are having lunch with two other members of your committee and you get into a serious discussion regarding the accreditation of a company under consideration by the committee. • You are under pressure to get your committee together and decide to dispense with a formal agenda. “Everyone knows what we have to talk about, anyway,” you think to yourself. ASME C&S Training Module C2

  50. SUMMARY • The Antitrust Laws • A Brief History of ASME and Antitrust Cases • Related Antitrust Cases • General Guidelines • Basic Do’s and Don’t’s ASME C&S Training Module C2

More Related