What do trade associations need to know about competition law?
Published 25 September 2014
漏 Crown copyright 2014
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Trade associations play an important role in promoting their members鈥� interests. However, if a trade association is used as a means to create or encourage an infringement of competition law, then both the association and its members can face serious consequences.
Things you should do
- remember that the association itself can be liable for breaches of competition law, and that a breach can have both financial and reputational consequences for the association
- establish a competition compliance policy for the association, and make sure members are familiar with it
- forbid members from discussing competitively sensitive information
- require members to leave, and to report to the association or the CMA, any meetings with competitors where competitively sensitive information is discussed
- ensure that any standard contract terms and conditions developed by the association are clear, easily understood, in plain language and fair to consumers
- ensure that rules and admission criteria for the association are transparent, proportionate, non-discriminatory and based upon objective standards
- ensure that the requirements for any quality certification schemes the association operates are fair, reasonable and are available to all businesses that meet them
Things you should not do
- have rules that prevent the members from taking independent commercial decisions
- let the association be a channel for, or otherwise facilitate, the sharing of competitively sensitive information between members about pricing, customers or output plans
- allow members to discuss competitively sensitive information in or around association events, including in 鈥榰nofficial meetings鈥� or at social events
- issue formal or informal pricing or output recommendations to members
- develop association rules or practices that restrict members from advertising their prices or discounts, soliciting for business or otherwise competing with other members
- require members to provide the association with competitively sensitive information, such as information about pricing and/or output intentions
- publish messages suggesting that lower prices means lower quality
- establish irrelevant or arbitrary rules for the admission of new members
- adopt rules that restrict members鈥� advertising and promotional business practices, beyond ensuring such practices are legal, truthful and not misleading
- prevent members from using different contractual conditions from any association developed standard conditions if they wish to do so
What is competitively sensitive information?
Competitively sensitive information covers any non-public strategic information about a business鈥檚 commercial policy. It includes, but is not limited to, future pricing and output plans. Historical commercial information is far less likely to be competitively sensitive, particularly if individual businesses鈥� commercial activities cannot be identified.
Visit our鈥痯age on how to report a cartel鈥痜or more information.
These materials do not constitute legal advice and should not be relied upon as such.