Source: American Society of Association Executives
This article originally was published by the American Society of Association Executives on September 16, 2019.
Antitrust “tying” claims typically are brought against for-profit companies, but associations may be liable if they package and sell products and services in a way that may be viewed as anticompetitive. It pays to know the risks.
Among the liability risks that keep association executives up at night, antitrust “tying” claims are probably low on the list—if they make the list at all. But recent cases against medical societies and medical boards suggest that association leaders should pay attention.
“Tying” occurs when an organization that sells a product or service requires, as a condition of sale, that consumers also purchase another product or service that they do not want or need—or that they would prefer to purchase from someone else. If the organization has sufficient market power in the desired product or service, this requirement could constitute a tying arrangement that violates the antitrust laws.
While tying claims are more often brought against for-profit companies with high market shares, nonprofit organizations are not immune, as recent tying claims involving medical certification make clear.
One case, Talone v. American Osteopathic Association, challenged the AOA’s requirement that doctors of osteopathic medicine who were board-certified in a specialty by the AOA must purchase AOA membership in order to maintain their certifications. The association settled the litigation last year, agreeing to end its practice of tying certification to membership and committing to provide other benefits to members, including reduced fees and free courses.
Even more recently, doctors have brought a series of cases against certain medical boards, challenging their requirement that certified practitioners obtain regular recertification. (Prior to the 1990s, most medical boards granted lifetime certifications.) Today, medical boards that are members of the American Board of Medical Specialties require practitioners to recertify through ABMS’s program for maintenance of certification (MOC), which ABMS asserts “improves patient care by establishing high standards for ongoing learning, practice improvement, and assessment activities of diplomates.”
Doctors have brought tying claims against the American Board of Internal Medicine, the American Board of Radiology, and other medical organizations. They allege that the boards have a monopoly in the sale of the initial certification and that they are using their monopoly power to force doctors to purchase the ABMS recertification program, when the doctors would prefer to purchase MOCs from competing organizations. The doctors allege that this requirement restricts competition and constitutes unlawful tying.
The medical boards deny that their programs are unlawful. They argue the initial certifications and MOCs are not separate products—that MOCs are simply a means to maintain the original products—and therefore cannot be tied. They also argue that requiring MOCs has legitimate benefits that outweigh any anticompetitive harm.
Most of these cases are in their early stages, and it is too early to predict their outcomes. But it is not too early for associations to assess whether their policies could expose them to tying claims.
Associations offer many of their benefits exclusively to members. In most cases, exclusive benefits do not pose the risk of a tying claim—often because the same or similar benefits can be obtained elsewhere or the requirement to join the association to access the benefits cannot reasonably be argued to restrain competition. However, if the member benefits are highly valuable and arguably necessary for a professional or business to compete effectively in the market, the association should consider offering the benefits to nonmembers for a fee (or for a higher fee than members pay) to reduce the risk of a tying claim.
Associations also should examine their policies, if any, that require the purchase of one product or service to obtain another or that bundle products or services that readily could be offered separately. Again, in most cases, the threat of a tying claim should not force associations to offer their products or services a la carte, but they would be prudent to review their policies with an eye on such risks.
The recent tying cases against medical organizations should not cause alarm for associations that offer exclusive member benefits or that bundle their products or services. But now may be a good time for organizations to reexamine how they offer their products and services and to confirm that they are comfortable with any tying risk those offerings may raise.
The author thanks Erica N. Baum, a law student and 2019 summer associate at Pillsbury Winthrop Shaw Pittman, LLP, for her contributions to this article.