Settlement Orders Designed to End Restraints Contained in Codes of Ethics
The National Association of Residential Property Managers, Inc. (NARPM) and the National Association of Teachers of Singing, Inc. (NATS) have agreed to eliminate provisions in their respective codes of ethics that limit competition among their members, according to the FTC. These settlements are the latest FTC enforcement actions challenging restraints on competition that are incorporated into the ethics codes of professional associations.
The FTC’s complaint against NARPM, which represents more than 4,000 real estate managers, brokers, and agents, alleges that NARPM and its members restrained competition in violation of the FTC Act through provisions in its code of ethics that restrict comparative advertising and solicitation of competitor’s clients. The provisions read, “The Property Manager shall not knowingly solicit competitor’s clients,” and “NARPM Professional Members shall refrain from criticizing other property managers or their business practices.”
The proposed consent order settling the FTC’s charges requires NARPM to stop restraining its members from soliciting property management work, and from making statements that are not false or deceptive about a competitor’s products, services, or business or commercial practices. NARPM also must implement an antitrust compliance program, among other things.
In a separate complaint, the FTC charged that NATS, which represents more than 7,300 vocal arts teachers in the United States, restrained competition in violation of the FTC Act through a code of ethics provision that prohibits members from soliciting students from other members. The provision reads, “members will not, either by inducements, innuendos, or other acts, proselytize students of other teachers.”
The proposed order settling the FTC’s complaint against NATS requires that it stop restraining members from seeking teaching work, and stop telling its members that soliciting students is unethical. Among other things, the order also requires NATS to obtain a certification from each of its chapters that the chapter is not restricting solicitation, advertising, or price-related competition by its members, and to sever its ties with any chapter that NATS learns is restraining solicitation, advertising, or price-related competition by its members. NATS also must implement an antitrust compliance program.
The Commission vote to accept each consent agreement containing the proposed consent order for public comment was 5-0. The FTC will publish the consent agreement packages in the Federal Register shortly. The agreements will be subject to public comment for 30 days, beginning today and continuing through September 22, 2014, after which the Commission will decide whether to make the proposed consent orders final. Comments on the National Association of Residential Property Managers, Inc. and National Association of Teachers of Singing, Inc. matters can be filed electronically, or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.