Fair Trade Law Q&A - Concerted Actions

Article 14, Paragraph 4 of the Fair Trade Act provides:"Any act by a trade association or other organization referred to in Article 2, Paragraph 2 that restricts the business activities of enterprises through its charter, resolutions adopted at members' meetings, board or supervisory meetings, or any other means shall also constitute concerted action under this Act." Article 5 of the Enforcement Rules further provides: "Authorized representatives of trade associations or other organizations described in Article 2, Paragraph 2 of the Act may be deemed actors in concerted actions under the Act." The principal reasons underlying these provisions are as follows:

1. Trade associations and other legally established organizations formed to promote the interests of their members are typically composed of competing enterprises operating in the same or closely related industries. Where such associations or organizations coordinate or restrain the business activities of their members through their charters, resolutions adopted at members' meetings, board or supervisory meetings, or other means, the competitive effects are functionally indistinguishable from concerted action undertaken directly among individual enterprises. Although trade associations and similar organizations are not profit-seeking entities engaged in commercial activity, historical industry practice prior to the enactment of the Fair Trade Act demonstrated that such organizations frequently played a leading or facilitating role in cartel conduct. In many instances, enterprises formed and implemented collusive agreements-including coordination relating to production and sales, uniform pricing, market allocation, and product standardization-through trade associations or similar organizations serving as the operational hub. Accordingly, to prevent trade associations or other organizations from orchestrating concerted action among competing enterprises, and to prevent companies, sole proprietorships, and partnerships from using such organizations to circumvent antitrust restrictions, thereby restraining competition and harming consumer welfare, Article 2, Paragraph 2 of the Fair Trade Act expressly includes "a trade association organized by businesses, or any other organization lawfully established to promote the interests of its members" within the definition of "enterprise" subject to the Act. The purpose is to curb entrenched collusive practices historically carried out through such organizations.
2. II. Trade associations and similar organizations frequently serve as the institutional mechanism through which unlawful concerted actions are organized and implemented by their members. For this reason, competition laws in many foreign jurisdictions likewise recognize such organizations as potential participants in cartel conduct. Article 2, Paragraph 2 of the Fair Trade Act adopts a similar legislative approach. Moreover, in practice, representatives of such organizations may themselves become subjects of enforcement proceedings. Article 5 of the Enforcement Rules therefore alerts representatives to the risk of antitrust liability and encourages them to avoid engaging in unlawful concerted conduct.

Relevant Provisions: Articles 2, 14, 15, 34, and 40 of the Fair Trade Act; Article 5 of the Enforcement Rules of the Fair Trade Act.