Legal Basis for Credit Groups
The exchange of factual credit experience
information, through a group or by individual competitors, is legal.
In Cement Manufacturers Protective Association vs. United States,
268 U.S. 603 (1925), the Supreme Court held that "the gathering and dissemination
of information which will enable sellers to prevent the perpetration of
fraud upon them, which information they are free to act upon or not as
they choose, cannot be held to be an unlawful restraint upon commerce,
even though, in the ordinary course of business, most sellers would act
upon the information."
In 1976 , in a case in which it was charged that
three companies' credit managers had caused a bankruptcy through the exchange
of credit experience information, a U.S. Appeals Court found that each
of the three credit executives had made his or her own independent decision
to cut off credit. The court upheld the right of "any individual
business to make its own business decisions, providing that it acts independently
and not pursuant to an unlawful understanding, tacit or expressed" (Michelman
vs . Clark-Schwebel Fiber Glass Corp., et al., 534 F. 2d 1036, 1976).