156 views

Deloitte Tax & Legal Alert: Possible anti-competitive conduct by professional associations

In May 2014 the Loan Market Association, an international professional association operating in the banking sector, issued astatement regarding possible breaches of competition law by associations of undertakings established in the banking system. The statement can be accessed at the following link.

Since professional associations’ meetings may constitute thepremises for the emergence of horizontal agreements regardless ofthe field where they are established, we detail hereinafter possible anti-competitive practices to which members of a professional association may be exposed, irrespective of their sector.

1. Cartel

Establishing a professional association does not raise competition law issues by itself. However, the professional association could be a convenient forum for competitors to meet in order to coordinate their market behavior, i.e. fix prices, limit the provision of services, share customers and geographic markets and align their behaviors during biddings.

In order to limit the risk of anti-competitive practices within professional associations we recommend caution in managing the following aspects:

  • Approving the agenda of the meetings in advance and transmitting it to all members;
  • Discussing in the meeting only those aspects which serve the purpose of the association;
  •  Drafting the minutes of the meetings such that conversations of the members and their intention to apply a particular practice are clearly recorded.

2. Exchange of sensitive information from a competition perspective

Exchanging sensitive information which has not been made public can be performed directly (through discussions between competing companies) or indirectly (through professional associations). In this context, sensitive information that should not be sent to competing companies can be related, for example, to prices, customer lists, production costs, quantities, turnovers, sales, marketing plans, investments, technologies or research and development programs.
From a competition law perspective, the risk refers to an indirect effect on competition by coordinating the market behavior, since it is believed that exchanging information reduces the uncertainty regarding competitors’ actions and the independent market behavior.

Preventively, association members should avoid the inappropriate exchange of information by:

  •  Providing reports with aggregated date and non-confidential information and anonymizing sensitive issues;
  •  Developing a “black boxing” system by designating one of the association’s members to receive and centralize confidential information from all the members and refrain from transmitting it to competing members;
  •  If a company receives sensitive data from a competitor, it should formally reject unsolicited information by a clear statement that it does not want to receive such data.

3. Exclusion of other potential competitors

Professional association membership criteria should be established objectively so that excluded companies do not suffer a competitive disadvantage by not being allowed to benefit from the studies/reports/standards developed by the association or its members.

To avoid restriction of competition:

  •  Criteria for admission in the association must be clear, objective and justified;
  •  Access to the association’s meetings and its working groups must be non-discriminatory;
  •  The results of the association’s activities must be disseminated to all members.

Related posts