ThePurchasingDept is in complete compliance with the Robinson-Patman Act, Sherman Act, and all Federal anti-trust laws and regulations. ThePurchasingDept ensures that preventive third party “firewalls” or “safe harbors” exist in order to comply with anti-trust regulations, even when direct competitors are involved as members. ThePurchasingDept continually seeks information on all new anti-trust laws, legislation, and published findings concerning group purchasing organizations and consortiums.
The Robinson-Patman Act
This act requires that favorable prices received by the purchasing group must also be available to comparable purchasers unless the pricing differential is cost-justified or granted to meet a competing supplier’s price.
The Sherman Antitrust Act
The Sherman Act’s prohibition against agreements in restraint of trade also concerns purchasers. To minimize the risk of exposure, the group purchasing organization – usually clearly spelled out in the agreement – cannot be used to restrict price competition, boycott suppliers, or boycott other purchasers. So, partners in a group purchasing organization must allow competing suppliers a fair opportunity to serve them and should make membership available to other purchasers based on published objective criteria.
Federal Trade Commission “Safety Zone” (35/20 Rule)
The 1994 Joint Statement of the Department of Justice and Federal Trade Commission on Enforcement Policy on Joint Purchasing set the most recent guidelines regarding antitrust issues. This effort was undertaken with the Health Care Industry as its focus. But the rules have been adopted by other responsible consortiums as a best practice.
The Joint Statement sets up an “antitrust safety zone” in which joint purchasing arrangements “will not ordinarily be challenged absent extraordinary circumstances” by the Justice Department or FTC. A group purchasing organization is within the “safety zone” if (1) its purchases account for less than 35 percent of the total sales of the jointly purchased product or service in the relevant market, and if members of the consortium compete with each other (2) the cost of the jointly purchased products or services account for less than 20 percent of the revenues of each competing members of the purchasing group. The “safety zone” also requires that purchase volumes be voluntary and that all commodities between the group purchasing organization manager and its members are kept confidential.
For those seeking more detail on this subject, an excellent resource entitled, AN ANALYSIS OF GROUP PURCHASING ORGANIZATIONS’ CONTRACTING PRACTICES UNDER THE ANTITRUST LAWS: MYTH AND REALITY©, is available at the Federal Trade Commission website: http://www.ftc.gov/ogc/healthcarehearings/docs/030926bloch.pdf