History and Background

 

The National Coal Transportation Association (“NCTA”), formerly the Western Coal Transportation Association, was organized on October 31, 1979 as a Colorado Non Profit Corporation, whose primary purposes and objectives were to promote the orderly and effective transportation of coal, to ensure that adequate transportation services, facilities and equipment would be available for transportation of coal, and to educate and inform Association members and the general public on issues related to the use and effective transportation of coal.  The NCTA is a voluntary organization, whose members are companies or individuals with an interest in the use and transportation of coal. 

 

The NCTA accomplishes its purposes and objectives by conducting three general educational conferences annually, and quarterly meetings of the Board of Directors. Additionally, several subcommittees conduct one or more meetings and/or teleconferences during the year with representatives of major railroads and various vendors to address and resolve coal transportation issues.  To encourage members to benefit most from open, balanced and frank discussion of issues related to the use and transportation of coal, the NCTA invites government officials, industry experts and various other speakers  to present topics of current interest at its meetings.  The views of such officials, experts and speakers do not necessarily represent the views of the NCTA, its Board of Directors, or its members, but rather reflect the views of the speakers themselves.

 

As the NCTA is comprised of members who are either suppliers or customers who, to a large extent, are in competition with each other, it is the clear and unambiguous policy and practice of the NCTA to fully comply with all laws, regulations and similar requirements related to anti–trust conduct.  The NCTA ensures, through use of appropriate admonitions and instruction, advice and monitoring by outside legal counsel, and consistent policy and practice that each attendee at any NCTA function is properly advised regarding the prohibition against anti-competitive behavior, with specific emphasis on the prohibition of any discussions on production and supply, pricing, allocation of territories or customers, exclusion or limitation of dealings with suppliers or customers, or any other discussions which are either intended to, or which may have the effect of,  restricting competition in any sense. 

 

This document embodies the Policy and the Guidelines adopted by the NCTA to ensure Anti-Trust Compliance by the Association and its members.

 

 

Overview of Anti-Trust Laws and Regulations

 

Federal statutes, regulations and case decisions and state laws and decisions provide the framework for anti-trust requirements applicable to trade associations such as the NCTA. The primary, pertinent Federal statutes are the Sherman Act and the Federal Trade Commission Act, although the Clayton Act and the Robinson Patman Act must also be considered. The Sherman Act prohibits agreements “ contracts, combinations or conspiracies in restraint of trade or commerce”, which essentially prohibits agreements between two or more parties that are intended to or have the effect of unreasonably curtailing trade. Such agreements may be either explicit, i.e. taking the form of a contract or other oral or written communication, or implicit, i.e. implied by the conduct of the parties and construed to indicate that an agreement was formed.

 

The Federal Trade Commission Act prohibits “ unfair methods of competition” and “ unfair or deceptive acts or practices”. The FTC Act provides for broad enforcement provisions and empowers the FTC to determine the meaning of “unfair” and allow the FTC to act against “incipient” unfair practices, i.e. practices that may not yet amount to, but are likely to lead to, violations of anti-trust statutes.

 

Various state statutes may also define prohibited conduct and may impose restrictions on actions of associations.

 

As the very nature of the Association involves the membership and participation of a “combination” of competitors, it’s actions may be closely scrutinized for compliance with anti-trust laws. Membership in an association and participation in association activities has been universally held to be both legal and appropriate; it is therefore only the nature of the association’s activities, and those of its members, as they relate to trade and commerce, which may be called into question.

 

Under the Sherman Act, any understanding or agreement affecting the price of a product or a bid on a transaction is prohibited. Therefore practices such as price fixing with competitors or customers, group boycotts, allocation or division of markets or customers, tie –in arrangements, and predatory practices to drive competitors out of business are by their very nature so harmful as to be considered “per se” unreasonable, without need for investigation as to their effect on the market.  The statutes provide both criminal and civil enforcement by the government, as well as certain rights to private civil litigation. Every individual who attends a meeting or participates in a discussion in which illegal activities may occur or be discussed may therefore face criminal penalties.

 

The U. S. Department of Justice, the States, and private parties harmed by anti-competitive conduct of others may bring lawsuits for violations of the Sherman Act. Enforcement of the FTC Act is the exclusive province of the FTC. Violations of the Sherman Act may result in both civil and criminal penalties.

 

 

General Anti-Trust Areas of Concern

 

Price-fixing.   Any agreement among competitors, whether tentative or implemented, to raise, lower or stabilize prices is unlawful.  Details like credit terms, discounts and warranties are elements of price.  Competitors may be charged with price fixing even if they only discuss their general pricing ranges or policies because these discussions may have an impact on price quotations. Therefore, at no time should any discussion or agreement among competitor members of the Association take place regarding product prices, price changes, or other subjects related to product pricing.

 

Similarly, a related area of concern is bid-rigging. A bid-rigging scheme has some of the characteristics of a price –fixing agreement and an agreement to allocate or divide customers. Therefore any agreement between two or more persons that one will submit a higher or lower bid, or submit no bid at all, will be construed as a violation of anti-trust laws.

 

Agreement to Divide Customers or Territory.   Any agreement among competitors  operating at the same market level, i.e. as producers, distributors, etc, to divide a market so as to allow each party to serve its share of the market without competition from the others is a violation of anti-trust laws. Similarly, any such agreement to divide customers is a violation. Even an informal agreement by one party to stay out of another’s territory is a violation.

 

Group Boycotts.  A collective refusal by otherwise competing companies to deal with a third party, referred to as a “group boycott”, may violate anti-trust laws. It is a violation for one person to agree with another that neither one will do business with a particular supplier or customer, or that they will only do business with certain suppliers or customers or only on certain terms and conditions.

 

Membership Restrictions.  As a general rule any person or company  that meets the criteria for membership and pays the required dues should be admitted, and permitted to remain, as a member. Competitive concerns, commercial disputes and personal animosity should not be used as a basis for denying or revoking membership. Denial or expulsion from membership may be viewed as a restraint of trade because it could limit the ability of the affected person or company to compete.

 

Product Standards and Certification.   Standards for manufacturing, performance or compatibility must be prepared through a consensus process which permits participation by all interested parties and is based upon objective engineering, technical and safety factors. Compliance with such adopted standards should be a voluntary decision by each member.  Similarly Association certification actions must not unreasonably serve the interests of certain groups or members to the exclusion or disadvantage of others.

 

Codes of Ethics.  The Association may develop a code of ethics or business practices, and membership in the Association may be conditioned upon adherence to such codes. Such code may not however unlawfully limit or regulate legitimate business practices. Enforcement of the code must be fair and non discriminatory.

 

Compilation and Use of Industry Data and Statistics.   Collection and reporting of statistical data by the Association serves a useful purpose for members. Any such data and statistics should, however, be handled and reported in a manner which ensures that the data is reported in composite or aggregated form and that the information provided by specific member companies is not revealed or disseminated. Statistical data may also not be used as a means for setting or fixing prices, allocating production or otherwise restraining trade.

 

NCTA Anti-Trust Policy

 

It is the clear and unambiguous policy and practice of the NCTA to fully comply with all laws, regulations and similar requirements related to anti–trust conduct, in order to ensure that all Association members, officers, directors  and staff personnel take all appropriate actions to avoid or minimize the risk of anti-trust violations.

 

The NCTA ensures, through adoption of a written anti-trust compliance policy and guidelines, through use of appropriate, periodic admonitions, briefings and instruction, through advice and monitoring by outside legal counsel, and through consistent policy and practice that each attendee at any NCTA function is properly advised regarding the NCTA’s prohibition against anti-competitive behavior, with specific emphasis on the prohibition of any discussions on production and supply, pricing, allocation of territories or customers, exclusion or limitation of dealings with suppliers or customers, or any other discussions which are either intended to, or which may have the effect of,  restricting competition in any sense.

 

The NCTA, on an annual basis, or as required, shall request either its legal counsel or outside legal counsel to review and update the anti-trust compliance policy and to advise the Association of any necessary changes to the policy.

 

The Association’s legal counsel shall review and present an opinion in advance on the legality of any new programs or changes to existing programs that may have potential anti-trust implications.

 

Anti-Trust Compliance Guidelines.

 

1. Adoption and Dissemination of Anti-Trust Compliance Policy and Guidelines.   The NCTA shall formally adopt a written Policy and Guidelines reflecting its intention to fully comply with the anti-trust laws.  It shall provide a copy of such Policy and Guidelines to the Board of Directors, the staff and the members of the NCTA.  At each general meeting of the NCTA or any of its subcommittees, and  periodically throughout the program year, members shall be advised and reminded of the policy and Guidelines as they detail what can and cannot be done at NCTA meetings or during conduct of NCTA business.

 

2. Periodic Review by Legal Counsel.  On an annual basis or as required, the NCTA shall request its legal counsel to review and update the Policy and Guidelines and to advise the Board of Directors as to any changes that may be necessary.

 

3. Membership.  Application for membership and the rights and privileges of members shall be in accordance with the provisions of the NCTA’s Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws, adopted in September, 2002.  The NCTA’s membership policy does not exclude any competitors from membership, if the applicant meets the Bylaw requirements. Similarly, the NCTA does not restrict members from dealing with non members,. The Board of Directors may request its legal counsel conduct a review of membership decisions, if it has any question concerning the legality of rejecting an application for membership or terminating an existing member.

 

4. Meetings and Conferences.  The following guidelines shall be followed at all meetings of the Board of Directors, general membership conferences, meetings of subcommittees and telephonic meetings:

 

a)      A Notice of the meeting and a written Agenda for the meeting, reviewed in advance by legal counsel where anti-trust sensitive issues may be involved, shall be prepared and provided to anticipated attendees prior to each meeting.

 

b)      Topics which raise obvious anti-trust concerns should be avoided altogether.  NCTA staff and other participants should monitor discussions and terminate those which appear to stray into prohibited areas. Under no circumstances should “ off the record” discussions be permitted. The following list of topics are representative , but not all-inclusive, of the topics which should be avoided:prices of goods, commodities or services, transportation tariffs, rates and classifications; discounts, warranties, credit terms, rebates or surcharges and other contract terms;  individual company  prices, pricing forecasts or agreements to raise, lower or stabilize prices, to limit price increases or to limit production.  There should be no exchange or discussion of confidential individual company statistical data, market shares of individual companies, or the allocation of business or customers. See below for treatment of composite statistical data by the NCTA.

 

c)      Prospective speakers invited to address meetings of the NCTA and its subcommittees should be advised to avoid anti-trust sensitive topics such as those listed above. The NCTA is not, however, responsible for previewing the material to be presented by the speaker and shall issue a disclaimer prior to presentations that the views expressed by the presenters do not necessarily represent the views of the NCTA, its Board of Directors or its members, but instead reflect the views of the speakers themselves.

 

d)     Minutes of every meeting of the Board or the subcommittees, telephonic meeting or general business meeting of the members  shall be  prepared following the meeting.  The minutes should include a list of attendees, the substantive matters discussed, and a record of actions taken.  The minutes should be accurate and complete, but should not be a

verbatim record or in the nature of a transcript.  In lieu of minutes for the general membership conferences, the NCTA may arrange for an audio or other recording of the proceedings and may supplement it with copies of materials or presentations made available by the various speakers.

 

e)      Minutes should be clear and unambiguous and should include an explanation of terms or phrases which might be subject to misinterpretation by an outside agency or party who may review such minutes in connection with possible investigation or litigation.  This same “clear and unambiguous “ standard should also be adhered to by NCTA Directors, staff and committee members in preparing all oral, written and electronic or email communications.

 

f)       The NCTA shall not condone or sponsor any “ splinter” or “rump” gatherings at NCTA meetings and conferences. All NCTA business shall be conducted at formal NCTA meetings for which minutes are kept.  Members should be advised not to attend any informal meetings where there is no agenda, no minutes are taken or no NCTA staff representative is present. Members should also be advised not to say or discuss any business matters before or after association meetings or at social events which would not be proper at a formal NCTA meeting.

 

g)      The NCTA file for each formal meeting or telephone conference should contain a copy of the notice of the meeting sent to invitees, the agenda, a list of attendees and the minutes of the meeting. The file for a general membership conference should contain a notice of the conference, the agenda, a list of attendees and the audio or other recording of the sessions, supplemented by materials provided by the speakers. Where legal counsel is requested to attend a meeting, counsel shall maintain an independent file of the meeting, including his own notes of the on the matters covered, in addition to the items maintained by the NCTA.  These files for meetings and conferences should be retained by the NCTA for a period of five years following the event.

 

5. Communications.   The NCTA Board of Directors, staff and committee members should apply the anti-trust standards listed above for discussions  during meetings to the communications they engage in.  They should be clear and unambiguous and shall explain all terms or phrases which might otherwise be misinterpreted. The FTC has determined that such communications may include, but not be limited to, written, recorded and graphic materials, computer files, emails, electronic correspondence, drafts of documents, plans, proposals and recommendations, whether or not finalized. “Computer files” includes those on personal computers, p.c.’s, work stations, backup diskettes and tapes, and offline storage.  Even internal company memos and emails have been recently sought by investigators.

6. Compilation and Use of Statistical Information.   The NCTA, through its various subcommittees, has become involved in the process of statistical data collection and reporting, primarily for the purpose of addressing coal transportation  issues.  This activity has been of great benefit to members, to the industry, to the railroads  and to the general public.  As improper handling of such data may involve anti-trust sensitive areas, it is important that the NCTA follow general guidelines concerning the collection and reporting of statistical data.

a)      Under no circumstances should confidential individual company data on prices or forecasts of prices be collected, exchanged or discussed with competitors.

 

b)      Individual company data on production, shipments, inventories, etc.should not be separately exchanged or reported to competitors, but whenever it is necessary to compile such industry data to prepare forecasts related to the transportation of coal or to seek changes to improve the transportation or safety related to transportation of coal, an independent third party should receive the data from participating companies, compile them  into a composite report, then transmit that report to the NCTA or its subcommittees for use in connection with its activities. Individual company data submission should be destroyed by the third party once the composite report is prepared. Neither the NCTA nor any competitor should have access to another company’s individual data.

 

c)      All potential participants in the NCTA sponsored data collection and reporting projects should consult with their own legal counsel to ensure that participation will not violate anti-trust requirements.

 

7. Setting Standards and Certification.  Standard setting involves an effort to establish a uniform or standardized product, service characteristic or practice. Certification programs approve particular products, services or practices that conform to such standards. Standard setting and certification programs are generally legal under anti-trust laws, provided they are not motivated by an anti-competitive purpose and do not have an unreasonably anti-competitive effect. Standards can increase efficiency, assure quality control and safety standards may discourage or prevent the use of potentially hazardous products or equipment.

a).  Standard setting programs can raise anti-trust concerns if they have an adverse impact on competition by reducing the competitive options or strategies available to potential competitors.  Standards which attempt to fix prices, to limit business to one source of supply or which are so narrowly drawn as to restrict competition may violate the anti-trust laws.

 

b). In setting standards, the NCTA should afford an opportunity for participation in the standard setting process by the widest possible group of affected parties. There should be a publicized procedure for any person to register a complaint that the standard is an unreasonable restraint of trade and a procedure for handling the complaint. A written record of the organization’s determination of the complaint and the standard adopted should be provided.

 

8. Miscellaneous Provisions.  The NCTA, acting through its Board of Directors, shall  enact such additional Guidelines  as may be necessary to address future anti-trust issues as may arise. 

 

 

ADOPTED this 18th day of April, 2005.

 

NCTA Board of Directors