Industry associations and competition laws
Industry associations provide a collective voice for individual businesses within an industry. Associations and their members have obligations under the Competition and Consumer Act 2010.
Association members regularly:
- share information
- discuss issues
- develop standards, and
- establish rules for best practice within their industry.
This is often legitimate commercial behaviour that benefits businesses and consumers. However, some actions may breach the Act’s rules against anti-competitive conduct.
Association rules and codes of conduct
What association rules and codes can do
Voluntary codes of conduct can be an effective way to:
- deliver more protection for consumers
- address systemic issues within an industry
- reduce the regulatory burden for members.
Many industry bodies create rules requiring members to comply with a code of conduct. This code of conduct is drafted and enforced by the association.
Industry-led codes of conduct include the Casual Mall Licensing Code of Practice and the Code for Solar Photovoltaic Retail Businesses.
Industry association codes and practices are subject to the law. Association rules need to be transparent and not relate to pricing policies.
The ACCC can provide information about developing a voluntary industry-led code. However, associations should seek professional advice about potential issues with their code of conduct.
What association rules and codes of conduct can’t do
An industry association may breach the Act if it:
- imposes membership criteria or restrictions that are anti-competitive
- imposes rules or codes of conduct that are overly restrictive or used to restrict competition
- sets advertising restrictions which limit competition among association members
- shares information between members in a way that substantially lessens competition
- provides members with recommended prices, or specific figures or percentages for profit margins and overheads which aids price fixing among members or substantially lessens competition by enabling members to conform to the suggested price or formula
- applies, or attempts to apply, pressure on members to adopt certain prices or price structures
- takes action to stop members from charging or advertising below certain prices
- begins collective bargaining without ACCC approval, via authorisation or notification.
There are also rights and obligations for businesses under Australian Consumer Law.
Associations will often require members to be suitably qualified. They may limit membership to people who meet certain prerequisites.
Industry associations need to ensure that membership requirements are reasonable. Membership requirements should not create a barrier to entry in that field and limit competition within the market.
As a guide, membership rules and requirements should be:
- reasonable and achievable
- clear and transparent
- backed by evidence
- not overly restrictive
- applied in a consistent, unbiased and fair manner to all potential members.
Industry associations often regulate advertising by members to provide consistency across the industry. For example, this can occur through consistency of terminology. Advertising rules should be genuinely in the interest of consumers and not overly restrictive.
If advertising rules are too restrictive, they can reduce the amount of information available to consumers.
Associations risk engaging in anti-competitive conduct if they set advertising restrictions which limit competition among association members. Advertising restrictions that limit competition among association members can be considered anti-competitive conduct whether designed to have this effect or not.
Example of a lack of transparency
An industry association imposes a rule that members should not include prices or discounts in their advertising. This may lead to a lack of consumer transparency. This could result in a reduction of price competition among the association’s members.
Members should be free to advertise prices or discounts of their own choosing and to compete fully with other members.
In certain circumstances sharing information between industry association members can be considered anti-competitive or create a risk of anti-competitive outcomes.
Information exchanges can take place in many ways including through a:
- understanding, or
- concerted practice between association members.
Information exchanges can create competition concerns where:
- the exchange assists collusion between competitors, or
- reduces the uncertainty that naturally arises from competition.
A ‘concerted practice’ involves some form of cooperation between businesses that is less than a ‘contract, arrangement or understanding’. A concerted practice is banned under the Act if it has the purpose, effect or likely effect of substantially lessening competition.
Australian courts have not yet considered this ban. In overseas jurisdictions, a concerted practice often involves competitors sharing commercially sensitive information. Read the ACCC’s guideline on concerted practices.
Anti-competitive information exchanges may occur between competitors or through an intermediary - such as an industry association. Industry associations can act as an intermediary or coordinator of information sharing. However, industry associations that help share members’ commercially sensitive information may risk breaching the Act - along with members.
Some industry associations provide support and guidance on the cost of business and pricing. This can be valuable for new and inexperienced operators. However, it is important to be aware of the restrictions on sharing pricing information and setting prices.
It is unlikely an association will breach the Act if it provides advice or guidance about standard, publicly available business costs.
An association can provide information on wages and entitlements under an enterprise agreement or award. This action will be unlikely to breach the Act.
Associations can also share aggregated wage data and average historical pricing to members. However, this data must be de-identified and presented in a way that makes it clear that those prices are not ’authorised’ by the association, and that members are not required to follow them.
An association cannot provide members with recommended pricing schedules or price structures, or facilitate the sharing of members’ current or future prices. In these circumstances the association and its members risk breaching provisions of the Act that relate to:
- price fixing
- anti-competitive contracts, arrangements or understandings
- anti-competitive concerted practices.
Find out more about anti-competitive conduct.
Price fixing is a serious criminal offence. Associations should make it clear to members that businesses must set their own prices for goods and services. This includes making their own allowances in their pricing for overheads and margins. Associations can’t take action against members for setting prices below a ‘recommended’ minimum. It’s less risky to provide members with general guidance about how they can calculate their own costs.
Industry associations should also clearly communicate to their members that by sharing, discussing or agreeing upon prices with other members or competitors they could risk committing a serious criminal offence.
Collective bargaining occurs where two or more businesses come together to negotiate with a third party. The group may choose to appoint a representative, such as an agent or industry association, to negotiate on their behalf. There can be many benefits from negotiating as a group rather than individually.
All businesses planning to engage in collective bargaining must gain ACCC approval before commencing negotiations, otherwise they may breach the Act.
Businesses can obtain legal protection to engage in collective bargaining. This decision is based on the ACCC’s judgement that the public benefits from the conduct outweigh the public detriments. The process for seeking ACCC approval is called authorisation or notification.
The ACCC has approved many collective bargaining arrangements.
Browse our public register to see the types of applications we have considered.
Collective bargaining class exemption
Some businesses may be eligible for a collective bargaining class exemption. The ACCC’s collective bargaining class exemption became available for businesses to use on 3 June 2021. This exemption allows eligible small businesses to collectively bargain without breaching competition laws.
Find out how the collective bargaining class exemption works and who is eligible to apply.
Rights and obligations under the Australian Consumer Law
There are also rights and obligations for businesses under Australian Consumer Law. These rights and obligations relate to business dealing with consumers. They include rules about:
Members often ask associations whether their policies and advertising breach consumer law. It is important that industry associations are aware of these obligations and understand how they will apply to their members’ day-to-day operations.
It's a breach of consumer law for members to claim they are a part of an industry association when they are not.