|Trade Assns and EU Competition Law: What an International Assn Needs to Know|
Date: January 1, 2011
Trade associations represent an important platform for gathering information and exchanging experience among member companies. Because these member companies normally operate in the same business sector, there is a potential risk to the association under European Union (EU) competition law. This type of legislation is having an impact on large U.S. companies that have operations, suppliers or clients in Europe. However, "for-profit" companies are not the only potential targets of EU competition law: trade associations are also subject to this legislation. International trade associations and other "not-for-profit" entities working globally must be aware of EU competition law and its impact on governance and operational issues. As an Association Management Company (AMC) managing several associations in the EU, we regularly address issues of competition law legislation. Here are six areas of concern as they apply to the association environment.
The risk and the consequences of infringement of EU competition law can be significant. Some common trade association activities and member behaviors can place an organization in a vulnerable position regarding EU competition law.
International trade associations should be aware that the European Commission can fine them up to 100% of the total profit generated by the association in the previous financial year for a single violation of competition law. There have already been numerous cartel cases before the European Court of Justice (ECJ) involving illegal conduct in the context of meetings of trade associations, as these associations acted as platforms or starting points for causing competition law infringement (ex: Dutch Building Trade Association, Dutch Federation of Crane Rental Companies (FNK), Spanish Commercial Transport Association).
Currently, the best remedy is prevention. Trade associations and their member companies have begun to implement "compliance programs." These programs can include rules on internal organization, compliance guidelines, training sessions for management and staff, information sessions for member companies, and procedural checklists.
Every association working (or planning to work) in the EU must take steps to mitigate the impact of competition laws. Appropriate governance guidelines and organizational rules will protect them from the risk of any future violation. Such guidelines should be drafted internally with the support of local legal counsel or a qualified EU-established AMC.
Terrance Barkan is the CEO of Association Global Services (AGS) which provides trade and professional associations, not-for-profit organizations, federations and foundations, with a high quality, professional management and consulting service. This paper was prepared by Mr. Valeriu Popovici, an AGS European Public Affairs specialist. A detailed White Paper on EU Government Affairs exploring the issue of international associations representation in the EU can be found on http://smooz.4your.net/agshq/files/EU_White_Paper_Nov06.pdf.
AGS is an AMC Institute (ANSI Approved) Charter Accredited Firm. Contact: firstname.lastname@example.org www.agshq.com