Are Your Electronic Communications Antitrust Law Compliant?

icon Blog on Legal Issues  •  posted 09/14/11

The exchange of credit information electronically—for example, by e-mail—must take account of U.S. antitrust law. The advice of attorney Wanda Borges of Borges & Associates, LLC, given at a NACM workshop, outlines how credit pros can make sure their e-mails and other e-communications are compliant. Borges is also an attorney member and former president of the National Board of Governors, Commercial Law League of America (CLLA).

“While the transmission of credit information electronically can provide instant gratification as to whether a potential customer is or is not creditworthy,” says Borges, “there is a continued risk when transmitting information electronically.”

“Today, some trade credit groups are even conducting their meetings and other business online,” Borges notes. “As the means by which credit executives obtain and transmit credit information is rapidly changing,” she adds, “today’s credit manager needs to know—more than ever—what can or cannot be done, what can or cannot be discussed, when and how credit terms may be adjusted and are covered under the various antitrust statutes.”

As most credit pros know, it’s a well-established legal precedent that the extension of credit and other terms of sale may fall within the scope of U.S. antitrust law. “It’s all too easy,” Borges points out, “for credit executives to believe they are immune from antitrust responsibilities—in contrast to sales, for example.” She explains that “the courts have repeatedly reaffirmed the doctrine that credit terms equals price.”

4 Precautions to Avoid Noncompliance

According to Borges, “the most important advice for credit granters to follow is to be aware that while electronic transmission hasn’t changed the rules, the use of electronic transmission makes it that much easier to establish a wrongdoing on the part of one or more credit grantors.”

Borges suggests the following set of precautions to ensure that your credit department is operating well within “permissive discussions and activities” under antitrust law:

1. “Anything transmitted electronically can be recovered by an expert with the proper tools,” Borges emphasizes. “Though it’s easy to feel that what’s taking place is a conversation and nothing more, remember that the electronic data record continues to exist.”
2. “Consider putting a warning on your own electronic transmissions,” Borges counsels. She offers the following language as an example of such a precaution: "This Credit Reference is provided at the request of ____ and is based upon information maintained in my files as a result of my company’s experience with ____. No judgment or recommendation concerning credit decisions is given or implied by this information. The recipient must determine its own credit decision. The data contained in this report is for information purposes only."
3. “Consider a requirement that anyone requesting a credit reference from you must affirm that the information will be used only for determining creditworthiness and not to be shared,” advises Borges. Again, she suggests possible language to achieve this: "The credit information you are about to view electronically is accurate information contained in my records and you are requesting same in order to determine the creditworthiness of ____. You may make one printed copy of this electronic information for your own use. You may not distribute, transmit, or otherwise circulate the electronic information to anyone else."
4. “If possible,” says Borges, “have your information systems staff create a mechanism by which the requesting party must accede to your restriction prior to proceeding, using the following phrase: I have read and understand this Use Agreement and agree to be bound by its terms. ACCEPT ____  CANCEL ____."