DOJ Antitrust Business Review Letter Confirms Trade Associations Can Remain Relevant to the Virtual Marketplace
An Association-Hosted Online Marketplace Proposes to Facilitate Deals
The DOJ’s analysis was in response to a proposal by the Association of Independent Commercial Producers (AICP), which represents companies that produce and post-produce commercials for advertisers and advertising agencies. AICP, through its wholly-owned, for-profit subsidiary, intends to develop and operate an online bidding platform that would allow subscribers (here, advertisers and advertising agencies) to solicit and receive bids from production and post-production companies for commercial advertisements.
Through the proposed online marketplace, subscribers would initiate the bidding process by uploading to the platform the bid specifications and budget parameters for each production phase of the project. Once uploaded, the subscribers would identify and invite production and post-production companies to bid for the various phases. Approved bidders could then access the online portal and submit a proposal for each phase of production for which it was invited to bid. After all bids have been received, the platform would allow subscribers to compare, assess, and award bids. The bidding platform would not retain, collect, or aggregate any bid specifications or data submitted to the platform after the bid review process is completed.
The DOJ Provides Guiding Principles for Trade Associations Creating Virtual Marketplaces
A trade association by its nature of being operated by and for its members would risk violating the antitrust laws if its online marketplace facilitates price-fixing. The DOJ said that it will not challenge on antitrust grounds AICP’s proposed online platform because it incorporated several important protections against price-fixing, which offer useful guidance to trade associations as they move to support virtual industry events and marketplaces for the near term.
1. Proper Management and Continued Oversight of Online Platform
Though certain competitive information would need to be shared as part of the bid process, DOJ’s approval was based in large part on the fact that the association had stringent firewalls in place to limit anticompetitive coordination among platform users. Bid specifications and responsive bid information would not be shared with other subscribers, bidders, or third party competitors. Instead, nonpublic subscriber data uploaded to the platform was disclosed only to a limited number of bidders that were invited to participate in the process. Moreover, bidders were unable to access data submitted by other bidders.
2. Data Privacy
The association and platform would implement measures to protect against the unauthorized use and disclosure of competitively sensitive information. Association staff who work with the proposed platform would be subject to a strict confidentiality agreement. Moreover, no data would be aggregated, retained, or collected by the association or the platform itself beyond the bid review process.
3. Voluntary and Non-Exclusive Access to the Platform
The proposal would not limit competition from other online bidding platforms or offerings. Participation in the proposed marketplace was available to both members and nonmember companies on a voluntary and nonexclusive basis. In other words, member and nonmember platform users could access both AICP’s service and online platforms offered by other associations, persons, or entities.
This DOJ business review letter highlights key elements for trade associations to consider as they invest in creating virtual marketplaces for their members in the wake of the COVID-19 crisis. Robust safeguards, like those discussed in the letter, ensure that online platforms are not used by competitors to exchange pricing, cost, sales data, or other competitively sensitive information.
Trade associations know they need to maintain strict antitrust monitoring and compliance programs, and having experienced antitrust counsel attend virtual industry meetings and assist in the creation of online marketplaces and discussion groups is critical to those compliance programs. Association staff often can benefit as well from antitrust “refreshers” to maintain proper safeguards when facilitating online meetings.