Guidance to eFIG members on the reducing the risk of being in breach of competition law
A trade association consists of a group of companies or undertakings (on a local, national or international basis) the aim of which is, in broad terms, to further the trade interests of its members. Trade association membership can benefit businesses in many ways. It is, for example, an effective way for industry to lobby governments or regulators about legislation or other issues likely to affect it. A trade association may be useful to its members by sponsoring or structuring research studies. Participation in trade associations can also help improve (in a legally acceptable way) understanding of the dynamics of particular industries and markets. Similarly, attendance at trade fairs or shows can be of value to companies not least in providing good opportunities for marketing.
However, trade association meetings and trade shows inevitably involve numbers of competitors getting together. For this reason, they give rise to competition law risks. Much evidence is cited in competition/anti-trust law cases of the legitimate activities of trade associations being used as cover for cartel conspiracies. As a result, trade associations are viewed with suspicion by competition authorities and are often targeted in an investigation. It is essential that any representative of a member company that attends a trade association meeting or trade show understands the competition law risks inherent in such get-togethers and does everything possible to minimise those risks. Any such individual must understand and comply with the fundamental principles of competition law and should know what to do in situations where there is the potential for a breach of competition law to occur.
The following guidance is aimed at preventing breaches of competition law and in particular to guard against the danger of trade association meetings or trade shows becoming forums for illegal discussions and agreements between competitors. The advice is based on guidance given by Rentokil Initial’s legal department to ensure that Rentokil Initial’s participation in trade associations does not put the company at risk in the environment of increasingly strict anti-competition legislation. As this guidance will be of benefit to all eFIG members as well as eFIG itself, it is offered as an example of good practice to protect eFIG and its members from any complaints relating to anti-competitive behaviour.
It should be noted that this advice is purely for guidance and is neither exhaustive nor definitive. eFIG members are advised to seek their own legal advice on this issue.
General guidance on trade association participation
- In order to provide protection to members of eFIG, it is suggested that eFIG members adhere to the following guidance
- Members must not use trade association meetings or trade shows to “announce” business strategies or comment on “market trends” (except in the most general of terms)
- Members must not use trade association meetings or trade shows to agree with any competitor(s) how they will negotiate with customers or suppliers
- If the discussion at an eFIG meeting turns to improper subjects, such as pricing or anti-competitive practices, members should
- a. make it clear that they cannot discuss such matters and ask that the subject be dropped
- b. if this does not happen, they should leave the meeting immediately, making clear their reason for leaving and ensure that their departure is recorded in the minutes of the meeting, or if there are none, in their own notes of the meeting; and
- c. report the matter to their line manager and/or legal department immediately
- If participants are in doubt about the legality of any discussion in the context of a trade association or a trade show, they should seek legal advice. If necessary, they should ask for the relevant agenda item to be postponed until they have had an opportunity to seek legal advice
- Participants must not participate in any “side meeting” with competitors outside the scope of the main trade association meetings
- Only in very limited circumstances should members meet with a single competitor in the context of a trade association meeting or trade show. Such a meeting may only take place within the context of a legally acceptable commercial or technical relationship (for example, where the competitor in question is also a supplier or a customer and your discussion is purely about that specific supply or customer arrangement) and where it has been scheduled and approved in advance by the appropriate senior directors of the member firms concerned. There must be a written agenda for any such meeting, which must be adhered to, and the discussion at the meeting must be recorded in writing. Copies of the agenda and the note of the meeting must be retained by the member firms concerned
During any eFIG meeting
As well as formal minutes, participants are advised to keep their own notes of what is discussed. Participants must not enter into any "off the record" discussions. Participants in trade association meetings or trade shows must be vigilant about what is discussed and should avoid discussing (or writing about) commercially sensitive topics with their competitors.
In particular, participants should not:
- discuss prices, details of specific services supplied to particular customers, production forecasts, individual or collective raw material costs, other future views of the market, etc.
- participate in any information exchange exercise, unless this has been approved by a company Legal Director (an “Approved Information Exchange”)
- discuss or analyse the output of an Approved Information Exchange with competitors
- agree with the other members of the trade association on how pricing increases will be announced;
- agree to adopt the same behaviour as other members of the trade association with a view to achieving a competitive advantage over competitors who are not members of the trade association
- discuss supply arrangements with other members of the association in order to get a feel for selling prices, current or future, in the market
- agree to share or allocate markets or territories amongst the members of the trade association
- agree to divide up different commercial projects between the members of the trade association, for example agreement to bid for different projects;
- discuss or make plans to keep a new competitor out of the market
- agree to warn a competitor, or new market entrant, to stay out of a territory
- discuss possible investments that a competitor is considering making in a particular country
- agree to leave any competitors customer’s alone; and/or
- agree to boycott a particular customer
If discussions stray into prohibited areas, participants must ask for the discussion to be ended as it seems to be straying into unlawful anti-competitive activity.