One Note Enforcement: FTC Continues Pursuit of Professional Associations' Anticompetitive Codes of Ethics Provisions | Practical Law

One Note Enforcement: FTC Continues Pursuit of Professional Associations' Anticompetitive Codes of Ethics Provisions | Practical Law

The FTC settled allegations that two professional services corporations maintained anticompetitive provisions in their Codes of Ethics, marking the third and fourth time in less than a year that the FTC challenged Codes of Ethics provisions.

One Note Enforcement: FTC Continues Pursuit of Professional Associations' Anticompetitive Codes of Ethics Provisions

by Practical Law Antitrust
Published on 25 Aug 2014 • USA (National/Federal)
The FTC settled allegations that two professional services corporations maintained anticompetitive provisions in their Codes of Ethics, marking the third and fourth time in less than a year that the FTC challenged Codes of Ethics provisions.
On August 22, 2014, the FTC announced that it reached settlements with two professional services associations, National Association of Teachers of Singing, Inc. (NATS) and National Association of Residential Property Managers, Inc. (NARPM) over charges that the associations' Codes of Ethics contained provisions restraining competition. The recent challenges were the FTC's third and fourth challenges to anticompetitive Code of Ethics provisions in less than a year. On December 16, 2013, the FTC settled with Music Teachers National Association and California Association of Legal Support Professionals over allegations that those associations maintained anticompetitive provisions in their Codes of Ethics.

National Association of Teachers of Singing, Inc.

In its complaint against NATS, the FTC alleged that a provision in the NATS' Code of Ethics restrained competition by preventing members from soliciting each others' customers. NATS, a non-profit professional association of vocal arts teachers, has over 7,300 members and has state and local chapters in 14 regions. The FTC alleged that the provision unreasonably restrained competition and injured customers in violation of Section 5 of the FTC Act by:
  • Restricting and discouraging competition among vocal arts teachers.
  • Eliminating the benefits for consumers of competition among vocal arts teachers.
In its decision and order, the FTC required NATS to, among other things:
  • Cease and desist from:
    • regulating, restricting or otherwise interfering with solicitation of singing teaching work; and
    • working with any chapter that NATS knows to use similar anticompetitive restrictions.
  • Post on its website and maintain for five years:
    • an announcement regarding the change in its Code of Ethics;
    • the FTC settlement statement; and
    • a link to the FTC press release for the matter.
  • Implement and maintain an antitrust compliance program.
The FTC's complaint and decision and order for NATS closely tracked its complaint and decision and order from its December 2013 settlement with Music Teachers National Association.

National Association of Residential Property Managers, Inc.

In its complaint against NARPM, the FTC identified provisions in the NARPM Code of Ethics that restrained competition by restricting the ability of its nearly 4,000 members to:
  • Advertise to clients by limiting their ability to criticize other members or their business practices.
  • Solicit competitor members' clients.
The FTC alleged that the stated restrictive provisions restrained competition in violation of Section 5 of the FTC Act.
In its decision and order, the FTC required NARPM to, among other things:
  • Cease and desist from regulating, restricting or otherwise interfering with members' ability to:
    • solicit property management work; and
    • make statements about competitors' business practices or products.
  • Post on its website and maintain for five years:
    • an announcement regarding the change in its Code of Ethics;
    • the FTC settlement statement; and
    • a link to the FTC press release for the matter.
  • Implement and maintain an antitrust compliance program.
The NATS and NARPM orders show that the FTC remains committed to seeking out and challenging Section 5 violations in organizations' Codes of Ethics. For more information on the FTC's December 2013 challenges, see Legal Update, FTC Settles Charges with Two Professional Associations over Anticompetitive Code of Ethics Provisions. For more on violations of Section 5 of the FTC Act, see Section 5 of the FTC Act: Nonmerger Competition Enforcement Actions Chart.