Easily overlooked and frequently misunderstood, antitrust law can bedevil credit professionals and their companies in a number of different ways.
Although primarily thought of as regulations against anti-competitive behavior or monopolies, antitrust law also includes provisions that govern the exchange of information and collaboration between companies in the same industry that may deal with the same customer base. And sometimes, all it takes to cement a violation of the law is a simple, innocently-sent internal company communication.
"If you think about the Microsoft lawsuit that went on for years that hit every newspaper, one of the things that absolutely was the nail in the coffin on the Microsoft antitrust litigation was an internal email that was found in their systems that Microsoft never intended anyone to see," said Wanda Borges, Esq. "The system had been purged but the email was uncovered and said ‘we are going to launch this product and bury the competition;' clearly an intent on behalf of Microsoft to destroy their competition."
Borges recently led an NACM-sponsored teleconference, "Antitrust Issues," illuminating the myriad ways companies can run afoul of the law and potentially expose themselves to potentially harmful civil and, even in some cases, criminal penalties.
For many credit professionals, the greatest risk for antitrust violations comes from exchanging information about customers between colleagues at other companies. Whether it's an informal chat on the phone or an organized credit group meeting, certain types of information cannot be shared and credit professionals need to be aware of this to avoid possible prosecution.
"You have to be careful that the conversation does not go beyond actual, factual and complete," said Borges. "Somebody might be tempted to say ‘you know, the customer used to be at a $30 million credit limit; we just brought them down to $10 million.' This is factual."
"They might continue, saying ‘and unless they pay us on time, we're going to cut them off altogether,'" she added. "That's something that could happen in the future. Therefore it is an improper statement to make."
Problems tend to creep in when credit professionals exit the protective confines of an industry credit group meeting, like the ones hosted by NACM. "You might get a phone call at that point from one of your competitors. ‘You were talking at the meeting about customer X and you say you brought them down, but you won't say more than that,'" said Borges. "‘But now that it's just you and me on the phone, what are you going to do in the future?' You never ever talk about future activity."
As a rule, Borges suggested that credit professionals stay away from conversations about credit terms in general, especially in an informal setting. "You don't ever want to have a discussion about credit terms," she said. "It's very interesting to note that from time to time one of your so-called friends will rat you out. I have gotten phone calls telling me about the tennis game or the golf course, or the dinners, and all of the sudden in the middle of dessert, ‘oh by the way, what are you doing about this customer?'"
"These kinds of impromptu conversations can get you caught," she added.
Jacob Barron, NACM staff writer