Hunting in packs works out well for wolves. The across-the-board cooperation of the group is key to getting wolf business done. In human endeavors, such as running a small business in the US, conspiring with your competitors as a pack to influence the market can lead to serious trouble. Wolves don’t have to worry about the Federal Trade Commission (FTC) or the Department of Justice (DOJ). You do. Read on to learn about Lone Wolf strategies that will protect your business from violating anti-trust laws.
Never discuss prices with the pack.
An innocent question from a competitor about how much you charge for a product or service can turn into a scenario that puts you at risk. Normally, it might seem silly to be paranoid. But the DOJ takes price fixing seriously.
It’s perfectly acceptable for you and a competitor to individually raise or lower prices based on market forces such as fluctuating costs of materials or ingredients. It is perfectly acceptable for you to see your competitor’s glaring sale sign and unilaterally decide to lower your prices to meet their sale prices. It is also fine to offer to “meet or beat” competitors’ pricing if customers bring in proof like a sales flyer or newspaper ad.
You get into trouble when you aren’t making these pricing decisions on your own, but based on an agreement that you’ve made with other competitors. For example, if you and the other florist in town feel you are not being paid enough for your bridal bouquets, and you both agree to raise your prices to an agreed upon, fixed minimum price, you and your competitor are violating anti trust price-fixing laws.
You can howl with the pack but don’t stay for dinner.
Sometimes competitors will enter into agreements to share advertising. Is this acceptable?
Let’s say you own a building supply store. The manufacturer of the bagged concrete mix you sell wants to feature all of the businesses that sell its product in a series of ads. Each advertisement will feature a different hardware store or building supply store. Should you pass up this great opportunity for business exposure? Of course not.
As long as the ad-sharing agreement does not include any price-fixing requirement, you’re fine. If, however, the concrete supplier demands that all stores in the ad series sell the product for a set price, or demands that each store only deliver product to a designated geographical or other territory, that ad-sharing agreement is in violation of the law. You can’t collude on pricing and you can’t divide up markets like a slaughtered beast.
Hunt alone when it comes to boycotts among trade groups.
You, as an individual business owner, can choose to boycott a supplier, to sell only to a certain clientele or to refuse to sell below a certain price. You are also free to join trade groups that advance your industry or lobby on its behalf.
Just don’t join any group boycotts. More than a few groups of competitors in the same field have been found guilty of illegally boycotting or refusing to sell products or provide services unless certain conditions are met. Doctors have formed groups denying coverage to patients until prices for medical services were raised. Attorneys have refused to provide legal aid to indigent clients unless states agreed to pay higher legal fees. Competing suppliers have joined forces and refused to sell to certain nations to influence legislation or tariffs they found restrictive. In each case, the groups were found guilty of conspiring to influence the market through unfair means.
Be a lone wolf when it comes to boycotts, or refusals of sales, and you’ll be fine.
Business law can be complicated. Contact an attorney, like Michael B. McCord, with any questions you may have about fair business practices. You need a professional who knows the law to keep your small business safe and compliant.