Companies may violate antitrust law when they lobby private organizations that play a prominent role in influencing business legislation, the Supreme Court has ruled.
The 7-2 decision upheld a $11.4 million jury award against a company accused of "packing" a meeting of the National Fire Protection Association when the organization adopted a safety code for electrical wiring.Justice William J. Brennan, in his opinion for the court, said such activity to influence a private organization does not warrant the same antitrust immunity granted to businesses and trade groups that lobby governmental bodies.
"The activity at issue here did not take place in the open political arena, where partisanship is the hallmark of decision-making, but within the confines of a private standard-setting process," Brennan said.
Also, he said, the activity involved more than "an exercise of the power of persuasion." The adoption of an industry code "in part involves the exercise of market power" because members of the National Fire Protection Association, including consumers, distributors and manufacturers, implicitly agreed to abide by the association's rules, Brennan said.
"Given the context and nature of the conduct, it can more aptly be characterized as commercial activity with a political impact," he said.
The case stemmed from a May 1980 meeting of the association that adopted a model legislative code for electrical conduit, a hollow tubing used in building construction to carry insulated electrical wires.
Allied Tube & Conduit Corp., the largest producer in the United States of steel conduit, was accused of organizing 230 voters at the meeting to block approval in the code of a competing plastic conduit.
The charge was made by Indian Head Inc. and its Carlon division, which makes electrical conduit from polyvinyl chloride, a plastic.
The National Fire Protection Association is a private organization that adopts the National Electrical Code regulations on which much state legislation is based.
Indian Head said Allied illegally restrained trade in violation of federal antitrust laws. A federal jury awarded $3.8 million, and the amount, as provided by law, was tripled.