July 16, 2013
Two competition law cases caught my eye this morning in my daily media sweep involving trade associations – one with allegations of price-fixing against German flour mills and the other with a challenge by the Irish competition authority for an alleged boycott by Irish physicians.
Earlier today, the German antitrust authority, the Bundeskartellamt, issued a summary of a cartel challenge made against 23 flour-milling companies and their trade association. According to the announcement by the German authority, representatives of flour milling companies organized meetings and agreed on price increases, dividing customers and restricting output. More than 60 milling companies are said to have participated in the agreements, which regulated the price and supply of flour products to wholesale and retail customers across Germany. According to the German authority’s investigation, a representative of the association of German mills also participated in two cartel rounds and helped flour mill representatives organize meetings and coordinate agreements.
In the second case, the Irish competition authority announced that it was commencing legal proceedings against the Irish Medical Organization (IMO) following its refusal to reverse a decision by member GPs to collectively withdraw services in protest of government cuts. In particular, the Irish authority is seeking a declaration that the GPs’ actions violate Irish and EU competition law, an injunction and an order to remove press releases issued by the IMO. Interestingly, the IMO has taken the position that it is a trade union not an “association of undertakings” for the purposes of Irish competition law and therefore not in breach of the Irish Competition Act. (Canada also has limited antitrust exemptions for collective bargaining by unions and employer associations in relation to salary, wages and conditions of employment; the Canadian exemptions do not, however, apply to collective refusals to supply by entities that are not employees or workmen – e.g., collective refusals to supply by companies).
While both cases are being contested (the flour milling case is on appeal relating to the fines imposed and the Irish GPs are apparently vigorously resisting the Irish authority’s enforcement efforts), the cases are a reminder that collective action through trade and professional associations relating to member prices, markets and output can raise significant competition issues. In this regard, while the natural inclination of some associations may be to take an active “regulatory” role in all aspects of members’ activities, in the absence of an exemption or legislative authority, competition laws (including the Competition Act in Canada) generally apply.
The flour milling case in particular is also a practical reminder that members of associations need to take commonsense steps to ensure that neither the association nor association personnel facilitate agreements or other member conduct that may violate competition laws, given that criminal liability can, among other things, be based on aiding or abetting the formation of a conspiracy agreement (e.g., agreements to collectively refuse to supply, set prices, divide markets or customers, etc.). It is also prudent for association personnel to ensure that association facilities are not informally used for improper purposes, given that in a number of cases cartel agreements have been formed on the “fringes” of otherwise legitimate association activities (and in some extreme cases sham associations formed to act as a cover for illegal arrangements).
For more about Canadian cartel law and competition compliance for trade and professional associations see: here and here.
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