Advisory Bulletin: Competition concerns regarding certain admission criteria and procedures of trade, sporting, professional and industry associations/bodies

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Trade associations (including sports association) play a significant role in Hong Kong’s economy. There are more than 800 ranging from large and influential cross sector industry bodies such as the Hong Kong General Chamber of Commerce to the rather smaller Hong Kong Lawn Bowls Association. The Hong Kong Competition Commission (HKCC) recognises that trade associations can bring benefits to their members and have a positive impact on the economy and society. This may include, developing standards and best practices, providing training to members and promoting their industry’s interests. However, in certain circumstances, an association’s practices may give rise to competition concerns.

As an example of one type of competition concern, HKCC encountered several situations where trade associations appeared to have admission criteria which were unreasonably and unjustifiably strict. This is particularly problematic where membership is highly desirable for those competing in a market or participating in a sport. To increase awareness of how Hong Kong’s competition law applies in such circumstances, the HKCC published an advisory bulletin. This highlights that admission to membership of a trade association should be based on criteria which are:

a) transparent; b) proportionate; c) non-discriminatory; d) based on objective standards; and e) subject to appeal in the event of a refusal to admit a party to membership.

The advisory bulletin explains what these requirements mean and highlights that the HKCC would take appropriate enforcement action in response to anti-competitive practices related to admission criteria. The bulletin concludes with a series of questions and answers presenting several scenarios, some of which are from the perspectives of trade associations and membership applicants.

The publication of the advisory bulletin has been widely reported by the media and the guidance offered was welcomed by the legal community. Some trade associations expressed that they would review their admission guidelines and make adjustments if needed. The HKCC also received requests from trade associations to further understand and discuss the matter. The bulletin has brought prominence to restrictive membership rules of a number of trade associations and pressure from both the media and the HKCC to address such rules.