What is NBMDA?

History & Mission

NBMDA is a trade association representing the leading wholesale distributors of specialty building materials for interiors including hardwood plywood & lumber, composite panels, decorative surfaces, cabinet & closet hardware, finishes/stains and related woodworking production supplies. Membership is comprised of distributors and suppliers (manufacturers & importers) that serve production companies involved in cabinetry, architectural woodwork, stock woodwork, store fixtures, solid surface fabricating, plastics fabricating, general and specialty woodworking industries as well as the independent building material, and kitchen and bath dealer.

NBMDA represents a network of distributors and suppliers dedicated to pursuing the association's mission of developing and promoting the effectiveness of distribution processes to improve member profitability and growth. As the industry evolves, so does NBMDA!

70+ Years of NBMDA History


Antitrust Policy

North American Building Material Distribution Association


  2. Policy

    It is the uncompromising policy of the North American Building Material Distribution Association, Inc., (“NBMDA”) to exercise the greatest care to comply with the antitrust laws. To help effect this policy, NBMDA’s activities are therefore monitored by its general outside counsel, an attorney with broad experience in representing trade and professional associations.

Because of awareness and concern resulting from antitrust litigation involving many industries, it is important to restate the commitment of NBMDA, its members and staff, to full compliance with both the letter and spirit of the antitrust laws. It is also important to remind each member that compliance with antitrust laws and other laws regarding fair competition is the responsibility of each individual member.

This restatement is designed to serve as a reminder of NBMDA’s long-standing commitment to compliance and as an aid to members and staff in understanding those portions of the antitrust laws which have application to our activities.

  1. NBMDA Organization and Purpose

NBMDA exists to represent distributors and suppliers of specialty building materials for interiors, including wood panels, surfacing materials, cabinet hardware, finishes and related woodworking production supplies, in the North American wholesale building Material distribution industry (the “Industry”).  Membership is comprised of distributors and suppliers that serve independent building material and kitchen and bath dealers as well as those that serve production companies involved in cabinetry, architectural woodwork, stock woodwork, store fixtures, solid surface fabricating, plastics fabricating, general and specialty woodworking industries.  NBMDA’s mission is to engage in such lawful activities as will enhance the welfare of the Industry and its members by promoting increased use of Industry products, by providing a lawful forum for analysis of conditions affecting the Industry, by collection, analysis and dissemination of relevant Industry information, by public advocacy and education and by programs and services which will enhance the efficient and economic performance of the Industry. 

With the application of intelligence, common sense and care, involvement with antitrust problems because of participation in NBMDA activities should be very unlikely.


  2. Overview

The Sherman Act, Clayton Act, Federal Trade Commission Act and Robinson-Patman Act are the basic federal antitrust and trade regulation laws. There are no implementing regulations. Many states also have similar laws.

These laws may be divided into two parts: those that govern what two or more competitors acting together may do and those that govern what individual companies may do. It is the former which is of primary concern to a trade association and its members. Specifically, an association is primarily concerned with the Sherman Act and the Federal Trade Commission Act.

  1. The Sherman Act (Enacted in 1890)

The Sherman Act is far and away the most important of the antitrust laws and its violation may bring the most serious consequences. It is enforced by the Antitrust Division of the Department of Justice (DOJ) and also by private litigants. Individual violators may now be fined up to $1 million and imprisoned for up to ten years. Corporate violators may be fined up to $100 million, and in some instances a penalty of twice the pecuniary gain to the violator may be imposed. In addition, private suits by injured parties, including class action suits, have become common and can result in treble damage payments of many millions of dollars.

Unlike many of the regulatory laws with which we are accustomed, the applicable portion of the Sherman Act is brief. The Act simply prohibits contracts, combinations and conspiracies in restraint of trade.

An association is, by definition, a combination, so our objective is to make sure that our activities do not restrain trade. Put another way, the activities of any association must not interfere with competition or any of its elements.

  1. The Federal Trade Commission Act (Enacted in 1914)

Although technically a trade regulation law rather than an antitrust law, the FTC Act empowers the Federal Trade Commission to prevent unfair methods of competition and unfair or deceptive acts or practices. The Act defines neither unfair competition nor unfair or deceptive acts and practices, leaving it to the Commission to decide what they are. For the purposes of this guide, it is assumed that the requirements of the Sherman and FTC Acts are similar, while at the same time recognizing the broader scope of activity potentially encompassed by the FTC Act.

The Commission often provides guidance under the Act by issuing advisory opinions and trade regulation rules. It enforces the Act with adversary proceedings by issuing complaints against respondents suspected of wrongdoing. Adversary proceedings are similar to court cases except that they are tried before an administrative law judge. Commission personnel act as prosecutor, judge and jury. The FTC may issue cease and desist orders and levy civil penalties, which are periodically adjusted for inflation, of up to $42,530 per day for unfair or deceptive acts and practices.


  1. General

Antitrust problems can be divided into three broad categories—those activities that are considered illegal in and of themselves (“per se” violations) by virtue of repeated court decisions and those activities that may, under certain circumstances be held by courts or the FTC to impose unreasonable restraints upon competition or acts of unfair competition.

The third problem category, and perhaps the most prevalent, involves nothing more than ignorance and carelessness:  situations where conduct, though actually innocent, creates an inference or appearance of wrongdoing. Needlessly suspicious behavior or carelessly worded letters, statements and memoranda are the usual causes of this kind of program.

  1. Per Se Violations

Price Fixing
Although everyone knows, or should know, that an agreement among sellers with respect to prices is the most serious violation of both the Sherman and Federal Trade Commission Acts, not everyone realizes that purchasers who agree on how much they are willing to pay for goods or services can be just as guilty as those who agree upon the price of what they sell. An agreement, to be illegal, need not be formal but may be inferred from a common course of conduct or understanding. As one judge put it, "a knowing wink can mean more than words.”

Agreements on Terms and Conditions
Price is merely one element of competition, albeit one of the most obvious. Other aspects of sales or purchase terms or conditions can be as important as price in the competitive arena. Discounts, allowances, freight charges, credit terms, warranties, etc., must not be agreed upon by competing sellers any more than prices. Discussion of these subjects must be avoided. Similarly, purchasers must not, directly or indirectly, impose comparable collective demands upon their suppliers.

Agreement to Control or Limit Production or Capacity
Such agreements, formal or informal, are illegal. Even common action resulting from suggestions for apparently laudable purposes such as raw material or energy conservation or for environmental benefits may be determined to be illegal.

Refusals to Deal
Collective boycotts against suppliers, customers or competitors are illegal. 

Market Allocation
Whether done on a geographic or functional basis, agreements by competitors to divide or allocate market segments, territories or customers are illegal.

Bid Rigging
Perhaps the quickest way to invite antitrust disaster is collusion or the appearance of collusion with respect of bidding, especially on government business.

  1. Activities Judged by the Rule of Reason

Many association activities have some impact upon competition, but because of their generally beneficial effects, they have traditionally been judged by a rule of reason. Except for those kinds of restraints which have been determined to be per se illegal (see above), the courts have been willing to judge most joint competitor activities in the light of whether or not their purpose or effect is to unreasonably restrain competition, taking into consideration all of the pertinent circumstances. It is in this area that experienced antitrust counsel’s advice is most needed. Intellectual honesty and common sense should, in most instances, warn the businessperson of a per se violation; this is not necessarily so in the case of many other areas of group activity. Some of these areas having application to a trade association will not be considered.

Association Membership
To the extent that membership in a trade association confers business benefits which have a bearing upon the ability to compete, arbitrary denial of membership may be considered an unreasonable restraint where membership eligibility criteria are met.  Any situation involving possible denial of a competitor’s application for association membership should be reviewed by NBMDA counsel.

Statistical Reporting and Benchmarking
The collection and dissemination of industry statistics and economic information (not involving prices) has traditionally been regarded as one of the basic legitimate functions of trade associations. Long ago the U.S. Supreme Court wrote in the Maple Flooring case (268 U.S. 563):

It was not the purpose or the intent of the Sherman Antitrust Law to inhibit the intelligent conduct of business operations, nor do we conceive that its purpose was to suppress such influences as might affect the operations of interstate commerce through the application to them of the individual intelligence of those engaged in commerce, enlightened by accurate information as to the essential elements of the economics of a trade or business, however gathered or disseminated.

Despite the broad approval given by the Court (not subsequently overruled) to economic data gathering and dissemination, prudent trade association management dictates that statistical and other economic data programs be considered by counsel prior to adoption and periodically reviewed to determine whether or not the purpose or effect of the program is likely to be held anti-competitive under current interpretations of the law.

Statistical reporting programs and industry benchmarking surveys should be conducted in accordance with guidelines first established by the DOJ and the FTC with reference to the health care industry in 1996 and subsequently applied generally to statistical reporting in all industries. The participation by industry members in the collection and analysis of industry price and cost information will not be challenged by the DOJ or the FTC under the antitrust laws, absent extraordinary circumstances if:

  1. the data gathering and analysis is managed by a third-party (e.g., a trade association, consultant or academic institution);
  2. the information provided by survey participants is based on data more than three months old; and
  3. there are at least five respondents reporting data upon which each disseminated statistic is based, no single respondent's data represents more than 25% on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated to prevent recipients from identifying any particular participant’s individual data.

Government Affairs Activities
Although rarely creating a problem, these activities are capable of having antitrust implications, particularly where their purpose or effect places someone at a competitive disadvantage. The First Amendment to the Constitution and a judicial principle known as the "Noerr-Pennington Doctrine” confer substantial exemption to government relations activities of associations from the antitrust laws. However, the exemption is not absolute. Counsel should be kept aware of government affairs programs.

Standards and Certification
The development by private organizations of product and performance standards, test methods and certification procedures has long been looked upon with favor by the courts, the FTC and the Department of Commerce. According to the FTC: "They facilitate communication between buyers and sellers, promote the interchangeability of products and components, transfer technology, assure the safety, fitness and energy efficiency of products, and help achieve efficiencies in design, production and inventory.”

The FTC, however, also states: "Despite these benefits, standards development and certification activities have frequently caused or contributed to substantial consumer and competitive injuries.”

There are tens of thousands of nationally recognized voluntary standards, developed by industry associations and technical organizations, in effect. Only infrequently are they challenged. When a problem does occur, it is generally because a standard facilitates price fixing or unreasonably causes the exclusion of a competitor or product from the market.

Assuming that an association’s standardization activity can neither be linked to price fixing nor the deliberate exclusion of a competitor or product, the principal remaining question is its reasonableness. As a practical matter, an examination of a proposed standards development project should review the following: (1) its objective, (2) its form, (3) the nature of the organization developing the standard, and (4) the procedures followed by the organization. If the examination shows that the standard: has a valid purpose (safety, for example); is voluntary and preferably related to performance rather than design specifications; is developed by an organization that provides representation for all reasonably interested parties; and employs procedures that permit adequate consideration of all pertinent points of view (i.e., due process); then the likelihood of an antitrust problem should be minimal.

Joint Industry Research
Joint research efforts by members of industry groups have increased substantially in recent years. By combining research efforts, the tremendous costs, often non-productive, can be apportioned. Individual companies, unwilling or financially unable to assume risks related to individual basic research projects, may be able to participate to reduce risks and avoid duplication. In addition, the urgent needs to develop new technology to comply with the flood of environmental, health and safety laws and regulations continue unabated.

Until the Justice Department’s complaint against the Automobile Manufacturers Association in 1969, joint research programs conducted by trade associations or groups of competitors had not been seriously questioned, although a variety of patent pooling and related practices had been under antitrust attack for many years. The automobile case involved air pollution control equipment and was terminated without a trial by a consent judgment. One of the main allegations in the complaint was that the major automobile manufacturers banded together to hinder development of air pollution control devices rather than facilitate it.

In an effort to encourage joint research efforts, including research related to standards development, and to dispel some of the antitrust concern, Congress passed the National Cooperative Research Act of 1984 (amended by the National Research and Production Act of 1993 and the Standards Development Organization Advancement Act of 2004). This law, as amended, applies a rule of reason standard in judging the legality of joint research ventures under the antitrust laws and limits recovery to plaintiffs in antitrust lawsuits. To obtain the benefits of the law, notification of the research venture must be given to the Department of Justice and the Federal Trade Commission within 90 days of its formation.

It is safe to say that under present law, joint research projects of the kind likely to be undertaken by NBMDA should not fall into the per se violation category. It should be recognized, however, that joint research may have an effect on two categories of competition – technological competition and the more traditional forms of competition. Therefore, proposed research activities must be considered in the light of the rule of reason by experienced antitrust counsel.

Employee Relations
It was generally assumed for many years that employer groups are immunized from the operation of the antitrust laws with respect to their labor relations activities. This assumption is based upon an exemption from the antitrust laws granted organized labor.

During the 1970’s, several federal court decisions cast some doubt upon that assumption and have held that the labor exemption extends to employers only in the context of multi-employer bargaining with a union.

More recently, there have been indications that Section 1 of the Sherman Act could be applied to situations where employers enter into agreements with one another not to “poach” each other’s employees.

Although these decisions should not severely limit most association employee relations activities, the guidance of antitrust counsel is advised with respect to information exchanges and activities having potential impact upon wages, benefits, terms and conditions of employment.

  2. Meetings

Meetings are a normal, legitimate function of trade associations. With the application of intelligence and care, they should not give rise to undue antitrust risks. The following precautions are suggested:

An agenda should be prepared by staff in advance of all meetings and reviewed by counsel. Agendas should be followed and departures from the agenda should be approved by counsel.

A staff member familiar with this guide should be in attendance at all meetings of the Association, its committees and subcommittees. In addition, NBMDA counsel, or a designee, should attend all Board and Executive Committee meetings. Some technical meetings may not require the attendance of counsel, but this determination should be made in advance by staff in consultation with counsel.

Accurate and complete minutes of all meetings should be prepared by a staff member. The staff member’s draft minutes should be reviewed by counsel prior to distribution to any member. Only minutes approved by counsel should be distributed (even in preliminary form) and only minutes as approved by counsel should be retained (no drafts, no tape recordings, no notes, no marked-up copies). Members should not keep their own minutes. The purpose of this section of the guide is not to provide "laundered” minutes but to avoid the preservation of misstatements, ambiguities, fragmentary reports and the like which may, years later, create misperceptions of the meeting.

Member Personnel
It is urged that member companies only send personnel to meetings who have been briefed by company counsel as to the company’s antitrust compliance policies.

Informal Meetings
All meetings of NBMDA, its committees and subcommittees are formal. There should be no private meetings or "rump” sessions because such sessions, even if innocent, may create a basis for suspicion of wrongdoing.

Meeting Room Cleanup
Staff should see that no documents, notes, etc. remain in meeting rooms at the conclusion of sessions. Fragmentary notes have a habit of turning up and possibly forming the basis of misperceptions.

Guest Speakers
Guest speakers are often unaware of antitrust considerations. Where possible, the text of guest speakers’ remarks should be reviewed by counsel in advance or, if the text is unavailable, an outline may serve. Exceptions may be made for government speakers and speakers on purely scientific or technical topics. Even university professors, scientists, engineers and similar professionals, however, can inadvertently be the cause of potential antitrust problems.

Meeting Handouts
Whether provided by the association or guest speakers, handouts should be reviewed by counsel in advance of distribution for possible inadvertent antitrust implications.

Social Events
It is recognized that luncheons, receptions, dinners, etc. are an important adjunct to many meetings. Periodically, members should be reminded that the same standards of conduct apply for social events as do for meetings.

Compliance Reminders
Counsel should make regular reports, at appropriate association meetings, of current antitrust law developments (court decisions of interest, pending legislation and enforcement agency policies as expressed in speeches, etc.). Any standard antitrust compliance statement at the start of every meeting, as used by some associations, should be periodically reviewed to assure that it reflects current law.

  1. Record Retention

All organizations and individuals are required by law to keep certain records. Many organizations and individuals, however, retain every scrap of paper. Only records required by law, necessary historical records, minutes and documents required for reference should be retained in permanent files. The miscellaneous collection of papers, correspondence, company statistics and notes that clutter up most files should be discarded after having served their purpose. Virtually all antitrust investigations and litigation, whether government or private, involve a file search; the more useless documents on hand, the more nuisance, expense and potential for trouble exists. A periodic records review and document disposal program should be a must with every organization.

  1. Correspondence and Memo Writing

Every letter and memorandum, including e-mail correspondence, prepared by a trade association member or staff member should be written with the assumption that someday it will be read by someone who has a jaundiced view of trade association activities. Before you write, think! Plan to say precisely what you mean, no more and no less. Leave no room for reading implications between the lines contrary to the facts. Assuming that the document is retained, think how you would like to be asked to explain it under oath five or ten years later.

  1. Communications from Members

When a staff person receives a letter from a member, the same mental processes should be followed. If the letter seems ambiguous or improper from an antitrust view, ask counsel to review it. The best practice when in receipt of an inappropriate letter is to respond to it, with counsel’s advice, clearing up any ambiguity or impropriety.

  1. Communications Among Members

From time to time, a committee chairperson or association officer may find it necessary to communicate with other members on association business. Unless the communication involves some unusual administrative matter of a personal nature that association staff should not see, communications should clear through the association office.


Trade association membership, and particularly membership in an organization such as NBMDA, should not present a material antitrust risk if members and staff follow the policy and guidance set forth above. Ninety percent of antitrust problem avoidance can be accomplished by application of intelligence, honesty, care and common sense. The remaining 10 percent of problem avoidance is seeking and following competent legal advice.

Never engage in any oral or written communication you would not want to share with a federal prosecutor.

Anthony M. Macleod