Trade Associations and EU Competition Law Alan S. Reid Lecturer in Law Robert Gordon University, Aberdeen, UK

Purposes of Competition Law Prevent Cartels Prevent anti-competitive takeovers and mergers Preventing abuse of a dominant position Restricting the power of member States to interfere with the market place

Objectives of EU competition law Pursuit of economic efficiency Protection of consumers/smaller firms Creation/Continuing operation of the Internal Market – in conjunction with the free movement provisions of the EC Treaty

Article 81 - Cartels Trade Associations may cause competition difficulties where the following characteristics are present; Oligopolistic market Low level of product differentiation Association represents a wide range of interests, horizontally and vertically – manufacturers/distributors/wholesalers

Problems posed by Trade Associations May set minimum or maximum prices May set quotas May impose penalties for breach of the agreement

Rules of the Trade Associations Rules of the Association, even if non-binding, may violate competition law Foreclosure of the domestic or regional market through product certification systems Degree of control wielded by the Association in the relevant market, determines whether competition law has been violated

Objectives of the Association Case C-137/95 – SPO Dutch Building Trade Associations 3 Purposes –Promote competition –Prevent improper conduct in price tendering –Promote the formation of economically justified prices

Membership Criteria of the Trade Association Case T-206/99 Metropole European Broadcasting Union Provided for 2 types of membership – active and associate Metropole repeatedly failed to gain membership Other companies remained associates after they failed to satisfy the membership criteria Discriminatory membership rules

Rules for Conducting Business SCK Case SCK certified crane hirers in the Netherlands and FNK was the umbrella organisation for crane hirers in the Netherlands Practical result of the rules of both organisations – non-SCK certified companies could not penetrate the Dutch market SCK operated a closed system, since it refused to recognise the certificates issued by equivalent foreign certifiers Thus the purpose of SCK was not to ensure quality BUT to restrict non-Dutch competition

Exchanges of Information Information Exchange Network Sensitive price information distributed between the members of the trade association Transparency to be welcomed in a healthily competitive industry Transparency destructive of competition in a tight oligopoly Uncertainty replaced by parallelism

Exchanges of Information II Can be very useful for companies They understand the market and can adapt their policies accordingly However, can be anti-competitive where the information; –Is very detailed –Is current –Is from very reliable sources Even information exchange in an informal setting can give rise to competition concerns Gentleman’s agreement will also violate EU Competition law

State Aid Trade Associations may object to the granting of such aid or indeed the recovery of illegal aid from its members Case T-55/99 – illegal state aid was recovered from the members of the Spanish Commercial Transport Association Case T-613/97 the aid given by La Poste to its subsidiary was not illegal

Enforcers of Competition Law Regulation 1/03 decentralises the enforcement of European competition law Commission will be freed up to concentrate on the strategically important cases This new policy necessitates a shift from public law enforcement to that of private law enforcement, via affected legal and natural persons

Competition law enforcement 1 Commission may undertake its own investigations 2 Commission receives notification from member States 3 Commission receives notification from interested persons 2 and 3 become more important next year after Regulation 1/03 comes into force

Trade Associations and direct and individual concern Administrative Competition law is already generous to applicants aggrieved by anti-competitive activity Article 230, the general provision on standing is much more restrictive – direct and individual concern

Direct and Individual concern – a relaxation of the rules? Case 50/00 Union de Pequenos Trade Association can only take action to annul a Community measure where; –Legal Provision expressly grants a procedural power to the Association –Association represents an undertaking which could bring an action –Association is individually distinguished HELD – NO RIGHT TO BRING AN ACTION

Direct and Individual Concern II A false dawn? Case T-177/01 Jego Quere Court of First Instance held that individual concern had been too restrictively defined Court of Justice cases are to be preferred over CFI jurisprudence Jego Quere have appealed and Advocate General Jacobs has delivered his Opinion in the case He appears to be taking a very conservative approach to direct and individual concern which he spurned in the original case

Conclusion Trade Associations can act anti-competitively or pro-competitively Short-term protectionist policies may achieve short term gains at the expense of innovation and fundamental reform which will provide long-term growth and security Trade Associations can act as an early warning system Trade Associations can help European industry respond to the rigours of globalisation and the need for improved competitiveness