Hot topics in competition law: Risks and issues for trade associations and industry bodies

Trade associations and industry bodies play a crucial role in shaping industry standards, advocating for their members, and fostering collaboration.

However, as they often involve groups of competitors coming together to share information and discuss matters of common interest or, in some cases, to agree or take collective actions in a sector, it is essential that they understand how competition law applies to their activities. Trade associations must not become a means to create or encourage a breach of competition law.  

The risks of non-compliance with competition law include fines of up to 10% of turnover for the members individually, but also for the trade association or industry body itself, which can be separately investigated and fined by the competition authorities. For example, the UK Competition and Markets Authority fined an association of estate agents and three of its members over £735k for agreements prohibiting members of the association from advertising their fees or discounts in local newspapers. In Europe, the EU Commission imposed fines on six French meat federations for jointly setting prices for beef and jointly agreeing to suspend or limit imports of meat.  

Key risks and issues

Competition law prohibits anti-competitive agreements and practices. Trade associations must therefore ensure that their meetings and communications among members do not lead to agreements or understandings that restrict competition.  

Trade associations could inadvertently or deliberately breach competition law in several ways. Common issues include:

• Sharing competitively sensitive information: A trade association must not be a channel for, or otherwise facilitate, the exchange of non-public, strategic information among members, such as information about members’ future pricing plans, customer information, production volumes, or business strategies. This includes not allowing members to discuss competitively sensitive information in or around association events, including social or less formal events.  
• Facilitating anti-competitive agreements: A trade association must not have rules that prevent the members from taking independent commercial decisions, or issue formal or informal pricing or output recommendations to members. Trade associations must take care not to help members divide markets among themselves or agree pricing, including for example, developing rules or practices that restrict members from advertising their prices or discounts, soliciting for business or otherwise competing with other members.
• Restricting membership: If a trade association imposes irrelevant, arbitrary or discriminatory rules for membership, it can restrict competition.  
• Standard setting and certification: While setting industry standards and certification schemes can be beneficial, they can also be misused to exclude competitors. If the standards are not transparent, proportionate, and based on objective criteria, they are likely to cause competition law concerns.
• Collective boycotts: Encouraging or facilitating a collective boycott of suppliers, customers, or competitors can breach competition law. This can occur if members agree not to deal with certain businesses to pressure them into changing their behaviour or to exclude them from the market.

How we can help

Implementing robust compliance programs, educating members about competition law, and regularly reviewing practices can help protect trade associations against these risks. Similarly, members of trade associations should also implement steps to ensure that they understand their obligations under competition law.  

The Mills & Reeve competition team has extensive experience advising organisations and members of trade associations, either on their governance and compliance procedures generally or on specific areas of concern, including data gathering and reporting, specific projects or initiatives involving joint working between members, or challenges from non-members.  

We have provided board and member level competition compliance training in diverse sectors. If you have any specific questions or need further guidance, we’d be delighted to hear from you.

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