May 28, 2014
On my media sweep earlier, two interesting trade association cases caught my eye, both including allegations of “output restriction” or “boycott” type activities. In one case, involving the Irish Medical Organisation (“IMO”), the Irish Competition Authority (the “Competition Authority”) announced that the IMO had provided undertakings (i.e., settlement terms) in an ongoing case that had raised collective refusal to supply (i.e., boycott) concerns for the Competition Authority. In particular, this case had involved alleged efforts by a medical association and its competing members to collectively refuse to participate in certain publicly funded health services.
In the second case, the Australian Competition & Consumer Commission announced that it is commencing proceedings in the Australian Federal Court alleging that an egg producer trade association, several egg producers and directors and former directors of the association and producers attempted to form an output cartel to cull hens or otherwise dispose of eggs to reduce the amount of eggs available on the Australian market.
While neither of these cases involves a decision on the merits, though that may come to pass in the Australian egg producer case, I thought they were interesting for several reasons (both in terms of compliance reminders and, in the IMO case, offering associations a route to be involved in members’ “consultations” with purchasers).
In terms of compliance, first, while a lot of the focus in the cartel (i.e., competition law conspiracy) area tends to be on price-fixing and bid-rigging agreements, these cases are a reminder that agreements among competing suppliers to collectively refuse to supply or deal can also raise serious concerns under the competition/antitrust laws of many countries, including Canada.
Second, the cases illustrate the ongoing interest of competition enforcement agencies in leading jurisdictions, again including Canada, in association activities that may violate competition laws.
Third, they are a reminder that both discussions about and agreements formed between competing suppliers relating to price, markets or output can be of significant potential competition law concern (and relatively easy for regulators to challenge unlike, for example, some unilateral conduct such as abuse of dominance, etc.).
Ok, so that’s the compliance bit (i.e., “lawyerly caution”) of my post.
Having said that, I thought the most interesting aspect of these two association related developments was the undertakings (i.e., settlement terms) in the Irish IMO medical association case. In this respect, the undertakings indicate where the Competition Authority in Ireland thinks that the “line is” for association led consultations with customers, including relating to price and services.
More specifically the undertakings suggest that, in the Irish Competition Authority’s view, voluntary industry associations can engage in consultations with customers regarding members’ services; can communicate with members and express opinions to members during such consultations; and can gather competitively sensitive member information (preferably using a third party) for the purpose of making submissions to customers.
The Competition Authority, however, suggests through the undertakings in this case that “the line” should be drawn in that an association should not recommend any particular pricing, underscore to members that they should make pricing and services decisions independently and unilaterally and that any competitively sensitive information gathered from members to be used for a legitimate purpose (e.g., submissions to a customer) should be gathered by a third party.
These undertakings are more or less a current statement of the Competition Authority’s collective bargaining position discussed in its Trade Associations Guidance Notice, which is in my view one of the most advanced regulator approaches to these types of issues that I am aware of.
I found the undertakings interesting, however, because they offer associations a legitimate route (including in Canada, depending on the circumstances) to participate in “collective” type discussions with purchasers/insurers on behalf of members, while reducing the potential competition law risk/issues that can sometimes arise in such discussions.
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