Trade Associations and EU Competition Law

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

2. 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

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Direct and Individual Concern IIA 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

18. 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