On October 24, 2008, the Competition Bureau (the Bureau)
released its draft Information Bulletin on Trade
Associations (the Bulletin) for public comment.
According to the Bureau, participation in trade associations -
particularly those whose members compete - carries with it an
inherent risk that the association may be used as a forum for
anti-competitive conduct, particularly anti-competitive agreements
or collective action that violates the criminal conspiracy (cartel)
provision of the Competition Act. "Association
activities that deal with subjects such as pricing, customers,
territories, market shares, terms of sales and advertising
restrictions" are of particular concern to the Bureau. The
draft Bulletin aims to provide guidance to trade associations on
how best to ensure compliance with the Competition Act; it
calls upon trade associations to "ensure that appropriate
safeguards are implemented" to guard against anti-competitive
After summarizing the provisions of the Competition Act
that are of greatest concern in the context of trade associations
(anti-competitive conspiracies and bid-rigging, price maintenance,
restrictive trade practices that exclude or reduce competition, and
misleading advertising), the draft Bulletin highlights the
following trade association activities as deserving of particular
information collection and sharing
recording of meetings (agendas and minutes)
membership criteria or restrictions
discipline of association members
self-regulation, voluntary codes and standard setting.
The draft Bulletin discusses the Bureau's concerns in these
areas and its recommendations for conduct by associations. These
recommendations range from the straightforward (e.g., establishing
clear and appropriate agendas and recording minutes of meetings) to
the more complicated (e.g., six guiding principles for a
trade association's development of any regulation, the primary
objective of which, according to the Bulletin, "should be to
promote open and effective competitive markets").
The draft Bulletin concludes with a list of "Best
Practices" for trade associations. The Bureau suggests that
associations establish a competition law compliance program for the
purposes of informing members about competition law, setting
boundaries for permissible conduct, identifying situations where
legal advice or the presence of a lawyer is advisable, and
encouraging pro-competitive association activities. Detailed
guidelines for association conduct, both general in nature and
specific to each of the issues listed above, are provided. These
include the more obvious Don'ts, such as:
discussing current or future prices, costs, output levels,
market allocations, business plans or bids; and
imposing sanctions aimed at inducing members to follow
association recommendations that, if carried out, would have an
Do's include such things as:
having clear membership criteria that are not arbitrary and are
based on the legitimate objectives of the association; and
adhering to clear agendas and record the minutes of the
The guidelines also include recommendations that may be
characterized as either a "gold standard" or as
"over the top," depending on your point of view. For
example, the guidelines state that associations should not only
ensure that legal counsel approve the agenda and minutes of any
association meeting, but that legal counsel should actively
participate in all association meetings. Generally, however, the
guidelines provide workable suggestions for the conduct of trade
associations that will go a long way to limit the risk of
association activity being off-side competition law and, if an
investigation is ever launched, to decrease the likelihood that the
Bureau will pursue the prosecution of an association or its
executives even if such activities are seen, by the Bureau, to be
on the 'margins' of anti-competitive conduct.
The draft Bulletin is a useful addition to the Competition
Bureau's many publications, and will serve as an important tool
for all Canadian trade associations and their members. Comments on
the draft Bulletin are welcomed by the Bureau until January 23,
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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