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ANTITRUST COMPLIANCE GUIDELINES

Introduction
The economic systems of the United States of America, Canada, the European Union
and other nations are based on the operation of free markets in which rival businesses
compete vigorously to provide the best products and services at the lowest prices.
Central to the operation of free markets is the absence of restraints on competition among
competing firms. While antitrust enforcement authorities have acknowledged the valuable
contribution of trade associations to the well being of the industries they serve and the
economy generally, the collaboration of competitors in any endeavour is perceived as
providing opportunities for illegal activity. The Pulp and Paper Products Council (PPPC)
recognizes the fundamental importance of complying with competition laws and has
always taken most seriously its commitment to uphold them. In furtherance of this,
PPPC, regularly reviews and updates its competition law (antitrust) compliance policy.
The complexity of antitrust and competition law makes it impractical in this very brief
outline to include all the principles in those laws. For these reasons, these Guidelines are
intended only to alert PPPC members and staff to those types of association activities
which are most likely to present antitrust law compliance concerns.

Overview of antitrust laws

Antitrust and competition laws (together antitrust laws) prohibit most business behaviour
that unreasonably restrains competition. The centerpiece of these laws, and the one
most applicable in the context of trade association compliance, is the prohibition, as a
general rule, of any practice or agreement that tends to limit competition by, e.g., fixing
prices, curtailing production, allocating markets, to name a few. An impugned agreement
need not be, and in practice seldom is, explicit. The courts have been astute at finding
agreements based on very subtle, often circumstantial evidence. Moreover, and this is
most important to keep in mind in the case of trade association activities, the illegal
agreement or arrangement seldom arises from a single incident. The typical antitrust
conspiracy case covers a multiplicity of documents, events and conversations, often
spanning a period of many years. It is the accumulation and interaction of these various
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elements that constitute the prosecutions or the plaintiffs case. Participants at a meeting
sometimes ask if a particular subject may be raised. It is possible that a one-time
mention of a subject that borders on the sensitive area could not alone form the basis of
liability, but it could add to an accumulation of circumstances which, together, at some
point in the continuum, would be sufficient to tip the balance and invite an investigation or
complaint resulting in liability.
Antitrust laws also prohibit anti-competitive practices amongst buyers, such as
agreements to pay not more than a certain price for a product that is an input to their
business or not to do business with a supplier or customer.
Liability can result in the imposition of very large fines, imprisonment and prohibition
orders or any combination of the foregoing in the United States and Canada.
Proceedings can be directed at companies and their directors, officers and employees.
Trade associations are often involved at the investigation stage and may be implicated,
but less often, at the prosecution stage. Private lawsuits may also be undertaken by an
injured party. These are particularly prevalent in the U.S. where the courts are
empowered to award treble damages. In Europe, the sanction is an administrative fine,
often in a substantial amount.
There are far reaching agreements for cooperation among enforcement authorities in
numerous countries, and foreign entities are in many situations subject to local laws in the
countries in which they do business. The U.S. and the EU both apply their antitrust laws
extra-territorially so as to reach illegal activity that may have taken place entirely off shore
but with effect on commerce within their territories.

Purpose
The purpose of an antitrust compliance plan in most manufacturing or service providing
firms is to protect the firm itself, by setting down a behavioral code to be followed by its
directors, officers and employees, from the various types of antitrust liability, including
liability that results from illegal agreements or arrangements with competitor firms.
While trade associations cannot be unconcerned with antitrust compliance of this kind
(they do in some instances have competitors in the form of rival associations and
consultants who provide similar services), the potential for liability, in their case, is
somewhat different for a number of reasons. For trade associations, therefore, the
emphasis in antitrust compliance (and in the present Guidelines) is more on avoiding
conduct and activities that could be construed as engaging the liability of its members,
who are competitors of each other. In this sense, the compliance plan of an association
complements a members own compliance plan, which, in any event, will likely offer some
guidance on participation by employees in trade association activities.

PPPC ANTITRUST COMPLIANCE GUIDELINES

September 2005

The purpose of these Guidelines is to ensure that:

1. The antitrust laws are observed, not only to the letter, but also in a manner that will
not present the appearance of possible illegality. In the light of the extremely
costly consequences of violation of antitrust laws, a conservative approach to
compliance is adopted.
2. Staff is informed in antitrust matters generally and, in collaboration with antitrust
counsel, involved in effective monitoring of PPPCs activities.
3. PPPCs activities are limited to those which will not expose members to antitrust
liability and that those activities are conducted accordingly.
4. Activities sponsored by PPPC are not used as an opportunity for the conduct of
illegal activities by members outside of PPPCs approved activities.
5. Members and their representatives participating in PPPCs activities are reminded
regularly of its antitrust compliance policy and the requirement that it be strictly
observed.
The current compliance Guidelines have been developed on the basis of the present
activities of PPPC. Should other activities be considered at some future time, antitrust
implications will be assessed carefully at that time.

Activities
PPPC, through its various product groups (associations), carries on the following activities:
1. The collection of data from members and other sources and the development and
dissemination of statistical reports and information based thereon.
2. Organizing periodic meetings and conferences to present these reports and hear
guest speakers on topics relevant to the industry.
3. On some occasions, in association with a meeting or conference, the organization
of a social event, usually a dinner or luncheon.
4. Upon request, consulting with individual members on specific projects.

Antitrust compliance principles

The following subjects are excluded from all PPPC activities:
1. Members or non-members current or future prices. Past prices may be alluded to
in certain contexts approved by counsel.

PPPC ANTITRUST COMPLIANCE GUIDELINES

September 2005

2. All matters that affect price, such as discounts and credit terms. These subjects,
and any others that affect price or agreements on the terms and conditions of sale,
such as warranty or delivery provisions, must be subject to competitive forces as
much as price.
3. Agreements with regard to changes in capacity or production levels.
4. Allocation, division or rationalization of markets or customers. These practices
are similar in effect to price fixing and are treated accordingly in the law.
5. Costs. However, there are exceptions which are discussed below.
6. Product quality. However, there are exceptions, particularly in the context of
establishing standards needed for interoperability and other legitimate purposes.
7. Boycotts or agreements not to deal with competitors, customers or suppliers.

Meeting procedures
1. Discussion of excluded subjects is not tolerated and, if it occurs, will be stopped
immediately by counsel or staff present. If it does not stop, all members should
leave immediately.
2. There should be a written agenda, prepared in advance, for all meetings, including
committees and subcommittees. Agendas should be followed.
3. Minutes should be prepared which accurately reflect the matters discussed and
action taken.
4. Counsel should examine agendas prior to meetings and should review all minutes
in draft form.
5. No informal or secret meetings should be held.
6. Counsel and PPPC staff should be present at all meetings of members or groups
of members and the board of directors.
7. Presentations, which are reviewed in advance, by guest speakers and panelists
must conform to these Guidelines.

Procedure at conferences
Procedure at conferences organized by PPPC is similar to that at meetings with the
possible exception of minutes.

PPPC ANTITRUST COMPLIANCE GUIDELINES

September 2005

Statistical reports
Antitrust laws generally permit the exchange of statistics provided the exchange does not
result in an anti-competitive effect. Data on current or future pricing plans, for example,
should never be exchanged or published.
Statistics reflecting past costs paid by members, but not revealing individual members
responses, may be collected and distributed to participants with the guidance of counsel.
Statistical reports issued by PPPC have been carefully designed in collaboration with
antitrust counsel and are believed to be in conformity with the various principles in that
regard which have been laid down in the case law and guidelines issued by antitrust
authorities. The matter is kept constantly under review by PPPC staff and counsel.

Social events
Members representatives should avoid discussion of business matters outside formal
meetings, including social events. PPPC may organize a social event on occasion. In
such cases, the following guidelines and procedures will apply:
1. Social gatherings organized by PPPC are limited to luncheons, dinners or
receptions taking place immediately before or after a regular meeting or
conference. Their purpose is purely social and not to discuss industry matters.
2. At the end of a meeting or conference, prior to gathering for lunch, counsel present
at the meeting again reminds those present that the same precautionary rules
apply during lunch as at the meeting itself. At a dinner gathering prior to a meeting
or conference, the reminder will be given at the commencement of the dinner.
3. Counsel and staff members will be present at social events and, as in the case of
regular meetings, will intervene immediately should conversation border on
inappropriate subjects.

PPPC ANTITRUST COMPLIANCE GUIDELINES

September 2005