Last week I attended at the ABA Antitrust Spring meeting, which is the highlight of the year for many in the antitrust bar. Excellent panels, renewing old friendships and making new ones, and open bars at the many receptions– what’s not to like. One program that is always my favorite is the Chair’s Showcase. This year the topic was the Per Se rule. Roxann Henry was the Chair and the stellar panelists were Seth Waxman, Stephen Calkins, Carl Shapiro, and Hillary Greene. The program was a high-level discussion of the history of the per se rule, the contours of the per se rule, and suggestions for possible changes to the rule. I won’t try to recount the whole session. But one part of the discussion focused on how to define hard-core per se behavior—you know, the kind that can land you in jail in the United States, even if you’re price fixing meeting was in Fiji. There was some discussion of whether an agreement can be hard-core if there are pro-competitive effects such as efficiencies and innovation. Is it hard-core per se if there are any vertical aspect to the agreement? There was no easy satisfactory answer, which raised the question, if it is difficult to define hard-core, how do you counsel clients?

It occurred to me, that while perhaps simplistic, at least a good starting point is some advice I got on ethics when I first started with the DOJ. There were many ethics rules: you can’t do this, you can’t do that, etc., but the “golden rule” was one thing. Don’t do anything that you wouldn’t want Jack Anderson to publish in the Washington Post. In other words, it you don’t want anyone to find out what you did, then don’t do it. The same rule can be applied to per se.[1]

This is a “quick look” counseling test. The easiest way to tell if an agreement with a competitor is per se would be to ask: “How would you feel if your customer found out?” And if the answer is “Well, they can’t know because they are the people we are ripping off” then there’s a pretty good chance it is per se. Here is a list of other questions counsel may pose to help flesh out whether conduct is per se.

1) Are you going to a meeting of a trade association—that you just created last week? Then it’s probably per se.

2) Do your meetings with competitors have an agenda—that bears no relation to the actual content of the meeting? Then it’s probably per se,

3) Are you meeting with a competitor(s)—but in the back room of the restaurant so you can’t be seen? Then it’s probably per se?

4) Are you meeting secretly with more than one competitor at the same time?

5) Did you put down a bogus reason for the meeting, or lied about who you met with, on your expense account?

6) Are you calling from a pay phone?

7) Or if you can’t find a pay phone, are you using a disposable cell phone?

8) Are you in a cold sweat answering these questions?

9) Are you afraid to show your subordinates this questionnaire?

10) Do you discuss your “joint venture” with your board of directors, or general counsel?

11) Do you sign into a hotel under an alias?

12) Are you sending “read and delete” emails or using a “secret” or encrypted email addresses (other than your business email)?

13) Are you holding competitor meetings outside the United States so that you don’t get arrested?

14) Do you shred your notes after a competitor meeting? Or have ground rules that no notes can be taken?

15) Do you have a code name?

If you have to keep the agreement with a competitor secret, then there’s a good chance it is not a pro-competitive agreement to benefit the customer. It is likely a fraud to secretly agree to raise the customer’s prices while outwardly maintaining the appearance of being competitors. For this reason, I never had any doubt that the so-called “no poach” cases were per se illegal, and in my mind merited criminal prosecution, though not the insane 10 years in jail currently available under the Sherman Act. There was an agreement among certain high-tech companies not to hire each other’s employees. Did the employees know about this? Of course not; they were the ones getting screwed and likely would not work for a company that did such a thing. The pro-competitive reason offered for the no-poach agreement was that the companies often did joint projects together and they didn’t want each other stealing employees they found to be good. But, they could have had the employees sign some kind of a waiver before working on such a project that they wouldn’t go to X company for some period of time. And the no-poach agreement covered more than just employees who worked on collaborative projects. In any event it was a fraud against these employees to have a secret agreement that suppressed their salaries[2]. So, if you have an agreement with a competitor that suppresses your employees’ salaries, and that agreement is secret, it isn’t probably per se—it is per se.

[1] It may be necessary to keep some competitor collaboration secret while the agreement is being worked out.—i.e. collaboration on a new product or venture. Secrecy for some period of time is necessary. But, if the end product of the agreement is pro-competitive, than a company would want to shout that from the rooftops. On the other hand, if the customer, or government, must never find out, then it probably per se.

[2] Interestingly, the Antitrust Division has had a form of “no poach” agreements—but the agreements were public and accepted by those that were affected. If an Antitrust Division attorney wanted to do a detail in the United States Attorneys Office to get trial experience, they would have to sign an agreement that they would return to the Antitrust Division at the end of the detail for a certain period of time. I think the time was a year, but I don’t know for sure because I was told I could leave any time and didn’t have to come back!