rr, ) FEET Meee MeL ({ manupatra Quarterly Journal Volume 1: Part 1 ROLU RETO er Te CM Patty) Competition Law Reports Consulting Editors Dr.S.Chakravarthy G R Bhatia Kumar Chaudhuri Former Member, Tatra and futhra Nahi Dea Sesobates, sade psocutes, MRTP Commission, Law Offices, Bangalore Adviser/Consultant New Delhi on Competition PolicyTrade Associations Qua Indian Competition Law G.R Bhatiat The competition agencies around the world have frowned upon ‘Trade Associations (TAs)' for their direct or indirect involvement in conduct which harms or restrains competition. A TA may itself engage, orchestrate and monitor blatant antitrust violations and perpetuate it over a time. The author delves into the issue and highlights the risks under the competition law and suggests Don'ts’ which TAs ought to refrain. The Article also emphasizes the need for co-ordination between Competition Authority and the TAs keeping in view the numerous useful functions which they perform and the need for the CCI to take a balanced view while enquiring into the role of TAS as the latter are ideally placed to facilitate increased compliance, 1. Trade Associations and their significance Globally, the important role played ‘They issue recommendations to their members on a variety of commercial and non-commercial issues. Trade associations also promotes by Trade Associations in modern economies is increasingly being recognized. Their activities benefit their members—especially the smaller members—and may also be | beneficial in increasing the efficiency of the market. According to OECD. “although their principal function to provide services to their member: trade associations also have important “industrial policy” and “political” functions. Most trade associations take an active role in | shaping the way their industry works. They promote product standards and best practices, and they define and promote standard | | terms and conditions of sale, They publish and enforce codes of ethies, and in some cases they formulate | and enforce industry self-regulation. port Potential Pro-Competitive and Anti-Competitiv represents and protects the interests of members on legislation regulations, taxation and policy matters likely to affect them. In addition to the aforementioned, trade associations also commission industry. studies — through independent’ agencies, lobby with the State Authorities /Regulators to bring to their notice the hardships being faced by Industry and plausible solutions for the same, the development of guidelines for product standardization, the dissemination of aggregate market information to help firms make investment decisions, the dissemination of information regarding good industry practices, etc. These activities of the associations are viewed as the Aspects of Trade/ Business Associations. Available for download at http:/ /sww.ceed.org/eampetition an, 09» Mar. 09a6. expression of economic and social freedoms as enumerated and | protected under the Constitution of India | The significance of the Trade | Associations can be gauged from the fact that the Cll, a premier business | association, has about 380 national | and regional associations as | “Members” representing over 83,000 | companies.! The FICCI which | espouses the shared vision of Indian | businesses and speaks directly or | Indirectly for over 3,50,000 business units, has over 500 Chambers/Trade | Associations as its Members.* The | ASSOCHAM which endeavours value creation of Indian industry is having Jn fts fold over 300 Chambers and | Trade associations serving more than 2 lacs members from all over India.’ Further, 1,049 non-profit entities are reportedly registered under Section 25 of the Companies Act, 1956 to promote inter alia commerce or any other useful object | and substantial number thereof, are associations of trade. These statistics are self eloquent. 2. Risks Under Competition Law However, the trade associations | remain by their very nature exposed to risks under competition laws, despite their many’pro-competitive aspects:~The suspicion of the | activities of the trade_assoclations | perhaps seems to be fiifluenced by | the frequently quoted dictum of Adam | Smith from 1776 in The Wealth of | Competition Law Reports The trade associations occasionally serve as a vehicle for practices that scuttles competition in Nations", namely: the market. “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in conspiracy against the public, or in some contrivance to raise prices. It Is impossible indeed to prevent such, meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from Sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less render them necessary”. Participation in trade and professional associations’ activities, therefore, provide ample ‘opportunities for companies in the same line of business to meet regularly and to discuss business matters of common interest. Such meetings and discussions, even if they are meant to pursue legitimate association objectives, brings together direct. competitors and provide them. with regular opportunities for exchange of views on the market, which could easily spill over into ‘legal coordination. Casual discussions of prices, 3, Website of the Confederation of Indian Industry, www.ctiontine.org 4 Website of the Federation of Indian Chambers of Commerce aiid Industiy. www-fleel.cam www.assocham.org Website of the Associated Chambers of Commerce and. Indpptry pf India, 6 e-records of the Ministry of Corporate Affairs, Government of India’s portal Jan:.08- Mar. 09