Antitrust Law

Critics of private standards charge that the activity is prone to anticompetitiveness and that, owing to lax antitrust enforcement, the law does not sufficiently discourage such activity.^[24] Proponents counter that the combination of liability law and antitrust law keeps private standards within an acceptable range of results. The argument goes as follows: private standards must be reasonable because liability attaches if a

product is not reasonably safe, while the antitrust law assures that standards will not be arbitrary or anticompetitive. The case studies suggest that antitrust concerns are voiced by committee members more openly than those about liability, but their perceptions of antitrust law are often uninformed.

The accusation that anticompetitive purposes lurk behind private standards is understandable given the unsavory history of product standards. Standardization schemes involving everything from ice cream to carpets were struck down by the courts in the 1940s as thinly veiled efforts at price fixing.^[25] AGA Labs was implicated in one of the most famous legal decisions in the field, Radiant Burners v. Peoples Gas, for allegedly withholding product certification for anticompetitive reasons.^[26] Economic considerations certainly influenced the AGA/ANSI committee's decision about requiring the ODS device when there was only one supplier. Ironically, while pleading antitrust concerns, most committee members were actually worried about putting U.S. companies at a competitive disadvantage. But popular perceptions to the contrary, there are several reasons why safety standards are unlikely to be infused with anticompetitive purposes. First, price fixing schemes tend to involve the shape or size of a product, not its safety features. The former are necessary to standardize prices, the latter are not.^[27]

More important, anticompetitive motives are most likely to be a problem in interpreting or applying safety standards, not in writing them. Anticompetitive implications are the clearest in applied situations, where outside scrutiny is minimal compared to standards-writing. The most celebrated case in the field, American Society of Mechanical Engineers v. Hydrolevel Corp., involved a conspiracy between two volunteers on a small subcommittee that helps issue thousands of annual interpretations to the Boiler and Pressure Vessel Code.^[28] In 1988, the Supreme Court declined to apply the "governmental action" immunity and upheld a verdict against a producer of steel conduit that had "packed" an NFPA meeting in order to keep polyvinyl chloride from becoming an accepted substitute under the National Electric Code.

There is somewhat less here than meets the eye. There has never been a successful antitrust suit alleging that a safety standard itself, as opposed to an interpretation, violated antitrust laws. The recent Supreme Court cases involved unusual circumstances and are unlikely to have widespread effect on private standards-setting, although they suggest a trend that might be counterproductive. American Society of Mechanical Engineers v. Hydrolevel Corp. involved an interpretation of the Boiler

and Pressure Vessel Code, something that focuses directly on a single product, not on the formation of general standards. Allied Tube and Conduit Corp. v. Indian Head involved a decision on the floor of an NFPA meeting, not in a committee or subcommittee, where almost all policy decisions are actually made. Morever, as a result of changes prompted in part by these cases, standards-setters are providing fewer "interpretations" and the decisive "floor vote" is a thing of the past at NFPA.^[29]

This leaves vast regions of standards-setting largely unaffected by antitrust considerations. In fact, the law tolerates a great deal of private activity, some of it questionable by almost any measure. By applying the so-called rule of reason to cases involving standards-setting proper, courts have sanctioned several private standards acknowledged to stifle technological innovation. Absent a showing of bad faith, there is almost always an "objective" reason for a standard that can pass judicial muster.

Private responses to antitrust law often seem out of proportion to the actual requirements of the law. Antitrust law is a popular excuse for almost every negative decision in the private sector. Since standards exclude things by definition, there is always an intuitively appealing argument that proposed requirements might illegally exclude something from the market. The law is not actually this restrictive. Even standards of obviously questionable scientific merit have been treated with great deference by courts and agencies.^[30] "We give the benefit of the doubt to the standards setter," according to a Federal Trade Commission official.^[31] The makers of low-tolerance metal chimneys or high-clearance woodstoves would have a valid antitrust claim only if they could prove the standards to be "manifestly anti-competitive and unreasonable."^[32]

Antitrust law is nevertheless influential in standards-setting, according to participants. Fear of the antitrust law, well founded or not, apparently helps explain the reluctance of private organizations to ban specific product types or push technology. A representative of the Gas Appliance Manufacturers Association argues that the Z21.11.2 committee could not require the ODS device, which was manufactured solely by a European manufacturer, without raising "serious antitrust problems." UL, beset by a controversy about the temperature tolerance of metal chimneys, argues that the antitrust law is one of the reasons it cannot upgrade the standard.^[33] Similarly, after the NFPA general membership agreed in an unusual floor vote to ban woodstoves requiring more than thirty-six-inch clearances, the Standards Council overturned

the action, citing antitrust concerns.^[34] These concerns are both widespread and overstated.