The two current commissioners of the Federal Trade Commission (FTC) approved a final order and consent agreement with the American Guild of Organists (AGO) after a public comment period of two months. The FTC alleged that the AGO violated Section 5 of the Federal Trade Commission Act by agreeing to restrain competition among its organist and choral conductor members. Under the terms of the settlement, the AGO agreed to make certain changes to its rules and policies.
WHAT HAPPENED
- The AGO represents approximately 15,000 member organists and choral directors in 300 chapters in the United States and abroad.
- The FTC initiated an inquiry into the AGO's practices in late 2015 after receiving complaints from consumers and organists regarding guild rules.
- Specifically, the AGO's rules required a customer seeking to hire a musician who was not dedicated as the "incumbent musician" in a particular area to pay both the "incumbent musician" in the area as well as the hired musician. The AGO's Code of Ethics stated that members should "protect themselves" through contracts that secured fees even when not performing.
- Also, the AGO published compensation schedules and formulas, instructing its membership to use the formulas to determine pricing in their region.
- Finally, the AGO's rules prohibited a member from soliciting employment from an organization already employing an "incumbent musician."
- The FTC's complaint alleged that these actions restrained competition by encouraging a fixed pricing schedule between and among the AGO's membership, and by preventing members from freely seeking or accepting employment. It also alleged that the AGO's rules and guidelines likely raised prices for consumers seeking to employ organists for special occasions, as well as the organizations that employed organists.
- The settlement requires the AGO to change its rules and Code of Ethics, and mandates that each chapter of the AGO certify compliance in order to remain in the organization. In particular, the AGO no longer can publicize or endorse any standardized or suggested prices or interfere with any member's ability to seek work as an organist or choral conductor.
WHAT THIS MEANS
- The FTC has signaled that it will continue to investigate and pursue trade associations and professional guilds for rules and guidelines that encourage or require members to limit competition with one another. Acting Chairman Ohlhausen has indicated that these kinds of restrictions will continue to be a focus for the FTC during the Trump administration because they inhibit economic liberty.
- Trade associations and professional guilds should be cautious to avoid sharing suggested or model pricing, fee schedules or any other mechanism through which its membership may be seen to be sharing or agreeing to any pricing.
- Trade associations and professional guilds should review their rules and regulations to ensure they cannot be seen as restraining or restricting their membership from competing among themselves.
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