If We Can't Talk About Fees, What Can We Do?

What Is The Big Deal About Translation And Interpretation Fees?

In the United States all businesses (freelancers included) whether they sell products or services are not allowed to participate in certain activities with their competitors.

Because certain topics are viewed by the Federal Trade Commission (FTC), as price fixing.

In order for us to understand what we can do, we need to understand what we can't.

What is price fixing?

The FTC states: Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms. Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor. When consumers make choices about what products and services to buy, they expect that the price has been determined freely on the basis of supply and demand, not by an agreement among competitors. When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement.

If we can't agree on a specific fee, can we agree on a price range?


The FTC states: A plain agreement among competitors to fix prices is almost always illegal, whether prices are fixed at a minimum, maximum, or within some range.

Is it legal to just want to raise or stabilize fees?

The FTC states: Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. Price-fixing schemes are often worked out in secret and can be hard to uncover, but an agreement can be discovered from "circumstantial" evidence. For example, if direct competitors have a pattern of unexplained identical contract terms or price behavior together with other factors (such as the lack of legitimate business explanation), unlawful price fixing may be the reason. Invitations to coordinate prices also can raise concerns, as when one competitor announces publicly that it is willing to end a price war if its rival is willing to do the same, and the terms are so specific that competitors may view this as an offer to set prices jointly.

Are all price similarities and price changes a result of price fixing?


The FTC explains: Not all price similarities, or price changes that occur at the same time, are the result of price fixing. On the contrary, they often result from normal market conditions. For example, prices of commodities such as wheat are often identical because the products are virtually identical, and the prices that farmers charge all rise and fall together without any agreement among them. If a drought causes the supply of wheat to decline, the price to all affected farmers will increase. An increase in consumer demand can also cause uniformly high prices for a product in limited supply.

A uniform, simultaneous price change could be the result of price fixing, but it could also be the result of independent business responses to the same market conditions. For example, if conditions in the international oil market cause an increase in the price of crude oil, this could lead to an increase in the wholesale price of gasoline. Local gasoline stations may respond to higher wholesale gasoline prices by increasing their prices to cover these higher costs. Other market forces, such as publicly posting current prices (as is common with most gasoline stations), encourages suppliers to adjust their own prices quickly in order not to lose sales. If there is evidence that the gasoline station operators talked to each other about increasing prices and agreed on a common pricing plan, however, that may be an antitrust violation.

Are there other things besides price that we cannot discuss?


The FTC states: Price fixing relates not only to prices, but also to other terms that affect prices to consumers, such as shipping fees, warranties, discount programs, or financing rates. Antitrust scrutiny may occur when competitors discuss the following topics:

Present or future prices
Pricing policies
Terms or conditions of sale, including credit terms
Identity of customers
Allocation of customers or sales areas
Production quotas
R&D plans

Is there any justification to price fixing?


The FTC states: A defendant is allowed to argue that there was no agreement, but if the government or a private party proves a plain price-fixing agreement, there is no defense to it. Defendants may not justify their behavior by arguing that the prices were reasonable to consumers, were necessary to avoid cut-throat competition, or stimulated competition.

Example: A group of competing optometrists agreed not to participate in a vision care network unless the network raised reimbursement rates for patients covered by its plan. The optometrists refused to treat patients covered by the network plan, and, eventually, the company raised reimbursement rates. The FTC said that the optometrists' agreement was illegal price fixing, and that its leaders had organized an effort to make sure other optometrists knew about and complied with the agreement.

What agreements are just as illegal as price fixing?

The FTC states: An agreement to restrict production, sales, or output is just as illegal as direct price fixing, because reducing the supply of a product or service drives up its price. For example, the FTC challenged an agreement among competing oil importers to restrict the supply of lubricants by refusing to import or sell those products in Puerto Rico. The competitors were seeking to pressure the legislature to repeal an environmental deposit fee on lubricants, and warned of lubricant shortages and higher prices. The FTC alleged that the conspiracy was an unlawful horizontal agreement to restrict output that was inherently likely to harm competition and that had no countervailing efficiencies that would benefit consumers.

Can we monitor competitors' ads, match special discounts or sales incentives?


The FTC responds: Matching competitors' pricing may be good business, and occurs often in highly competitive markets. Each company is free to set its own prices, and it may charge the same price as its competitors as long as the decision was not based on any agreement or coordination with a competitor.

Your company may collect price or other competitive information from public sources.

Can associations even suggest fees?


The FTC explains: Most trade association activities are pro-competitive or competitively neutral. For example, a trade association may help establish industry standards that protect the public or allow components from different manufacturers to operate together. The association also may represent its members before legislatures or government agencies, providing valuable information to inform government decisions. When these activities are done with adequate safeguards, they need not pose an antitrust risk.

But forming a trade association does not shield joint activities from antitrust scrutiny: Dealings among competitors that violate the law would still violate the law even if they were done through a trade association.  For instance, it is illegal to use a trade association to control or suggest prices of members.

What else are associations not allowed to do?

The FTC explains: It is illegal to use information-sharing programs, or standardized contracts, operating hours, accounting, safety codes, or transportation methods, as a disguised means of fixing prices.

Are we or associations allowed to exchange current price data?


The FTC explains: One area for concern is exchanging price or other sensitive business data among competitors, whether within a trade or professional association or other industry group. Any data exchange or statistical reporting that includes current prices, or information that identifies data from individual competitors, can raise antitrust concerns if it encourages more uniform prices than otherwise would exist. In general, information reporting cost or data other than price, and historical data rather than current or future data, is less likely to raise antitrust concerns. Dissemination of aggregated data managed by an independent third party also raises fewer concerns.

The bylaws of our association require me to provide data. What should I do?


The FTC answer: Many trade associations maintain industry statistics and share the aggregated data with members. Collection of historical data by an independent third party, such as a trade association, that is then shared or reported on an aggregated basis is unlikely to raise competitive issues. Other factors can also reduce the antitrust risk. For instance, the Statements of Antitrust Enforcement Policy in Health Care set out a "safety zone" for data exchanges: (1) that are gathered and managed by a third party (like a trade association); (2) involve data more than three months old; and (3) involve at least five participants, where no individual participant accounts for more than 25% on a weighted basis of the statistic reported, and the data is aggregated such that it would not be possible to identify the data of any particular participant.

For more information visit the FTC's Guide to Anti-Trust Laws they talk more on:

Price Fixing
Bid Rigging
Market Division or Customer Allocation
Group Boycotts
Other Agreements Among Competitors
Trade Associations

*This entire post was practically word for word from the following two FTC web pages.



What can we do?

The antitrust laws requires that you establish fees and other terms on your own, without agreeing with a competitor.

You may collect price or other competitive information from public sources.

You are free to set your own prices, and may charge the same price as a competitors as long as the decision was not based on any agreement or coordination with a competitor.

You may also change your prices due to supply and demand, market conditions, and your higher business costs.

As always, thank you for reading and sharing my posts.  Please if any of my blogs inspire you, give credit where credit is due.  Let's be fair, honest, and professional.  Let's help each other be great and stay great!

Feel free to connect or email me, Carmen Arismendy.  I'm a professional Spanish interpreter-translator and founder of eLingual.Net.  I started the eLingual Network because I could not find a fair, no middleman, no job bidding, ethical, and transparent meeting place for translators, interpreters, and clients online.  The website is in beta phase and by no means perfect but it's a step in the right direction.
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