The AALL Executive Board is about to act on a proposal that may prevent this Caucus from organizing in any form, whether within AALL or independently. The Board will vote on a proposed “AALL Antitrust Compliance Policy” at its July 21st meeting in Philadelphia. (I copied this document from the Board’s posted agenda draft of June 15, 2011.) We ask that the Board delay a vote on the policy, whose consequences will affect all AALL members, not just those who belong to our Caucus.
The policy represents an interpretation of Section 1 of the Sherman Antitrust Act, banning concerted action in restraint of trade. Its drafters target price-fixing as a special concern. According to their “Antitrust Guidelines,” “[p]rice-fixing is a very broad term which includes any concerted effort or action which has an effect on prices, terms or conditions of trade, or competition.”
To enforce compliance, the policy requires rigorous oversight of all AALL entities. AALL entities must submit meeting minutes “to the AALL office” and provide to the Executive Board “written periodic reports” on “all pending matters, requests for action and approvals for preliminary decisions.” AALL members can not have “any discussion which may provide the basis for an inference that the members agreed to take any action relating to prices, services, production, allocation of markets or any other matter having a market effect.” (AALL initially asked members to follow a similar restriction when joining AALL’s digital “communities.”) Members can not have prohibited discussions at “formal meetings and informal gatherings. In fact, informal gatherings of association members are often looked upon with suspicion by the government.”
The policy also includes “some examples” of what AALL members can not discuss – “either virtual or live” – at Association meetings. Among other examples, members may not “discuss current or future prices,” and we must “be very careful of discussions of past prices.” We may not discuss “pricing procedures.” It is unclear whether, or when, informal member discussions – “live or virtual” – would also trigger these and other of the specified bans. Even the possibility of violating these restrictions would have an obvious chilling effect on informal discussion by members who wish to retain their membership. They could secure advance authorization from AALL headquarters whenever they discuss business practices of legal-content vendors. “It is important that members contact the association for guidance if they have even the slightest qualms about the propriety of a proposed activity or discussion.” But how can members anticipate whether they should have qualms of the kind AALL’s counsel would have? As a result, members would have at least an incentive to avoid such informal discussions altogether. (Some members may, of course, prefer to risk disciplinary actions up to revocation of their membership, though the policy has no provision on member penalities.)
The policy appears to have at least two antecedents. The first involves a canceled, SCCLL-SIS program that Ken Svengalis was to present at the 2007 Annual Meeting. The program concerned recommended responses to skyrocketing prices in the legal publishing industry. Ken expected to include economist Mark McCabe, who received AALL’s support for his research on anticompetitive pricing effects of the Thomson-West merger. AALL canceled the program because its description had the word “boycott”: AALL’s counsel found that any boycott reference in an AALL program incurred significant risk of antitrust violation. (Betsy McKenize describes the details here. Commenting on the program’s cancelation, Ken said he talked to Department of Justice Antitrust Division attorneys, and they advised him that the Department would intervene only if AALL members undertook to organize a boycott. ) Responding to member inquiries about the cancelation, AALL described its broader antitrust concerns with language later used in the policy. Our Caucus may have also influenced the policy’s development. We submitted our initial statement of purpose in May 2011. AALL raised policymaking and antitrust objections that the policy appears to formalize.
At our July 25th meeting, our Caucus had plans to decide whether to stay within AALL or to organize independently. If we decide to become an AALL Caucus under a new statement of purpose, we would recommend that AALL petition government bodies for remedies of antitrust and unfair business practices by specific legal information vendors. Although AALL has conditionally approved this statement of purpose, the policy suggests that AALL would render it moot. Our recommendation of a petition may never receive approval as an agenda item for a Board meeting. The Board can discuss “only approved agenda items.”
A reasonable interpretation of the policy shows how it would be pointless for us to organize as an AALL Caucus, unless the Board clarifies the policy or we plan to change it by a membership resolution. If successful, any petitioning we recommend to AALL would have a proscribed “effect on prices, terms or conditions of trade, or on competition.” Under the policy, we may be understood to recommend collective action with an intention to influence market conditions or competition – not directly, of course, but through government intervention. To prepare our petitioning recommendation to AALL, we would risk violating the policy, because we would need to discuss past, current, or future prices of legal subscriptions, among other “conditions of trade.” How could we prepare a recommendation under this circumstance? And even if we organized independently, as AALL members we would be associating “informally” to undertake actions, such as government petitioning, that the policy may be understood to prohibit. We would then risk AALL’s refusal to allow our preparations, disciplinary warnings, or revocaion of our membership.
A body of case law – the “Noerr-Pennington doctrine“ – establishes our right to petition our government even if market participants perceive our petitioning as a restraint of trade under the Sherman Antitrust Act. Although the doctrine has exceptions, they do not apply to the action we would pursue as an AALL Caucus.
A recent Vendor Colloquium Action Plan includes a recommendation to develop “an AALL Vendor Relations policy related to antitrust law,” and to engage “outside counsel as needed.” We had no advance notice that the Board would vote on such a policy so soon; in fact, we did not become aware of the policy until July 16th, a day after the deadline for members to comment on the Action Plan. Of course, we do not know that we have correctly interpreted the policy. Yet a reasonable interpretation raises troubling questions. We therefore ask that the Executive Board suspend any action on the policy until AALL’s members have full opportunity to request clarifications and to submit comments on its ramifications.