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20 March 2020

Trade associations must pay attention to competition rules! The risk of fines is real, even during the COVID-19 pandemic

Information conveyed recently via various communication channels in Romania suggests that joint measures and decisions are being adopted at the level of trade or employers' associations to respond to the challenges that the COVID-19 pandemic has raised.

We recommend caution for trade and employers' associations as regards the risks of adopting joint, coordinated behaviour on the market, as well as reporting these measures to the public. Such decisions may raise competition risks both for associations and for their member companies.

The Romanian Competition Council may at any time initiate investigations if it suspects coordination of certain behaviours (this may include information picked up from press releases), within a limitation period of five years. If the competition watchdog identifies any indication that common, coordinated conduct has been adopted on the market, the authority may impose fines of up to 10 % of revenues achieved by associations and/or by each member company in the financial year prior to the fining decision.

Prevention rules for trade and employers' associations

In this context, we have summarised the main rules that trade and employers' associations should apply in order to avoid potential investigation by the Competition Council, along with a set of recommendations for adopting preventive measures:

  1. Competition rules are in force and applicable even during a global crisis.
  2. The golden rule is not to discuss or disclose confidential/strategic information during trade / employer associations meetings that should not normally be in the possession of competitors, irrespective of the means of communication.
  3. Although things are happening quickly, we recommend that all discussions within the associations be preceded by a written agenda, circulated in advance between the participants. Make sure to document the discussions in minutes, subsequently circulated by email and checked for accuracy by each member company.
  4. Industry-level solutions that should normally be decided independently by each company should not be discussed and agreed upon. For example, each company should independently decide on any change in the terms and conditions of contracts or any component of the sale price in accordance with its strategy and applicable laws.
  5. Possible common positions regarding future/anticipated conduct should not be discussed, decided upon and/or made public. The mere disclosure of information about future strategies (especially regarding pricing or trade policies) might be sanctioned.
  6. Associations may discuss topics such as the legal alternatives available to their member companies according to the legislation in force or positions on topics of general interest (without disclosing elements related to the commercial policy or strategy of each company). Ideally, aggregated data available at industry level, studies or any public information should be used to substantiate market positions. Trade and employers' associations may adopt recommendations, but without reference to any joint decision to adopt concerted behaviour on the market.
  7. Particular attention should be paid to discussions on draft bills in this period. For instance, in its motor third-party liability insurance investigation, the Competition Council found the discussions within the trade association regarding the impact of a legislative draft on tariffs (without touching on specific tariffs and merely indicating that a higher risk coverage obligation will trigger insurance rate increases) to be problematic. In the Competition Council's view, the uncertainty that would otherwise exist on the market was reduced by these discussions on the future (rising) trend of insurance tariffs. In this case, the trade association was sanctioned separately (even if it was not present on the relevant market) for having facilitated an anticompetitive practice.
  8. We recommend caution when making public statements and press releases. In many cases, investigations are initiated as a result of the monitoring of statements/press releases in the mass media.
  9. During this period, the use of certain marketing phrases in the communications of trade and employers' associations or in interviews with the representatives of member companies may give rise to competition concerns. This may be the case with formulations such as "industry companies / member companies of the association have aligned on...", "the voice of the industry says that...", "there is industry consensus" or "coordination / we have coordinated on... ".
  10. We also recommend that trade and employers' associations adopt an active role in fostering competitive conduct among their members.