Hotel Association of New York City
Antitrust Code of Conduct,
Compliance Policy & Guidelines
ANTITRUST COMPLIANCE POLICY
STATEMENT OF POLICY
It is the policy of the Hotel Association of New York City (“HANYC”) to fully comply with all the laws and regulations that govern our business, including the antitrust laws. The antitrust laws protect vigorous, open, and fair competition by prohibiting agreements in restraint of trade, abuse of market power, and other forms of unfair competition. HANYC expects and requires all members, directors, officers, committee members, meeting participants, and employees associated with HANYC to adhere to the antitrust laws, and to conduct their affairs in keeping with the highest moral, legal, and ethical standards. This applies at all formal and informal meetings of HANYC or related activities, including Board meetings, member meetings, educational events and community forums.
Trade associations, such as HANYC, are generally recognized as procompetitive and important resources for American business. They can, however, be subject to accusations of anticompetitive behavior. Because HANYC is by its nature an association of competitors, potential competitors, affiliates and other businesses, HANYC and its members must ensure that their activities do not lead to an illegal restraint of trade, or even create the appearance of such an anticompetitive restraint. Violations of the antitrust laws can lead to substantial civil liability, and some violations are treated as criminal acts that can result in felony convictions of both corporations and individuals.
These Guidelines are intended to provide a brief overview of antitrust laws. Keep in mind, however, that these Guidelines are not intended to be a full explanation of the laws, and do not cover every situation you may encounter. It is your responsibility to consult with counsel if you have any doubts or questions about the propriety of a particular activity.
I. Agreements or Collaborations with Competitors
Some competitor collaborations are always illegal under the antitrust laws, regardless of justification or impact. Prohibited conduct includes agreements or understandings with competitors:
- To set prices (or rates) or any other economic terms relating to the sale of services (price fixing);
- To bid, not bid, or how to bid (bid rigging) on a contract;
- To refrain from offering services of any kind, or to offer services in only a specified form.
- To allocate customers, territories, or markets;
- To not solicit each other’s customers or employees (non-solicitation agreements);
- To share data concerning wages paid, bonus structures, tip pool inclusion, production, sales, bids, costs, or other business practices, including confidential, competitively sensitive information, unless the exchange is made pursuant to a well-planned survey that has been approved by HANYC;
- To refrain from doing business with (or to “boycott”) suppliers or other third-parties;
Competitor communications and agreements are subject to heightened scrutiny under the antitrust laws. For that reason, competitors must avoid having discussions in unstructured, casual circumstances about competitively sensitive topics (e.g., rates, salaries, prices, etc.). This includes discussion of future strategic plans, pricing policies or analyses, costs, profits or profit margins, inventories, market shares or markets, customers, distribution and supply practices, market surveys and studies. Agreements on many or all of these subjects with competitors are illegal, and even discussions of them can lead to liability because a court or prosecutor infers that an agreement was reached. HANYC Members must ensure that their communications, information sharing, and other activities do not restrain competition or create the appearance of an anticompetitive restraint.
While there are many legitimate sources of competitive information, obtaining information directly from a competitor is not one of them. Accordingly, you should never contact any competitor in order to obtain competitively sensitive information.
In certain circumstances, discussions with competitors may be permissible if it does not involve the exchange of competitively sensitive information. For example, HANYC may engage in discussions with independent business about the potential for joining HANYC. Participation in certain approved trade association activities may also be permissible.
In some instances, it may not be possible to avoid unsolicited contact by a competitor. For example, a competitor may approach you during a break at a trade association meeting. Or a competitor may stray from pre-approved agenda topics during a trade association meeting and begin discussing competitively sensitive topics. In such cases, you should avoid any discussion of competitively sensitive matters, immediately voice objection to the discussion of business matters, terminate the encounter, and report the contact to counsel.
II. HANYC Membership
Trade associations are permitted to adopt objective and reasonable standards for membership. Exclusionary membership practices that affect a market participant’s ability to compete, however, may raise antitrust issues. Similarly, denial of membership or discrimination in membership terms may place competitors at a disadvantage if membership is necessary to compete in the industry on equal terms. The same general rules apply to non-members: if certain benefits or services provided by the association are essential or material to compete effectively, then the association likely will be required to provide access to those benefits necessary to effectively compete in the industry upon payment of a reasonable fee.
III. Information Exchanges
Structured properly, an information exchange program is a legitimate and valuable function of a trade association. Compilations of reasonably available public information and other data collection and statistical reporting, conducted under reasonable guidelines, will not run afoul of the antitrust laws. No new data collection or information exchange program should be embarked upon without the approval of appropriate HANYC staff.All such programs should be reviewed from time to time for antitrust concerns.
Careful language will not avoid antitrust liability when the conduct involved is illegal, but it is unfortunate when perfectly lawful conduct becomes suspect because of a poor choice of words. Careless and inappropriate language in communications can have an extremely adverse effect on HANYC’s position in an antitrust investigation or lawsuit.
In litigation, all documents other than privileged communications to or from counsel may be subject to production, including handwritten notes, cell phone text messages, and drafts of documents. The following general guidelines should be helpful:
DON’T use guilt-complex words (“Please destroy after reading”).
DO be careful of the exaggerated use of power words (This program will “destroy” competition. With this combination, we will “dominate” the market).
DON’T speculate as to the legal propriety or consequences of conduct or attempt to paraphrase legal advice.
DON’T mis-describe competition as something unexpected or improper, such as referring to rate-reductions as unethical.
DO use particular care when discussing competition and rates. Avoid giving the false impression that you are not competing vigorously and independently.
DO clearly identify the source of your information when discussing rates or plans of competitors so that there will be no implication that the information was obtained under a collusive arrangement with a competitor.
DON’T disparage the services of competitors.
DON’T say or write anything that you would not want on the cover of the New York Times or to disclose in court.
DON’T destroy any documents which you know are a subject of any government investigation or litigation.
DO prepare an agenda for each meeting, and have the agenda reviewed and approved in advance by counsel. All agenda must include an antitrust compliance reminder as a specific item.
DO keep accurate and complete minutes of all meetings will be prepared and reviewed by counsel before distribution.
VI. Government Requests for Information
It is HANYC policy to cooperate with every reasonable request of Federal, State and local investigators seeking information concerning HANYC operations for antitrust enforcement or other purposes. HANYC, however, is entitled to all the safeguards provided by law for the benefit of persons under investigation, including particularly the representation of counsel. Therefore, if the Department of Justice, the Federal Trade Commission, a member of the FBI, the Attorney General, or any representative of any government agency requests an interview, or seeks data or copies of documents, they should be told that HANYC will cooperate, but the matter must first be referred to legal counsel. This procedure should be followed whether the request is by letter or oral. All requests, written or oral, must be reported by telephone immediately to HANYC. Do not talk to government agents before notifying the HANYC so that legal counsel may be present during any interview.
VII. Legal Consequence For Antitrust Law violation
Under U.S. antitrust laws, corporations can be fined up to $100 million per violations. Courts also can impose an “alternate fine” of up to twice the gain to the perpetrator or twice the loss to the victim as a result of illegal behavior. Courts or government antitrust agencies can impose permanent restrictions limiting corporate activity. Competitors, who can show they were harmed by the perpetrator’s actions, can bring private lawsuits that may result in damages many times the size of a government-imposed fine.
Violations of the Sherman Antitrust Act are felonies which can result in imprisonment for up to ten years, fines up to $1 million, or both, per violation.
As a consequence, for an antitrust law violation, courts may issue injunctions or other orders preventing HANYC from pursuing association business and, in some instances, courts have ordered trade associations to disband.
VIII. Disciplinary Action for Violations of CareAbout Antitrust Policy
Each individual participating in HANYC activities is obligated to comply with this antitrust compliance policy and guidelines. In addition to individual liability for criminal and civil penalties for violations of applicable law, violations of the antitrust laws by participants may affect the name and reputation of HANYC and subject HANYC to litigation, investigation, and other consequences. Accordingly, HANYC may, in its discretion, impose disciplinary action for violations of the Antitrust Policy or Guidelines, up to and including cancellation of a hotel’s membership.
These Guidelines are intended to provide an introduction to antitrust concerns so that you can spot potential problems and refer such situations to appropriate HANYC persons at an early stage for proper advice. The consequences of violating the antitrust laws can be disastrous for you and for HANYC. Don’t take chances. When in doubt, check first, to avoid making a mistake.
Do not hesitate to reach out to us at HANYC at [email protected].