KBI’s Antitrust Policy

KBI Antitrust Guidelines

Please understand that these guidelines, although written for KBI officers, Board of Directors, and members, do not and are not intended to replace member company antitrust compliance programs. These guidelines provide a statement of KBI’s antitrust compliance policies, guidance regarding proper conduct at meetings and in communications involving KBI and its members, and give a brief refresher course on how the antitrust laws apply to communications among competitors.

An Overview: KBI Members’ Responsibilities to Ensure Antitrust Compliance

KBI’s policy is to avoid all communications between competitors that is unlawful or creates the impression of being unlawful. The best rule of thumb for members is to assume that there is no “grey area” with respect to the antitrust laws. KBI members should consider it part of membership to be on the alert for contact between competitors that is or could be perceived as not complying with antitrust laws. Conduct that falls into any one of the following categories should be considered unlawful:

  •         Setting or discussing past, present, or future prices with competitors
  •         Dividing territorial markets between competitors
  •         Dividing customers between competitors
  •         Agreeing on levels of production with competitors
  •         Agreeing to exclude competitors from the market
  •         Distorting the bidding process
  •         Boycotting customers or vendors
  •         Exchanging any confidential, competitively sensitive information

If a KBI member observes any potentially unlawful interactions, the member should voice his or her objection and alert KBI. In addition, a member who comes across a KBI document that reflects prohibited activity should bring it to the attention of KBI. Remember that even individuals who do not actively participate in an unlawful discussion, or who do not formally agree to act in a certain way, risk incurring liability for themselves, their company, and the Association merely by virtue of their awareness of any potentially unlawful communication.

 

KBI Antitrust Compliance Safeguards

All KBI events and communications are thoughtfully designed by KBI members to achieve the goals of the organization, noted below, while avoiding any conduct that could be considered unlawful under the antitrust laws. KBI strictly enforces these protocols to ensure compliance with the antitrust laws for the protection of the Association and its members.

All official KBI meetings have agendas distributed in advance, detailing the topics to be covered. These agendas are designed to keep all discussions on track and within the bounds of the antitrust laws.

All presentation materials whether given by KBI members or outside presenters, should ensure compliance with antitrust laws.

All official KBI meetings are memorialized in minutes to provide a record of who attended KBI meetings and what was discussed.

Communications from the KBI to its members should ensure compliance with antitrust laws. Emails, newsletters, and website content should also comply.

The KBI Organization and Purpose

Kombucha Brewers International was founded in 2014 by Kombucha Kamp and members of the global Kombucha Tea Bottled Beverage industry.  The mission of the Association is to promote, protect, and enhance the overall well-being of the industry in areas where the individual companies are not able to function as effectively as an Association.  Such areas include: advancing our industry through advocacy, education, research, and modern legislation. KBI is the organization to speak for the Kombucha Tea Bottled Beverage industry where its collective voice can be heard.

Membership in any trade association should be assumed to provide an economic benefit. Therefore, exclusion of an entity from a trade association by virtue of its membership criteria should be viewed as having the potential to give rise to antitrust liability. In order to ensure that KBI membership criteria pass muster under the antitrust laws, they are carefully crafted to be non-discriminatory, objective, and in furtherance of the above-noted pro-competitive purposes of the KBI.

 

Conduct that Could Create Antitrust Liability

KBI performs important functions for its members, including the creation of an environment in which competitors can come together for the common good of the industry without running afoul of the antitrust laws. KBI has a policy of obeying all laws that apply to it, and the antitrust laws are no exception. Therefore, as a prerequisite to participation in KBI activities, members should have a basic understanding of the antitrust laws, and what conduct might present concern.

Because the Sherman Act prohibits communication among competitors that has the aim or effect of restraining competition, it is most often invoked by private plaintiffs and the enforcement agencies in pursuing actions against trade associations or trade association member entities that misuse organizational ties. These lawsuits usually allege a conspiracy or “horizontal agreement” among competitors, and can carry stiff civil and criminal penalties (including imprisonment), treble damages, and injunctive relief. The fine for individuals may reach $1 million or, for corporations, $100 million. The treble damages provision of the antitrust laws, which entitles plaintiffs to three times the amount of damages suffered, can allow the ultimate cost of an antitrust litigation to soar. Injunctions restricting the future conduct of defendant entities can last for many years and cover areas of business beyond those involved in the lawsuit itself.

1.Pricing

It is KBI’s policy not to permit direct or indirect communication between any representatives of member companies concerning past, present or future prices. The word “price” as used in this statement of policy is broadly defined to include sales prices, pricing policies, bids, discounts, allowances, markups, warehousing charges, costs of raw materials, credit terms, terms of sale, transportation costs, manufacturing improvements, etc. All are factors bearing directly on the final “price,” and under these Guidelines, they may not be discussed. For purposes of these Guidelines, “discuss” should be understood to include two-way conversation between more than one member or the mere expression of the views or experience of any member to other members.

Agreements resulting from discussions between competitors concerning prices are absolutely prohibited by the antitrust laws. Such agreements likely are to be found to be per se violations of the antitrust laws. The term “per se” is used by the courts to define conduct that is unlawful in and of itself. There are no defenses available to a charge of price fixing if it is proven. This prohibition covers much more than just formal written agreements, and in practice, antitrust conspiracies rarely are conducted through formal means. More often, it is oral agreements, “gentlemen’s agreements,” tacit understandings, “off the record” conversations, a “knowing wink,” and the like, from which an unlawful agreement or understanding will be inferred.

Most evidence in price fixing cases is circumstantial and based on isolated facts from which a common scheme or agreement may be inferred. For example, if general price movements routinely followed meetings between competitor’s representatives, circumstantial evidence is created that agreements to fix prices may have been made at such meetings. To counter this type of proof, clear evidence that price fixing did not in fact take place at such meetings must be offered and one should conduct himself so as to avoid even the appearance of impropriety.

  1. Control or Limit Production of Sales

Any attempt on the part of competitors to control, limit or allocate the customers to whom they will sell, or the territories in which sales are made, is likely to be found to be illegal per se. Further, it is illegal, by concerted action, to segment a market on either a geographical or functional basis.

  1. Allocation of Territories or Customers

Under the antitrust laws, competitors are generally prohibited from dividing markets, whether the markets are defined by geography, customer identity, or other factors. As a result, competitors should not engage in any discussions that might be construed as facilitating market allocation.

  1. Bid Rigging

One of the most common forms of per se violation is bid rigging, i.e., the process of agreement among competitors to control the awarding of a bid or bids. KBI policy prohibits communications concerning such subjects, as well as the identity of the persons who are or who are not bidding, prices or terms of bids, or decisions to bid on selected items.

Conduct that Presents Little or No Antitrust Concern

Categories of conduct that present little antitrust concern include the monitoring and disseminating of information about various government regulations; studying environmental, technical, health, and safety problems which may arise in the industry; and monitoring competitive beverage activities which might threaten the industry’s markets. Furthermore, KBI will become increasingly active in making its members’ views known to regulating bodies and government program administrators. The KBI antitrust compliance policy permits and encourages communication and discussions concerning these subjects.

Contacting Antitrust Counsel

These Guidelines are meant to supplement, not replace, the antitrust compliance programs in place at each KBI member. Every member should be aware of their responsibilities in ensuring antitrust compliance.  In every instance, the wisest course of action, even at a mere hint of uncertainty regarding the lawfulness of any conduct or communication by KBI members, is to contact counsel.

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