Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Professional associations settle FTC charges by eliminating challenged rules, (Dec 16, 2013)

By Linda O’Brien, J.D., LL.M.

The FTC announced today that a music teacher association and a legal support services provider association have agreed to remove provisions in their respective codes of ethics that allegedly limited competition among their members (In re Matter of Music Teachers National Assn., Inc., FTC File No. 131-0118; In re Matter of California Assn. of Legal Support Professionals, FTC File No. 131-0205).

The Music Teachers National Association, Inc. (MTNA) represents over 20,000 members nationwide and includes music teachers who provide music teaching services for a fee, or are employed at schools, universities, or music studios. The FTC complaint alleges that the MTNA and its members restrained competition in violation of the FTC Act through a code of ethics provision that restricted members from soliciting clients from competing music teachers. The provision, entitled “Commitment to Colleagues” which was added by MTNA to its code in 2004, stated “The teacher shall respect the integrity of other teachers’ studios and shall not actively recruit students from another studio.” The FTC alleged that the provision restrained competition unreasonably, injured consumers by discouraging and restricting competition among music teachers, and depriving consumers of the benefits of free and open competition among music teachers.

The proposed consent order settling the FTC charges requires that the MTNA stop restricting, interfering with, advising against, or declaring it unethical for its members to solicit teaching work from other music teachers. The order also requires MTNA to maintain an antitrust compliance program.

Additionally, the MTNA is an umbrella organization for more than 500 state and local music teaching association affiliates throughout the country. Some affiliates have codes of ethics that restrain their members from charging fees that are lower than the average in the community, offering free lessons or scholarships, or advertising free scholarships or tuition. The proposed settlement requires the MTNA to stop affiliating with any association that MTNA knows engages in conduct that restricts solicitation, advertising, or price-related competition among its members.

The California Association of Legal Support Professionals (CALSPro) is a nonprofit professional association of over 350 business and individual members who provide legal support to the legal community in California. In a separate complaint, the FTC charged that CALSPro violated the FTC Act through ethics provisions that restrained its members from competing against each other in price, disparaging each other through advertising, and soliciting legal support professionals for employment. Specifically, the ethics code stated that it was unethical to: (1) cut the rates normally and customarily charged when soliciting business from a member firm’s client; (2) speak disparagingly of another member; and (3) contact an employee of another member firm to offer him or her employment with the firm without first advising the other member prior to the contact.

Under the proposed consent order settling the FTC complaint, CALSPro is required the association to cease and desist from such practices in the future. The order also requires CALSPro to maintain an antitrust compliance program.

“Competing for customers, cutting prices, and recruiting employees are hallmarks of vigorous competition,” said the Commission in a statement that accompanied the announcement of the settlements. “Agreements among competitors not to engage in these activities injure consumers by increasing prices and reducing quality and choice. Absent a procompetitive justification, these types of restrictions on competition are precisely the kind of unreasonable restraints of trade that the Sherman Act was designed to combat.”

Attorneys: Michael Belote (California Advocates, Inc.) for California Assn. of Legal Support Professionals. T. Scott Gilligan (Gilligan Law Offices) for Music Teachers National Assn., Inc.

Companies: Music Teachers National Assn., Inc.; California Assn. of Legal Support Professionals

News: Antitrust FederalTradeCommissionNews