Canadian COMPETITION LAW

Earlier today, the European Commission published a summary decision announcing the parties and imposing more than 82 million Euros in penalties against nine firms involved in a price-fixing cartel for mountings for windows and window doors.

According to the EC, the parties operated a cartel spanning the whole of the EEA in which they agreed on common price increases for mountings for windows and window doors, which was in place from late 1999 until mid-2007.  Also according to the EC, the cartel involved coordination through trade association activities:

“At the occasion of meetings of associations in Germany in November of each year the parties regularly agreed to increase prices by coordinating the amount (percentage or percentage range) and date of the envisaged price increase. There was a common understanding that the price increase agreed for Germany at these meetings was to be applied in the entire EEA, with adaptations to the specific situation of each country to the extent necessary.  In addition to the main meetings in Germany in November, regional representatives met to discuss the application of the agreed price increase to their respective territory.”

The vast majority of trade and professional associations (and their activities) serve many legitimate purposes, including promoting common interests to the public, lobbying and advocacy, research, member education and the promotion and improvement of product standards.  However, because association activities by definition involve the interaction of direct competitors, they can in some cases raise serious competition law concerns under competition laws, including the Competition Act.

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 association activities that can be problematic include: (i) board and membership meetings, (ii) exchanges of competitively sensitive information (e.g., information relating to fees, customers, costs, bidding/tendering, etc.), (iii) association rules and bylaws (e.g., mandatory or suggested fee guidelines, advertising restrictions, membership restrictions, etc.) and (iv) advertising or marketing restrictions.

Trade Association Meetings & Information Exchanges

Meetings are a normal and routine part of most professional and trade associations and can involve a variety of legitimate and pro-competitive activities.  However, given that association meetings also in many, if not most, cases involve the interaction of direct competitors, they are considered to 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 Act (e.g., the formation of price-fixing or other agreements that contravene the conspiracy offences of the Act) or can make it easier for the Bureau, a court or private plaintiff to infer that anti-competitive conduct has occurred (e.g., use a meeting, if appropriate precautions are not taken, such as where competitively sensitive topics are discussed, as evidence of an anti-competitive agreement).

Based on the potential risk, it is prudent for associations to adopt basic conduct of meeting guidelines for the conduct of board, committee, task force and membership meetings.

Information exchanges (i.e., the exchange of competitively sensitive information) is another of the main risk areas for trade and professional associations, which may include the exchange of information relating to current/future pricing, market shares, costs, customers, markets, market shares and current/future business plans and strategic plans.

The reason the exchange or discussion of such information can potentially raise issues is because, when shared with competitors, it can lead to the formation of an anti-competitive agreement (e.g., a price-fixing agreement) or support the inference of an anti-competitive agreement (e.g., the exchange of pricing information followed by a stabilization of price could infer that an anti-competitive agreement exists).

Based on the potential risk, associations should adopt basic compliance guidelines for information exchanges between members (e.g., in relation to benchmarking, research, lobbying or other joint activities among members).

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