4. Activities of trade associations
What is the role of trade associations in promoting competition?
Trade associations have a vital role to play in educating their members on the Competition Ordinance and promoting a pro-competitive compliance culture.
[Source: “Competition Ordinance and Trade Associations” Brochure - “Do” section]
What are the competition risks associated with trade association activities?
A trade association will be an association of undertakings if the members of the trade association are undertakings. Where undertakings, as members of an association of undertakings, make or give effect to a decision of the association of undertakings which has the object or effect of harming competition, the undertakings and the association may both incur liability under the Ordinance.
Trade association should not:
- Recommend or require their members to set particular prices for their products or impose particular fees for their services.
- Impose restrictions on members regarding the terms and conditions on which they sell their products.
- Help members divide up their sales territories, including by geographic areas, types of customers or types of products.
- Set or recommend production targets for members.
- Coordinate or facilitate collusive tendering by members.
- Help members share strategic information that a business normally doesn’t want its competitors to know. Generally, information relating to price (including future pricing intentions) and quantities of members’ products or services is the most competitively sensitive.
- Organize or encourage a boycott by members against targeted individuals / businesses.
- Set rules or codes restricting or reducing competition among members, for example, setting rules limiting members’ discount/ promotional activities.
- Use arbitrary rules to admit and/or expel members.
- Prevent members from developing alternative standards or providing products that do not comply with the association’s standards.
[Source: Commission’s Guideline on the First Conduct Rule Para 6.54 & “Competition Ordinance and Trade Associations” Brochure - “Don’t” section]