Kentucky Petroleum Marketers Association

KPMA Antitrust And Fair Competition Guidelines

 

The Federal Antitrust Laws

 

The antitrust laws are a comprehensive charter of economic controls aimed at promoting free competition. These laws rest upon the premise that the preservation of free competition will yield the best allocation of economic resources, the lowest prices, the highest quality and the greatest material progress for the public welfare. Under the antitrust laws competitors may not restrain competition via agreements or understandings regarding the price, production or distribution of products and services. Competitors may not engage in any activity intended to restrict the competitive capabilities of their customers, suppliers, or other competitors. The antitrust laws are immensely complex and are often of unclear applicability. Unlawful agreements can be inferred from circumstantial evidence. A conviction for violating the antitrust laws may result in stiff fines, extended jail sentences for individuals who participated in the violation and forced disbanding of their trade association. Even if an antitrust suit is successfully defended the demands upon the time of those involved can be tremendous. Legal fees and costs can easily run to six figures or more.

 

The guidelines that follow are designed to assist you in avoiding even the appearance of questionable activity. At KPMA meetings, the following will not be discussed:

 


 
  1. Current or future prices.
  2. What constitutes a “fair” profit level.
  3. Possible increases or decreases in prices.
  4. Standardization or stabilization of prices.
  5. Pricing procedures.
  6. Cash discounts.
  7. Credit terms.
  8. Control of sales.
  9. Allocation of markets.
  10. Freight allowances.
  11. Refusal to deal with a corporation or an individual because of its pricing or marketing practices.

 

 

The most important antitrust statutes applicable to KPMA activities are Section 1 of the Sherman Act, which prohibits conspiracies in restraint of trade and Section 5 of the Federal Trade Commission Act, which establishes broad prohibitions against unfair methods of competition and unfair or deceptive business acts or practices.

 

Kentucky Fair Competition Laws

 

Section 198 of the Kentucky Constitution empowers the Attorney General to enact laws to prevent any organization from joining together to depreciate any product or commodity below its real value or enhance the cost of any product or commodity above its real value. The two most important Kentucky statutes applicable to KPMA activities are the Kentucky Unfair Trade Practices Act (the “Trade Practices Act”) (specifically KRS 365.020 – 365.070) and the Kentucky Consumer Protection Act (the “Consumer Protection Act”) (specifically KRS 367.170 – 367.176). The Trade Practices Act prohibits any person or organization from performing certain activities with the intent to injure other competitors or destroy competition. The Consumer Protection Act prohibits any unfair, false, misleading, or deceptive acts or practices in trade or commerce. The Consumer Protection Act also prohibits any contract or conspiracy to restrain or monopolize trade or commerce. In addition to the activities prohibited by federal antitrust laws, the following will not be discussed at KPMA meetings pursuant to Kentucky fair competition laws:

 

  1. Allowances, discounts, or rebates given to certain purchasers;
  2. Prices given to purchasers in different localities;
  3. “Cost” of products or services;
  4. Production levels of products;
  5. Increases or decreases in production levels of products; and
  6. Value of products or services.

 

All KPMA activities comply strictly in all respects with federal antitrust laws and state fair competition laws.