The following is from an article by William
J. Parsons in the April 1992 issue of Business Credit:
A credit group must be legally organized, and
its services and activities must be properly operated and monitored.
But, precisely because it is a "gathering of competitors," it must also
present the image of a legal organzation with proper operations.
The group by-laws are the first benchmark.
These may be elaborate or quite simple, but they must contain three vital
clauses. First, the name of the group should be designated, and,
to eliminate any confusion, this name should describe the credit group
as closely as possible. Second, the membership qualifications--reasonable,
specific, and non-discriminatory--should be detailed. And third,
and perhps most important, a clause must state the purpose of the group.
This purpose or reason for the existence of the
organization is usually outlined in general, simple terms, such as "the
exchange of factual credit information," or "the exchange of factual credit
information," or "the upgrading of the credit practices a of the industry,"
or similar wording. This should be followed by a declaration of the
intent of the group to comply with antitrust and other laws. As an
no event, however, shall this group participate in or give consideration
to any activity, plan, understanding, or arrangement that would restrict
or interfere with the free and independent judgment by the members in the
management or operation their respective businesses. NOthing contained
in these by-laws shall authorize or permit the group to perform or engage
in any acts prohibited by law."
intent clause should be combined with rules of conduct to ensure:
only historical, factual credit information may be reported;
prices may never be reportted or discussed;
credit terms may not be discussed; and,
there may be no agreements or understandings.
A clause should also state that the
rules of conduct apply to all discussions, both those within formal meetings
and any outside those meetings. This Antitrust Compliance Statement
should be read at the beginning of every meeting. In 1976 a credit
group was named as a defendant in an antitrust suit. This statement,
with testimony confirming that it was read at the beginning of every meeting,
proved significant in obtaining a swift dismissal as a defendant for the