The CPS Consortium Model is in complete compliance with the Robinson-Patman Act, Sherman Act, and all Federal anti-trust laws and regulations. CPS ensures that preventive third party "firewalls" or "safe harbors" exist that exempt our clients from anti-trust regulations, even when direct competitors are involved in the purchasing consortium.  CPS is kept apprised on all new anti-trust laws, legislation, and published findings concerning purchasing consortiums.

Robinson Patman Act

In simple terms, it requires that favorable prices received by the purchasing group (consortium) must also be available to comparable purchasers unless the pricing differential is cost-justified or granted to meet a competing supplier's price.

Sherman Act

The Sherman Act's prohibition against agreements in restraint of trade also concerns purchasers. To minimize the risk of exposure, the consortium's effort - usually clearly spelled out in the agreement - cannot be used to restrict price competition, boycott suppliers, or boycott other purchasers. So, partners in a consortium must allow competing suppliers a fair opportunity to serve them and should make membership available to other purchasers based on published objective criteria.

Federal Trade Commission "Safety Zone" (35/20 Rule)

In 1994 Joint Statement of the Department of Justice and Federal Trade Commission on Enforcement Policy on Joint Purchasing set the most recent guidelines regarding antitrust issues. The Joint Statement sets up an "antitrust safety zone" in which joint purchasing arrangements "will not ordinarily be challenged absent extraordinary circumstances" by the Justice Department or FTC. A consortium is within the "safety zone" if (1) its purchases account for less than 35 percent of the total sales of the jointly purchased product or service in the relevant market, and if members of the consortium compete with each other (2) the cost of the jointly purchased products or services account for less than 20 percent of the revenues of each competing members of the purchasing group. The "safety zone" also requires that purchase volumes be voluntary and that all commodities between the consortium manager and its members are kept confidential.

 

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