On July 21, 2014, two Internet resellers of UPC barcodes settled charges by the U.S. Federal Trade Commission that they violated Section 5 of the FTC Act by inviting competitors to collude. An "invitation to collude" involves an improper communication from one firm to actual or potential competitors that the firm wants to coordinate on price, output, or other important terms of competition. In an invitation that the FTC deemed "particularly egregious" in its complaint, the FTC alleged that a principal from InstantUPCCodes.com sent an email to representatives of two other UPC competing resellers—Nationwide Barcode and "Company A"—inviting them to "match the price" of rival competitor, "Company B." InstantUPCCodes.com and Nationwide expressed a readiness to raise prices over several months if Company A would agree, but Company A never responded. While acceptance of the invitation would have constituted a per se violation of the antitrust statutes and criminal penalties, the invitation itself was sufficient to violate Section 5 of the FTC Act, which precludes "unfair methods" of competition. The proposed settlement, subject to public comment for 30 days, prohibits InstantUPCCodes.com and Nationwide from (1) communicating with competitors about prices; (2) entering an agreement with a competitor to divide markets, allocate consumers, or fix prices; and (3) urging any competitors to manipulate prices or limit levels of service. Despite the uncertainty about the boundaries of Section 5 liability, the settlement confirms the FTC's long-held position that invitations to collude fall within the scope of this section and will continue to be the subject of FTC enforcement. Indeed, although FTC Commissioners have had an ongoing debate about the scope of Section 5, this consent decree was adopted unanimously. The settlement reaffirms a company's need for current, ongoing and thorough antitrust compliance training for its executives and employees. A copy of the proposed settlement can be found here.
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