Cartels and competition” (December 6) by Sanjaya Baru reminds us of Adam Smith, who remarked in “An Inquiry into the Nature and Causes of Wealth of Nations” that people of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is common for trade associations to use a platform for cartel-like activities. Trade and professional associations are playing an increasingly important role in promoting both the interests of their members and the industries they serve, particularly as businesses become more global and closely integrated. The efforts of these organisations can improve the quality, variety and availability of products and services in the marketplace. However, since the members of trade and professional associations typically are competitors, the varied activities that associations conduct are subject to close scrutiny under the laws regulating competition, marketing practices and advertising.
Although anti-trust laws do not impede association activity, trade associations and their members must be aware of the types of conduct these laws proscribe while carrying out association activities. The anti-trust problems relate to agreements that fix prices or pricing terms, agreements that control or limit production or capacity, allocation of customers or markets, group boycott or refusal to deal, abuse of dominant position and so on.
The key to protecting associations and their members from anti-trust exposure lies in developing a keen sensitivity to the types of interactions that create anti-trust risks. This can be achieved through compliance efforts by reflecting the required sensitivity in the organisation and management of the association.
K D Singh, New Delhi