Pricing and Salary Discussions in a Closed Environment

By Karen O'Donnell

DCWW has a membership of approximately 4,000 women who work in new media. Our organization fosters a collegial, problem-solving atmosphere. The mailing list contains discussions of database-building, webpage coding, troubleshooting computers, and more. It provides support and information on many topics to the members. One discussion forbidden by list rules concerns pricing and salaries. Why? Certainly it would be helpful to newcomers to the industry. Jobseekers could use advice when the all-important salary question comes up in interviews.

Consider the following (all of which have occurred on the list):

• An employer posts a job to the list and receives a number of responses. A list member later asks what salary she should ask when she applies for the job.
• A freelancer discusses a project she's received and asks what to charge for the project.
• Questions arise as to appropriate price ranges for different tasks.

Each of these discussions is prohibited by list rules. Each would be considered a violation of antitrust rules.

What is Price Fixing?

The Sherman Act prohibits any agreement among competitors to fix prices, rig bids, or engage in other anti-competitive action.

Price fixing is an agreement among competitors to raise, fix, or otherwise maintain the price at which their goods or services are sold. Agreement does not mean the same in antitrust law as it does in, for example, contract law. It is not necessary that there be a written or even an express oral agreement. Price fixing may be inferred from actions or circumstantial evidence. The more contact that there is among competitors discussing price, the likelier it is that agreement may be inferred. It is illegal even when it doesn't work.

Are We Competitors?

Well, yes. While DCWW fosters a collegial, problem-solving atmosphere on the list, members do compete for work or jobs. An employer may receive 30 or 40 resumes in response to a job posting on the list. One employer who recently posted work for a freelancer on the list had the position filled within the day.

The Closed Environment

Four thousand women may not seem like a closed environment. But we are all involved in the new media and would be considered an industry group. An Internet-based discussion can be particularly sensitive, due to the rapid dissemination of information to interested parties. In addition, the possibility that pricing information will reach people who will use it is high, which may facilitate the perception of coordination.

Salaries are essentially the prices we charge for our services to clients. Discussions on what to charge for services is as forbidden as discussions as to what to charge for products.

Would the Department of Justice file suit against one or two wrrls who discussed pricing on the list? Probably not. Would they file against the group that hosted the discussion? They have in the past. There are a number of cases in this area. For example, in Goldfarb vs. The Virginia State Bar, the U.S. Supreme Court held that a suggested price list published by the Fairfax County bar association for various tasks (simple will, etc.) constituted price-fixing.

Lisa King, a past president of DCWW, asked the then antitrust counsel at the Department of Justice informally for information on this topic. He cautioned that such discussions on list could open DCWW and its officers to prosecution.

Claims can be brought by private third parties as well. It doesn't have to be the government that brings suit. Suppose one wrrl posts a question about pricing and another responds by stating what she charges. Others may change their charges with or without the knowledge of the first two wrrls. The first two wrrls could face charges of price fixing, along with DCWW and its officers, from other wrrls.

So that is why most attorneys would recommend that there be no discussions of pricing and salaries on the list.

Some Common Objections

What about free speech? Does free speech extend to conspiracy to commit a crime? Individuals are free to engage in speech, but on DCWW's list, discussions of pricing are an element of a crime. In addition, while there is a right to free speech, DCWW has the right to decide how its forum is used.

What about surveys? If surveys are conducted in accordance with proper statistical procedures, they can be a useful tool. If they aren't, there are a number of cases where people were fined and even jailed for using surveys as a tool in setting prices. A proper survey is conducted by an independent firm, has a large enough sample size, and identifiers connecting individuals to specific prices are stripped out. DCWW cannot conduct salary surveys on the list or provide a forum through which to do so.

Additional Resources:

• Antitrust Guidelines for Collaborations Among Competitors from the FTC and DOJ (PDF file).
• Department of Justice guidelines (PDF file).
• San Francisco Women on the Web
• Gigalaw (an excellent resource for Internet law)
• "Horizontal Price Fixing in Cyberspace," transcript of a speech by Jonathan Baker.