Intersection with Antitrust
The primary goal of antitrust law is to promote competition among firms.
The primary goal of antitrust law is to maximize consumer welfare by promoting competition among firms. Areeda & Hovenkamp, supra, ¶ 100a; see also LePage's, 324 F.3d at 169.
— Broadcom Corp. v. Qualcomm Inc., 501 F. 3d 297, 308 (3rd Cir. 2007).
Standard setting organizations can provide opportunities for anticompetitive behavior.
[S]tandard-setting organization like ASME can be rife with opportunities for anticompetitive activity. Many of ASME's officials are associated with members of the industries regulated by ASME's codes. Although, undoubtedly, most serve ASME without concern for the interests of their corporate employers, some may well view their positions with ASME, at least in part, as an opportunity to benefit their employers.
— American Soc. of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 US 556, 571 (S. Ct. 1982).
Standard setting organizations are therefore held to a high standard. For example, SSOs may be held liable for the actions of their agents.
When ASME's agents act in its name, they are able to affect the lives of large numbers of people and the competitive fortunes of businesses throughout the country. By holding ASME liable under the antitrust laws for the antitrust violations of its agents committed with apparent authority, we recognize the important role of ASME and its agents in the economy, and we help to ensure that standard-setting organizations will act with care when they permit their agents to speak for them.
— American Soc. of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 US 556, 577-78 (S. Ct. 1982).
Membership in a standard setting organization does not insulate a company from antitrust liability.
We refuse to permit a defendant to use its literal compliance with a standard-setting organization's rules as a shield to protect such conduct from antitrust liability.
— Indian Head, Inc. v. Allied Tube & Conduit Corp., 817 F. 2d 938, 947 (2nd Cir. 1987).
Standard setting is permitted only where it offers procompetitive benefits.
[P]rivate standard-setting by associations comprising firms with horizontal and vertical business relations is permitted … under the antitrust laws only on the understanding that it will be conducted in a nonpartisan manner offering procompetitive benefits
— Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 US 492, 506-07 (S. Ct. 1988).
Standard setting should further provide meaningful safeguards that prevent the process being biased in favor of individual members.
[P]rivate standard-setting ... is permitted … only on the understanding that it will be conducted … in the presence of meaningful safeguards that prevent the standard-setting process from being biased by members with economic interests in stifling product competition[.]
— Broadcom Corp. v. Qualcomm Inc., 501 F. 3d 297, 310 (3rd Cir. 2007).
Standards may provide pro-competitive benefits, for example, by ensuring interoperability of products.
Private standard setting advances [the] goal [of antitrust laws] on several levels. In the end-consumer market, standards that ensure the interoperability of products facilitate the sharing of information among purchasers of products from competing manufacturers, thereby enhancing the utility of all products and enlarging the overall consumer market.
— Broadcom Corp. v. Qualcomm Inc., 501 F. 3d 297, 308 (3rd Cir. 2007).
Standards may also reduce the risk that producers face when investing in new technologies or designing new products.
Standard setting also reduces the risk to producers (and end consumers) of investing scarce resources in a technology that ultimately may not gain widespread acceptance. (Texas Instruments Br. 5.) The adoption of a standard does not eliminate competition among producers but, rather, moves the focus away from the development of potential standards and toward the development of means for implementing the chosen standard.
— Broadcom Corp. v. Qualcomm Inc., 501 F. 3d 297, 309 (3rd Cir. 2007).