INSURANCE ADVERTISING COMPLIANCE ASSOCIATION
This is the Web Site of the Insurance Advertising Compliance Association (IAdCA). The Web Site may provide information made available by individuals or companies that are in direct business competition with each other. Because we are all committed to adhering strictly to the letter and spirit of state and federal antitrust laws, this Web Site is designed for the sole purpose of promoting advertising and compliance education.
We must exercise care to avoid any passing of information, discussions, formal or informal, that may be interpreted as constituting boycott, coercion or intimidation. Under no circumstances should this Web Site be used as a means for companies to reach an understanding, express or implied, that restricts competition or in any way impairs the ability of any company to exercise its independent business judgement regarding matters affecting competition.
Specific areas that the Web Site avoids are any discussion of premiums or rates being charged for insurance products, costs or profits of any products, marketing strategies for the sale of insurance products, allocations of markets, territories or customers, or fixing of prices of products or services. We expect to conduct ourselves in such a way that there is not even the slightest appearance of impropriety with regard to anti-trust compliance.
The Web Site can, however, provide information regarding a wide range of topics without anti-trust implications. It provides advertising compliance tools, practices and procedures, and could be a forum for the free exchange of ideas. Your interest here represents your commitment to ethical market conduct and compliance in insurance advertising. We applaud you for this commitment.
In summary, IAdCA policy prohibits any activities that could be considered anti-competitive or in violation of antitrust laws. Any questions about the issues should be brought to the attention of an IAdCA Board of Directors member who will address the matter with legal counsel.
Thank you for your awareness and cooperation.
Guidelines for Antitrust Compliance
Antitrust laws were created nearly a century ago to preserve and promote free and fair competition throughout the United States economy. Antitrust laws advance competition by preventing businesses and professionals from engaging in anti-competitive conduct such as price fixing, market allocation, boycotts, monopolies, and other activities that limit free trade. Associations like the Insurance Advertising Compliance Association by bringing together insurance professionals and promoting the exchange of ideas and information among those professionals, have the potential to undermine competition. Antitrust enforcement agencies are naturally suspicious of associations, which are essentially institutionalized gatherings of competitors. Association meetings provide the optimum environment for antitrust activities to arise. It is our intent as compliance professionals to ensure compliance, with advertising and marketing rules and regulations. But in doing so, we must also conduct ourselves in a compliant manner as to all laws and regulations, by ensuring IAdCA, its members and meeting attendees are in compliance with antitrust requirements.
The following guidelines may assist IAdCA, its members and conference attendees in following antitrust statutes. These guidelines address: (i) the areas of antitrust which may relate to IAdCA, its members and conference attendees (ii) areas to avoid to minimize the risk of antitrust liability, and (iii) policies and procedures to follow in the area of competition. These guidelines cannot address all possible areas of antitrust concern. Should you have concerns about a particular issue, bring it to the attention of a member of the IAdCA Board of Directors, who will seek the advice of legal counsel.
The basic federal antitrust statutes are the Sherman Act, the Clayton Act, and the Federal Trade Commission Act.
The Sherman Act was passed in 1890 to halt the growing concentration of economic might in the control of the giant corporate trusts. The Act prohibits contracts, combinations, and conspiracies in restraint of trade in interstate commerce, and the ultimate result of such restraints, the monopolization of trade. Among the agreements prohibited by the Sherman Act are those that involve price fixing; allocation of markets or customers; and boycotts of competitors, suppliers, or customers.
The Clayton Act was passed in 1914 to supplement the Sherman Act. It prohibits various specific business behaviors which tend to lessen competition or monopolize trade. Among the activities prohibited by the Clayton Act are exclusive dealing arrangements, acquisitions, and mergers tending to lessen competition.
The Federal Trade Commission (FTC) Act, also passed in 1914, in addition to prohibiting the anti-competitive activities made illegal by the Sherman and Clayton Acts, bans unfair methods of competition and unfair or deceptive acts and practices. Unlike the Sherman and Clayton Acts, in which most of the prohibited activities requires actions of two or more parties, individuals or firms can be liable under the Federal Trade Commission Act even though they did not act in concert with others.
In addition to the federal statutes, most states have enacted laws similar to the Sherman Act, the Clayton Act, and the FTC Act. Some people in the insurance industry believe that under the McCarran-Ferguson Act, federal antitrust laws may not apply to some otherwise anti-competitive activities of insurance associations. However, the courts in general do not share that view as they consistently restrict the definition of the terms “business of insurance”. Even if an exemption were determined to exist under McCarran-Ferguson, state antitrust laws might well still be applicable in those situations. A summarization of each state.s antitrust laws is impractical. If specific questions arise, IAdCA, its members and conference attendees should look to their own states’ antitrust laws and enforcement mechanisms.
The Sherman Act is enforced by the Antitrust Division of the United States Department of Justice and by the Bureau of Competition of the Federal Trade Commission. Additionally, private litigation, with treble damages, may be brought by those claiming injury as a result of antitrust violations. The federal and state government may bring either civil or criminal suits. The remedy for a civil suit in an action brought by the government is an injunction prohibiting the offender from future violations. Criminal penalties include fines, imprisonment, or both.
Sherman Act violations carry stiff fines, of up to $100,000 (corporations may be fined up to $1 million). A violation of the Act is also a felony, punishable by up to three years in prison.
The Federal Trade Commission enforces the FTC Act by issuing cease and desist orders to stop violations. The violation of a Commission order may result in a penalty of as much as $10,000 per day. Any association that is determined to be in violation of the antitrust laws can be dissolved by court order. Please note, each party found liable, regardless of the role that party played, can be held liable for all damages caused by all participants in the antitrust conspiracy. The legal costs incurred in defending antitrust allegations can be significant.
Meetings and Ethical Behavior
The main principle which should guide the policies and programs of IAdCA, its members and conference attendees, in order to avoid antitrust violations is that no illegal agreements, arrangements, or understandings should be reached or carried out through the Association. Any activities, conversations or conduct which might give even the appearance of an illegal agreement should be avoided. Be alert to conduct that might fall into areas of particular antitrust concern.
Information exchanges with IAdCA members, or with conference attendees should be analyzed in view of: “How does the information relate to the competitive behavior of the companies or firms represented by participants?” And, “how does the information affect the independent business decisions of the companies or firms represented?” As a general rule, if the exchange of information relates to the future competitive behavior of an individual company or will affect the independent business decisions of an individual company, then it is prohibited by these guidelines.
Meetings at IAdCA conferences and breakout sessions should follow an agenda prepared in advance. Subjects not on the agenda should not be considered at the meeting. Attendees and participants at meetings and breakout sessions should retain copies of the agenda any handouts and any personal notes which they may have taken during the meeting, should any subsequent issues as to the propriety of the matter be raised.