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March 01, 1994
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Case No: FTC File No. 931 0085 FTC v Community Associations Institute
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Federal
Federal Court
County of Washington
Branch: FTC
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Federal Trade Commission
v.
Community Associations Institute
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Summary
The Community Associations Institute (CAI), whose members manage condominium and other homeowners' associations, has agreed to settle Federal Trade Commission charges that provisions in its codes of ethics restricted competition among its members to solicit clients, in violation of federal antitrust laws. According to the FTC complaint detailing the allegations in this case, until June 1993, CAI interpreted its PCAM code of ethics to prohibit its PCAM members from sending unsolicited mailings to homeowner and condominium associations quoting prices or otherwise seeking their business. CAI allegedly issued warning letters to managers who its investigations showed had violated these provisions. The settlement would prohibit the Alexandria, Virginia-based CAI from inter-fering in any way with the truthful advertising and solicitation efforts of its members in the future, and require it to remove any code of ethics provisions inconsistent with this prohibition.
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Causes of Action: Federal Trade Charges over client solicitation restrictions by Community Associations Institute CAI
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Lawsuit Text
FOR IMMEDIATE RELEASE
MARCH 1, 1994
COMMUNITY ASSOCIATION MANAGERS' PROFESSIONAL GROUP TO SETTLE FEDERAL TRADE CHARGES OVER CLIENT SOLICITATION RESTRICTIONS
The Community Associations Institute (CAI), whose members manage condominium and other homeowners' associations, has agreed to settle Federal Trade Commission charges that provisions in its codes of ethics restricted competition among its members to solicit clients, in violation of federal antitrust laws.
The settlement would prohibit the Alexandria, Virginia-based CAI from inter-fering in any way with the truthful advertising and solicitation efforts of its members in the future, and require it to remove any code of ethics provisions inconsistent with this prohibition.
CAI is a voluntary association whose members include professionals who offer their services as managers of residential community associations. CAI confers the title of Professional Community Association Manager (PCAM) on those who meet certain educational and experience standards.
According to the FTC complaint detailing the allegations in this case, until June 1993, CAI interpreted its PCAM code of ethics to prohibit its PCAM members from sending unsolicited mailings to homeowner and condominium associations quoting prices or otherwise seeking their business. CAI allegedly issued warning letters to managers who its investigations showed had violated these provisions. The code also required PCAMs to notify other professional managers of any contacts the PCAMs made with the other managers' clients (calling this a "professional courtesy").
Moreover, the complaint alleges, CAI circulated a task force report containing guidelines that declared it unethical to engage
in certain truthful, nondeceptive advertising designed to attract an association away from its current manager. The guidelines also declared it unethical to give price quotes to prospective clients before being selected to bid, and to offer free, non-management services (such as insurance and landscaping) as marketing incentives. Finally, according to the complaint, local chapters of CAI have discouraged members from soliciting clients.
- more -
CAI--03/01/94)
The challenged conduct allegedly deprived customers of truthful information for comparing professional residential community association managers, and unreasonably restrained competition among those managers, the FTC charged.
The proposed consent agreement to settle these allegations, announced today for public comment, would prohibit CAI from restricting truthful, nondeceptive advertising or solicitation by its members. For example, CAI could not interfere with members' general mailings to condominium or homeowner associations, solicitations targeting specific associations, telephone or personal calls designed to attract current clients of another manager, unsolicited price quotes or offering of free services. Further, CAI would be prohibited from inducing or encouraging others to take action that would violate the order.
The settlement also would require CAI to remove from its code of ethics any provisions inconsistent with the consent agreement's prohibitions, and to make the changes known by publishing the revised code and the FTC order in Community Management and Common Ground, two CAI publications, and by notifying local chapters and PCAMs. In addition, CAI would be required to deny recertification to any local chapter that refuses to certify that it will ensure compliance with the new bylaws, and to cease affiliation for one year with any chapter that CAI learns is violating the order.
The Commission vote to announce the proposed consent agreement for public comment was 5-0. It will be published in the
Federal Register shortly and will be subject to public comment for60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000. Copies of the complaint and proposed consent agreement, as well as an analysis of the agreement to assist the public in commenting, are available from the FTC's Public Reference Branch, Room 130, at the above address; 202-326-2222; TTY for the hearing impaired 202-326-2502.
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MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs 202-326-2161
STAFF CONTACT: Michael D. McNeely, Bureau of Competition202-326-2904
(FTC File No. 931 0085) (cai)
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