At a basic level, industry associations are not for profit organisations comprised of members that share a common interest. While they play an important role in providing a collective voice for individual businesses within an industry, regardless of their size, it’s imperative that the associations and their individual members remain mindful of their obligations under the Competition and Consumer Act 2010 (Cth), as ultimately the meetings or events will involve competitors coming together in one form or another.
So, while the benefits and growth opportunities that come with attending and contributing to your industry’s business community should not be underestimated, it’s important that all business owners are aware of the competition law rules so that they do not inadvertently fall foul of the prohibitions.
We’ve listed our top 7 reasons to make connecting with your industry association one of your ongoing business objectives below, then outlined a number of things to look out for to ensure you don’t find yourself inadvertently in breach of competition law through your affiliation with your industry association.
1. Keeping your ear to the ground
If you’re a business owner, networking with industry peers at association meetings can help you stay abreast of important or developing industry issues and regulatory changes. Plus attending regularly will give you an opportunity to participate in and influence debate on legislation and regulation within your industry.
Be a part of the movement. Join in discussions, hear about and participate in industry research, discussions, and debate. Take advantage of opportunities to lobby public officials and influence changes you believe are needed in your industry.
2. Meet new people and grow your network
Meetings are an invaluable opportunity to network with industry colleagues and make new connections. Whether they are business leads or prospects, or simply having the opportunity to connect in a less intense, less formal environment, association meetings are a great way to connect with your peers.
3. Good leaders never stop learning
Continuing your education in whichever field or industry you are practising, or in a general business sense, should be an ongoing practice throughout your professional life. Canadian leadership commentator and author, Gerard Seijts, maintains that “good leaders are really the product of a never-ending process of skill and character development,” and that they really only “develop through [the process of] constant learning about their personalities, relationships and careers, not to mention the kind of leader they want to become.”
In South Australia where our firm, Peripheral Blue is based, it’s a mandatory professional requirement for us to complete ten hours of continuing professional development each year, pursuant to the Legal Practitioners Act 1981 (SA). Association meetings and seminars are a valuable opportunity to develop technical and other softer skills through training and seminars on relevant topics.
4. Giving back through volunteering or mentoring
While the opportunity to give back may not present itself immediately, becoming actively involved in your industry’s association can be a valuable exercise in giving back.
You may have been operating in your industry for many years and have a wealth of valuable business and industry knowledge you could be sharing. Mentoring is also a wonderful and enriching way to help educate and shape the next generation of professionals in your field or area of expertise.
Volunteering brings many well-documented benefits for your mental, emotional, social, and even physical health, not to mention the positive effects on those you assist, your industry association, and as a result, the wider community.
5. Leadership opportunities
Industry association meetings and conferences are a terrific opportunity to develop and grow your leadership skills and profile. Through volunteering for speaking engagements, chairing or nominating yourself for committees or other activities, or even simply becoming involves in the organisation of industry events, you put yourself ‘out there’.
These types of engaging activities will not only help to develop and grow your skills and network further, they also are a great way to enhance both your personal and professional brand.
6. It won’t happen overnight, but it will happen
The value you will derive from your industry association will take time to develop, so attending just once is clearly not going to deliver any long-term value.
We all have different personalities, so an outgoing person with a natural flair for networking is likely to enjoy the benefits of an industry association faster than someone less forthright or focused. Don’t give up. Continue your attendance and over time, you will be able to build a solid foundation of knowledge, in addition to professional contacts, relationships, and in some cases, lifelong friendships.
7. Strengthen your personal and brand reputation
Association membership can also act to further validate your business via valuable industry certification. Industry certification or association membership also reassures consumers or customers that they are doing business with a reputable company.
Internally, associations will also often provide support services and advise for members, HR or policy related guidance, for example, or assistance with grant or related applications. Otherwise, there may be sponsorship opportunities for your business so you can further highlight your brand or operations to others.
So many benefits…where’s the rub?
As association meetings typically involve interaction with direct competitors, there are risks from a competition law perspective which SMEs should be aware of so they can avoid discussions between competitors which cross the line.
According to the Australian Competition and Consumer Commission (ACCC) Chair, Rod Simms, “[a]ny contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anticompetitive understanding.”
Unfortunately, many businesses (both small and large) do not appreciate the risks of these types of discussions – potentially resulting in cartel conduct. The ACCC has said that “[b]usinesses that make agreements with their competitors to fix prices, rig bids, share markets or restrict outputs are breaking laws and stealing from consumers and businesses by inflating prices, reducing choices and damaging the economy.”
There have been a number of significant cartel cases run by the ACCC and by international competition authorities that have germinated at industry association meetings. In 2016, for example, parties operating in the local laundry detergent industry agreed to stop supplying standard concentrate detergent in favour of ultra-concentrate detergent. They also agreed amongst themselves to continue to supply the products at the same price per wash i.e. not passing the cost saving of the ultra-concentrate on to consumers. Some of these discussions and exchanges of information took place through an industry association.
The penalties for breaching competition law are severe for both the companies and the individuals involved and can result in criminal prosecution and hefty fines. In the laundry detergent case, the fines totalled $18 million. The penalties imposed in competition law cases are set to increase as the ACCC is intent on deterring anticompetitive behaviours.
Understanding your rights and obligations
It’s important to understand what you can and can’t discuss and to know what to do if you are concerned that discussions are veering into territory that you are not comfortable with.
1. First, understand and be sure that there is a legitimate reason or commercial objective for the association. If the intention is merely for competitors to come together to influence pricing or to limit supply, then alarm bells should ring. If the association only involves a few competitors rather than being open to the whole market, this may also be problematic. Seek legal advice if you are not sure before attending.
2. Make sure there is a clear agenda for each meeting and that discussions follow that agenda. Ideally, there should be a competition law statement of compliance included in the agenda to make it clear to all members that competitively sensitive information should not be discussed or exchanged.
3. Minutes of each meeting should be taken. After the meeting, you should check that they accurately reflect who was there and what was discussed.
4. Avoid discussing any competitively sensitive information about your business – including current and future pricing, cost information, product development and marketing plans.
5. If you are concerned that anti-competitive topics are being discussed or competitively sensitive information is being exchanged (i.e. pricing including in up or downstream markets, restrictions on supply, agreements to divide up customers or markets) then you should object. Ask to have your objection recorded in the minutes. If the discussions continue despite your objection, you should leave the meeting. When you return to the office, make a note of what happened and call your legal adviser.
At Peripheral Blue we advocate for taking a proactive approach to legal advice for your business. All too often business owners seek legal representation at the onset of a crisis, rather than implementing internal systems to mitigate risk in the long term from the outset.
A good legal team will be equipped to provide ongoing training on competition law to your team, to help build a compliance culture and to ensure that the risks are understood. They will also be there to provide specific legal advice if you have concerns about an industry association that your company is involved in.
Industry associations and the relationships and networks that grow from membership in them, can be immensely valuable to your organisation in the long term, as long as you remain knowledgeable – and wary – of their associated risks.
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