Members of Trade Associations need to Make their own Pricing Decisions and not Follow the Lead of any Trade Association
On 8 January 2016, the Irish Competition and Consumer Protection Commission (the “CCPC”) warned one trade association in particular, but also trade associations generally, not to issue minimum price recommendations to their members.
The CCPC emphasised that in order to comply with competition law, all businesses (i.e., “undertakings” in competition law terminology) must decide unilaterally/individually what price they are willing to charge for their products or services and not, for example, take directions from trade associations or set their pricing on the basis of the decisions of trade associations.
The CCPC had conducted an investigation into the display of minimum recommended rates for tour guide services on the Approved Tour Guides of Ireland’s (ATGI) website. The ATGI association represented tour guides in Ireland who have been accredited by Fáilte Ireland (i.e., the Irish tourist board). The CCPC decided that the publication of a list of recommended minimum rates on the ATGI website meant that consumers (i.e., tourists and tour operators) did not benefit from normal price competition between tour guides. The CCPC has indicated that it directed the ATGI to remove the list from its website and to inform its members that tour guides must decide individually what price they charge for their services. The ATGI now advises consumers to check fees with individual guides. The CCPC confirmed that “recommendations by trade associations of minimum prices to be charged by their members are likely to distort or eliminate competition and cause consumers to pay higher prices than they otherwise would [be]”..
The CCPC’s approach is not novel because it is well-established that trade associations may not agree on pricing for their members and that members must make their own pricing decisions. Nonetheless, the CCPC’s view is welcome because it is a useful restatement of the legal position. It is important that the CCPC remains consistent in its view on horizontal and vertical pricing because consumers and businesses alike need consistency and predictability on these issues.
For further information, please contact Dr Vincent J G Power or any member of the EU, Competition and Procurement Law team at A&L Goodbody.
Date published: 11 January 2016