TRADE AND PROFESSIONAL ASSOCIATION ACTIVITIES
THAT CAN RAISE COMPETITION LAW RISK
Trade and professional associations can serve many legitimate purposes, including promoting common interests to the public, lobbying and advocacy, research, member education and promoting and improving product standards.
However, because association activities typically involve the interaction of direct competitors, they can also in some cases raise serious competition law concerns under Canada’s federal Competition Act.
For more information about some of the provisions of Canada’s Competition Act that can apply to trade and professional association activities, see: Associations. For information about the Competition Bureau’s compliance guidance for trade and professional associations, see: Trade Associations and the Competition Act. See also: Association Compliance.
In general, some of the types of association activities that can raise competition law issues include those dealing with pricing, advertising, customers, territories, market shares, terms of sale and other key aspects of competition.
Some specific trade and professional association activities that can potentially raise competition law concerns under the Competition Act include:
1. Board of director and other association meetings (e.g., where competitively sensitive information may be exchanged between competing members).
2. Information exchanges (e.g., exchanges of competitively sensitive information, such as relating to fees, customers, suppliers, costs or bidding/tendering) during association activities.
3. Association rules, by-laws or codes of conduct that restrict competition (e.g., mandatory or suggested fee guidelines, advertising restrictions or restrictions on members’ business models).
4. Advertising or marketing restrictions (e.g., restrictions on members’ advertising and marketing in codes of ethics or association by-laws or other rules).
These potential areas of competition law risk for trade and professional associations are discussed in more detail below.
Board of Director and Other
Trade and Professional Association Meetings
Meetings are a normal and routine part of most trade and professional associations and can involve a variety of legitimate and pro-competitive activities. However, given that association meetings also in many cases involve the interaction of direct competitors, they can be a high-risk area for associations and their personnel.
This is because meetings between direct competitors can in some instances either result in conduct that actually violates the Competition Act (e.g., the formation of a criminal price-fixing or other agreement that contravenes the conspiracy offences under section 45 of the Competition Act) or can make it easier for the Competition Bureau, a court or a private plaintiff to infer that anti-competitive conduct has occurred (e.g., use a meeting where competitively sensitive topics were discussed as evidence of an illegal conspiracy agreement).
Key competition law compliance tips: Based on the potential risk, trade and professional associations should adopt conduct of meeting guidelines for the conduct of board, committee, task force and membership and other meetings where competitors gather.
For more information, see: Association Compliance, Conspiracy (Cartels) and Information Exchanges.
For information about the Competition Bureau’s compliance guidance for trade and professional associations, see: Trade Associations and the Competition Act and Compliance Hub.
Information Exchanges
(Exchange of Competitively
Sensitive Information)
Information exchanges (e.g., the exchange of competitively sensitive information between competitors) is another key risk areas for trade and professional associations.
Areas of potential competition law risk include the exchange of information relating to association members’ current or future pricing, market shares, costs, customers, suppliers, markets, market shares and current or future business plans and strategic plans.
The reason the exchange or discussion of such information can potentially raise competition law issues is because, when shared with competitors, it can either potentially lead to the formation of an illegal anti-competitive agreement (e.g., a price-fixing or other illegal agreement under section 45 of the Competition Act) or support the inference of an illegal anti-competitive agreement (e.g., the exchange of pricing information followed by a stabilization of price could infer that an anti-competitive conspiracy agreement between association members exists).
Key competition law compliance tips: Based on the potential risk, trade and professional associations should adopt basic compliance guidelines for information exchanges between members.
In this regard, some common measures include conduct of meeting guidelines (e.g. for board of director and other association meetings), compliance guidelines for industry surveys, benchmarking and other information exchange exercises and guidelines for other types of information exchanges between members.
For more information, see: Association Compliance, Conspiracy (Cartels) and Information Exchanges.
For information about the Competition Bureau’s compliance guidance for trade and professional associations, see: Trade Associations and the Competition Act and Compliance Hub.
Association Rules, By-laws or Codes of Conduct
That Restrict Competition
Trade and professional association rules, policies or bylaws can also, in some instances, raise competition law concerns under the Competition Act if they deal with competitively sensitive topics such as member fees/pricing, marketing, advertising or membership restrictions or member discipline.
The key potential issue is that where an association enacts or enforces rules on competitively sensitive topics (e.g., fee tariffs, advertising restrictions in a code of ethics, etc.), that the association may be either a party to or assisting in the formation of an illegal conspiracy agreement under section 45 of the Competition Act (criminal conspiracy).
Association rules and codes of conduct can also in some cases raise concerns under the price maintenance, abuse of dominance, misleading advertising or other provisions of the Competition Act. In this regard, the Competition Bureau has commenced several cases against trade and professional association enacted rules under section 79 of the Competition Act (abuse of dominance).
In its Competitor Collaboration Guidelines, the Competition Bureau’s position is that anti-competitive agreements involving industry trade associations (or association rules, policies or by-laws that prevent or lessen competition substantially) and are enacted and enforced by an association with the approval of members who are competitors can lead to liability for an association as either a party to an offence or on the basis of aiding and abetting an illegal agreement under the Criminal Code.
Key competition law compliance tips: Associations should review any rules, policies, bylaws or codes of conduct that touch on competitively sensitive topics for Competition Act compliance and potential risk, including rules relating to member fees/pricing, discounts, marketing and advertising and membership restrictions and discipline.
For more information, see: Association Compliance, Abuse of Dominance, Conspiracy (Cartels) and Price Maintenance.
For information about the Competition Bureau’s compliance guidance for trade and professional associations, see: Trade Associations and the Competition Act and Compliance Hub.
Advertising and Marketing Restrictions
The criminal and civil misleading advertising provisions of the Competition Act can also be relevant to trade and professional association activities.
They can apply where, for example, an association makes false or misleading claims about its own products or those of its members (e.g., in connection with industry-wide marketing conducted by an association).
Key competition law compliance tips: Associations should ensure that their advertising and marketing activities comply with the Competition Act.
Associations should also review any association rules, bylaws or codes of conduct regulating member advertising or marketing to reduce the likelihood that such rules themselves (i.e., association restrictions on member advertising or marketing) may violate the Competition Act.
For more information, see: Association Compliance, Advertising Law and Misleading Advertising.
For information about the Competition Bureau’s compliance guidance for trade and professional associations, see: Trade Associations and the Competition Act and Compliance Hub.
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