Says Price-Related Restraints Illegal on their Face; Commission Dismisses Charges Regarding Other Association Rules
The Federal Trade Commission has ordered the International Association of Conference Interpreters (known by its French acronym, AIIC) and its U.S. affiliate members to eliminate Association rules regarding, among other things, fees, travel expenses, pro bono work, and commissions, finding that these restrictions constitute a comprehensive price fixing scheme. Writing for a unanimous Commission, Commissioner Christine A. Varney said such restrictions have been shown to be so dangerous to competition that they are per se illegal and must be dismissed without any weighing of possible benefits. The Commission dismissed certain other charges against Association rules governing work-day length, interpreter team size, and other non-price-related factors, in part, because there was no showing that AIIC had market power or that the restrictions had anticompetitive effects.
AIIC is a voluntary professional association of interpreters from 68 countries who perform interpretation services at multi-lingual conferences or other high-level meetings. It is based in Geneva, Switzerland, and has 2,500 members worldwide and approximately 140 in the United States. In November 1994, the FTC issued an administrative complaint naming AIIC and its U.S. Region, alleging that their fee schedules, work rules, and other restrictions violated federal antitrust laws. Variations of the rules at issue have been in place for more than 40 years. Administrative Law Judge James P. Timony upheld the charges in a July 1996 decision follow ing a trial that ended in April 1996. AIIC then appealed Judge Timony’s decision to the full Commission.
"Based on the extensive history and publication of minimum daily rates, the record evidence of the price-fixing agreement, and the expert testimony, we conclude that there was an unlawful agreement among AIIC members as to the minimum price to be charged for conference interpretation in the U.S.," the Commission said. "We further find that respondents engaged in restraints that prevented price competition on virtually all aspects of conference interpreting, including minimum daily rates; an ?indivisible day’ that prevented lower remuneration for shorter meetings; specified payment for travel, rest, briefing, and nonworking days; a mandate that all interpreters at a conference be paid the same; standardized payments for full fare travel expenses; uniform per diem allowances; cancellation and recording fees; and restrictions on pro bono work and the payment of commissions."
The Commission also concluded that AIIC’s moonlighting rules, which prevent inter preters with permanent jobs from performing freelance work unless no freelance interpreter is available, constitute a per se illegal market allocation agreement "that staff interpreters will not compete with freelance interpreters."
The Commission concluded that other AIIC restrictions must be analyzed under the "rule of reason," which considers a number of factors including the rule’s pro-competitive and anti competitive effects. Rules requiring rule-of-reason analysis include those that govern the length of interpreters’ work days and the size of interpreter teams, require members to declare and maintain a single professional address, prohibit in most instances the use of portable equipment (in place of working with a soundproof booth), restrict advertising that might "bring the profes sion into disrepute," and bar package deals that group interpretation services with other confer ence costs. The Commission disagreed with the ALJ’s finding that AIIC has market power because AIIC members found it in their interest to charge the agreed-upon prices, and looked next to market share evidence in the record, finding insufficient evidence, thus "making it impossible to determine market power." In addition, the Commission said, "[e]ven without a showing of market power, if the anitcompetitive effects of the rules were clear, we still would be able to make a finding of liability under a rule-of-reason analysis." However, "the record in this case is virtually devoid of evidence of anticompetitive effects flowing from the non-price restraints." Thus, for those rules requiring rule-of-reason analysis, the Commission reversed the ALJ and found "that complaint counsel failed to carry the burden of proof under the rule of reason."
The order issued by the Commission would prohibit AIIC and its U.S. region, in connection with interpretation, translation, or language services performed within the United States, from:
- creating, distributing, or suggesting adherence to any schedule of fees;
- entering into or participating in any agreement to fix, raise, or otherwise interfere with such fees;
- suggesting or recommending that interpreters, translators, or language specialists charge or offer any existing or proposed fee;
- prohibiting, regulating, or interfering with any form of price competition;
- discouraging or prohibiting members from accepting less-than-full-day fees or doing free or discounted work;
- entering into or participating in any agreement to mandate payment for travel expenses or time spent traveling;
- entering into or participating in any agreement to limit the recruitment of interpreters or the payment or receipt of commissions.
In addition, if the topic of fees applicable to the United States comes up at any meeting of the membership, the person or persons bringing them up must be warned and, if the warning is not heeded, dismissed from the meeting. If that is not effective in stopping the discussion of fees, the meeting would have to be adjourned.
The order also would require AIIC to amend its basic texts, rules and bylaws to conform to the Order provisions. In addition, the Order contains a "fencing-in" provision requiring AIIC for a period of five years to eliminate from its Basic Texts and standard form contracts any provisions, even if phrased in non-mandatory language, related to payments in the event of a canceled contract, payment of commissions, payment or specification of arrangements for travel, payments for non-working days, travel days, rest days, food and housing, and payment for recordings for conference interpretation.
The order also contains various reporting, distribution and record keeping requirements that are designed to ensure compliance.
The Commission vote to issue this decision was 5-0, with Commissioner Roscoe B. Starek, III, issuing a separate opinion in which he concurred in the result reached by the majority but "disagree[d] with elements of their analytical methodology." He did "not share the majority’s eagerness to replace [the] prudent approach to horizontal restraints [established in the Commission’s 1988 decision in Massachusetts Board of Registration in Optometry (?Mass. Board’)] with a system in which reference to categories of conduct -- some condemned per se, others judged under the rule of reason -- supplants discerning analysis. . . . The approach of the majority does nothing to mitigate -- and in fact perpetuates -- the principal weakness of [the Commission’s 1996 decision in California Dental Association]: that oversimplistic analogizing to traditional per se categories is not a satisfactory substitute for the cautious analysis mandated by the Supreme Court. . . . [I]f the Mass. Board analysis needs improvement, the instant case presents . . . an opportunity to accomplish that. What I cannot accept is the majority’s unwarranted abandonment of the Mass. Board precedent."
This order will be effective 60 days after it is served on the respondents. Under Commission rules, ex parte communications regarding this matter are barred until the Commission has disposed of any petition for reconsideration, or until the time for filing such petitions (14 days after service) has elapsed.
Copies of the Commission decision and Commissioner Starek’s statement, as well as other documents associated with this case, are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Docket No. 9270)
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