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Are alarm companies violating The Sherman Antitrust Act
March 12, 2021
Are alarm companies violating The Sherman Antitrust Act
          This was posted on a popular security industry facebook page.  Company X posted: 
          “I'm second guessing myself here. A longtime client of mine asked for a quote for 3 additional doors (currently has 8-door [redacted] panel). I figured a day and a half of labor, a 4-door panel, a 4-door power supply with FACP integration, 3 prox readers, 3 strikes, and 3 contacts, along with some cable and misc hardware. The quote came to around $[redacted]. Then he asked what it would be for just 2 doors and that quote ended up at $[redacted]. Ultimately he told me to hold off because he didn't expect it to be so much.  [Manufacturer 1 redacted and Manufacturer 2 redacted, for reference]. Am I out of my mind or is that average?”
          Within a couple of hours, there were 10 replies from companies in the same region, and across the country, including solo installers and national salespeople.  All quoted their price for the job.  Another dozen or so quoted labor hours or simply stated too much or too little.
          I’ve been attending ESA, TMA and SIA events for more than two decades, I’ve heard the standard Sherman Antitrust Disclaimer that precedes any gathering of competitors too many times to count.  For those unfamiliar, the 1890 Act prohibits anticompetitive behavior.      
          Here is a snippet of alarm one group’s disclaimer:
          “Because the existence of unlawful agreements may be inferred from circumstantial evidence, the following topics carry antitrust risks and must be avoided at XXXX meetings, seminars, and other functions:
          Members’ current or future prices or components thereof, including discounts,   rebates, and credit terms; The possibility or desirability of members’ limiting their   sales of any product in any geographic area; Allocation or division of customers or   territories among competing retailers;
          Reasons why members should refuse to deal with a particular supplier or   customer; Whether the pricing or distribution practices of a competitor are   “unethical” or constitute an unfair trade practice; Efforts to influence suppliers’   prices; What constitutes a “fair” profit margin; Price lists or procedures for   coordinating price changes.”
          Moderators on facebook, linkedin, etc. should edit or delete threads like this.  Not just because they aren’t legal.  Despite best efforts to vet new subscribers, there are many end-users including specifier and security directors in these groups.
  Your thoughts?
Peter Goldring, SET, NICET #143428 Fire Alarm Systems, Level IV
ACFE Certified Fraud Examiner #861106
Electronic and Physical Security Expert Witness | Operations, Financial, Licensing and Compliance Consulting | Security Risk Analysis
          I’m not sure what’s concerning you most, that consumers may see pricing or that alarm companies are violating anti-trust laws, or both.  I think you need not be concerned on either count.
          First, I am not a fan of censorship, whether it’s by some idiot sitting with his finger on the delete button or an A1 programmed to look for certain words and phrases that some actual idiot programmed it to look for.  Last I heard, at least in this country, free speech was still a protected right.  I guess it depends on what you have to say.
          It’s interesting that social media giants think they have not only the right but the moral high ground to censor speech on their platforms.  You may be interested to know that in law its difficult [I am tempted to say impossible] to get a court order prohibiting defamatory speech.  The courts won’t stop it in advance but will entertain a remedy once it happens.  At least that’s my take on the current state of the law. 
          Sure I understand the risks and harm caused by hate speech, but censorship has gone well beyond that, deciding what information to disseminate, how to characterize it and when to discredit it.  So no, I don’t think Facebook should be taking down the discussion.  If you think some customer is going to get pricing from the discussion then that same customer could get the information from trade journals or even the an Internet search.
          When I first started representing alarm associations in New York they would start the meeting with the anti-trust statement. Word had come down from “national” and “those in the know” that the statement was required at the meeting and, more importantly, the meeting had to be carefully monitored so that prohibited conversation didn’t take place.  I was a young attorney; what did I know?  By the second meeting I advised the association officers that it wasn’t necessary to make the statement.  By the third meeting, maybe a few more, I told them to stop the nonsense altogether.
          What should alarm companies charge for basic monitoring?  Hmmm, $24 a month; definitely not less than $16, no more than $30 unless some free equipment or installation was provided.  That’s not price fixing.  That’s not discussion in violation of anti-trust laws. 
          Ever notice how two gas stations situated across the street have the same prices?  How do you think that came about?  Well, there’s two ways:  One station posts a price and then the second one copies it.  That’s called competition and it’s not illegal.  The other way is the two owners meet every night and figure out how they can come to a price, and then the next day that’s the price.  That’s price fixing, especially if they are the only two gas stations around and they pick a price that’s inflated above market. 
          There is nothing wrong with discussing pricing, what you get for this or that.  The problem is when you agree to fix a price, especially above market, to squeeze consumers who may have no other choice but to buy from the conspirators. 
          Any lawyers out there want to correct me?  Be my guest.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301