Trade Associations—Under the Spotlight for Competition Enforcement

This article is part of a Chronicle. See more from this Chronicle

Hong Kong Association of the Pharmaceutical Industry, Sep 30, 2015

The Competition Ordinance, Hong Kong’s first cross-sector competition law, was enacted on June 14, 2012 and is finally set to come into full force on December 14, 2015. Trade associations play an important role in society by advocating a specific industry sector to the public and the government and representing the common interests of their members. Through this platform, members are able to discuss important issues affecting their businesses, the trends in the marketplace, and any legislation or policy proposed by the government that may be of relevance to them.

Importantly, members are able to make use of invaluable networking opportunities that come with joining a trade association to grow their business. Trade associations also hold valuable information about the relevant industry, such as news, professional development, and research materials to help members stay on top of market trends and developments. It is therefore clear that businesses can reap numerous benefits from joining a trade association. Given the benefits, it comes as no surprise that there are hundreds of trade associations in Hong Kong in different sectors and industries.

With the coming into force of Hong Kong’s competition law regime, many trade associations are reviewing their practices and such is the chilling effect of the many uncertainties inherent in competition law that some people are actively considering withdrawing their membership of associations. This article examines the key activities of trade associations and the competition law implications followed by a discussion of best practices to minimize the risks of a member or a trade association contravening the Ordinance. It concludes that so long as trade associations adopt certain best practices and a tailored and comprehensive compliance policy, there is no need for members to cease participating in the activities of trade associations.