Trade association

Last updated

A trade association, also known as an industry trade group, business association, sector association or industry body, is an organization founded and funded by businesses that operate in a specific industry. An industry trade association participates in public relations activities such as advertising, education, publishing, lobbying, and political donations, but its focus is collaboration between companies. Associations may offer other services, such as producing conferences, holding networking or charitable events, or offering classes or educational materials. Many associations are non-profit organizations governed by bylaws and directed by officers who are also members.

Contents

In countries with a social market economy, the role of trade associations is often taken by employers' organizations, which also take a role in social dialogue.

Political influence

One of the primary purposes of trade groups, particularly in the United States, is to attempt to influence public policy in a direction favorable to the group's members. It can take the form of contributions to the campaigns of political candidates and parties through political action committees (PACs); contributions to "issue" campaigns not tied to a candidate or party; and lobbying legislators to support or oppose particular legislation. In addition, trade groups attempt to influence the activities of regulatory bodies.[ citation needed ]

In the United States, direct contributions by PACs to candidates are required to be disclosed to the Federal Election Commission or state and local election overseers; are considered public information; and have registration requirements for lobbyists. Even so, it can sometimes be difficult to trace the funding for issue and non-electoral campaigns.[ citation needed ]

Publishing

Almost all trade associations are heavily involved in publishing activities in print and online. The main media published by trade associations are as follows:

The opportunity to be promoted in such media (whether by editorial or advertising) is often an important reason why companies join a trade association in the first place.

Examples of larger trade associations that publish a comprehensive range of media include European Wind Energy Association (EWEA), Association of British Travel Agents (ABTA) and the Confederation of British Industry (CBI).

Generic advertising

Industry trade groups sometimes produce advertisements, just as normal corporations do. However, whereas typical advertisements are for a specific corporate product, such as a specific brand of cheese or toilet paper, industry trade groups advertisements generally are targeted to promote the views of an entire industry.

Ads to improve industry image

These ads mention only the industry's products as a whole, painting them in a positive light in order to have the public form positive associations with that industry and its products. For example, in the USA the advertising campaign "Beef. It's what's for dinner" is used by the National Cattlemen's Beef Association to promote a positive image of beef in the public consciousness.

Ads to shape opinion on a specific issue

These are adverts targeted at specific issues. For example, in the US in the early 2000s the Motion Picture Association of America (MPAA) began running advertisements before films that advocate against movie piracy over the Internet.

Controversy

A frequent criticism of trade associations is that, while they are not per se "profit-making" organizations, they are in reality fronts for cartels engaged in price-fixing, creating and maintaining barriers to entry of industry, and other subtle self-serving anti-competitive activities not in the public interest. [1]

Anti-competitive activity

Jon Leibowitz, commissioner at the Federal Trade Commission in the United States, outlined the potentially anti-competitive nature of some trade association activity in a speech to the American Bar Association in Washington, D.C. in March 2005 called "The Good, the Bad and the Ugly: Trade Associations and Antitrust". For instance, he said, under the guise of "standard setting" trade associations representing the established players in an industry can set rules that make it harder for new companies to enter a market. [2]

Cartels

In September 2007, the German trade association for Fachverband Verbindungs- und Befestigungstechnik (VBT) and five fastener companies were fined 303 million euros by the European Commission for operating cartels in the markets for fasteners and attaching machines in Europe and worldwide. In one of the cartels, the YKK Group, Coats plc, the Prym group, the Scovill group, A. Raymond, and Berning & Söhne "agreed [...] on coordinated price increases in annual 'price rounds' with respect to 'other fasteners' and their attaching machines, in the framework of work circles organised by VBT". [3]

See also

Related Research Articles

Cartel Mutually beneficial collusion among competing corporations

A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Most jurisdictions consider it anti-competitive behavior. Cartel behavior includes price fixing, bid rigging, and reductions in output. States that pursue economic interests may form cartels such as the Organization of the Petroleum Exporting Countries (OPEC). The doctrine in economics that analyzes cartels is cartel theory. Cartels are distinguished from other forms of collusion or anti-competitive organization such as corporate mergers.

Clayton Antitrust Act of 1914 US antitrust Congress Act of 1914

The Clayton Antitrust Act of 1914, was a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act sought to prevent anticompetitive practices in their incipiency. That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices considered harmful to consumers. The Clayton Act specified particular prohibited conduct, the three-level enforcement scheme, the exemptions, and the remedial measures.

The Federal Trade Commission Act of 1914 established the Federal Trade Commission. The Act, signed into law by Woodrow Wilson in 1914, outlaws unfair methods of competition and unfair acts or practices that affect commerce.

United States antitrust law collection of federal and state government laws, which regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers

In the United States, antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote competition for the benefit of consumers. The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts serve three major functions. First, Section 1 of the Sherman Act prohibits price-fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that would likely substantially lessen competition. Third, Section 2 of the Sherman Act prohibits the abuse of monopoly power.

Price fixing Agreement over prices between participants on the same side in a market

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.

A collective business system or collective business model is a business organization or association typically composed of relatively large numbers of businesses, tradespersons or professionals in the same or related fields of endeavor, which pools resources, shares information or provides other benefits for their members. In the past, collective business systems such as the trade association, the cooperative and the franchise were created to allow groups of independently owned businesses with common interests to successfully compete in the marketplace.

Competition law is a law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. Competition law is known as antitrust law in the United States for historical reasons, and as "anti-monopoly law" in China and Russia. In previous years it has been known as trade practices law in the United Kingdom and Australia. In the European Union, it is referred to as both antitrust and competition law.

Decartelization is the transition of a national economy from monopoly control by groups of large businesses, known as cartels, to a free market economy. This change rarely arises naturally, and is generally the result of regulation by a governing body with monopoly of power to decide what structures it likes.

In the United States, a group purchasing organization (GPO) is an entity that is created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members.

A 501(c) organization is a nonprofit organization in the federal law of the United States according to Section 501(c) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 through 505 set out the requirements for obtaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and unions.

Confederation of Indian Industry organization

The Confederation of Indian Industry (CII) is an industry association in India.

Marketing ethics is an area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics overlap with media and public relations ethics.

Asociación Mexicana de Productores de Fonogramas y Videogramas (AMPROFON) is a non-profit organization integrated by multinational and national record companies in Mexico. Established on April 3, 1963, it is a trade association of phonographic companies that represent more than 70 percent of the market in Mexico. AMPROFON is an associated member of the International Federation of the Phonographic Industry (IFPI).

Jon Leibowitz Chairman of the Federal Trade Commission

Jonathan David Leibowitz is an American lawyer who served as the Chairman of the Federal Trade Commission (FTC). He is currently co-chairman of the 21st Century Privacy Coalition, a group that aims to loosen regulations for how companies have to protect consumer's sensitive information. He is also a partner at the law firm of Davis Polk.

Affinity marketing is a concept that consists of a partnership between a company (supplier) and an organization that gathers persons sharing the same interests to bring a greater consumer base to their service, product or opinion. This partnership is known as an affinity group.

Promotional merchandise promotional items — toys, collectables, souvenirs and household products — that are linked to a product, and often require box tops, tokens or proofs of purchase to acquire

Promotional merchandise is products branded with a logo or slogan and distributed at little or no cost to promote a brand, corporate identity, or event. Such products, which are often informally called swag, tchotchkes, or freebies, are used in marketing and sales. They are given away or sold at a loss to promote a company, corporate image, brand, or event. They are often distributed as handouts at trade shows, at conferences, on sales calls, and as bonus items in shipped orders. They are often used in guerrilla marketing campaigns.

Recording Industry Association of Malaysia

Persatuan Industri Rakaman Malaysia (RIM) is a Malaysian non-profit music organisation, founded on 12 December 1978, as the Malaysian Association of Phonograph Producers (MAPP). In the end of the 1980s, it changed its name to Malaysian Association of Phonogram and Videogram Producers and Distributors (MAPV). It adopted its current name in 1996.

Native advertising is a type of advertising that matches the form and function of the platform upon which it appears. In many cases it functions like an advertorial, and manifests as a video, article or editorial. The word "native" refers to this coherence of the content with the other media that appear on the platform.

The International Advertising Association (IAA) is a global association that represents marketers, ad agencies and mass media that carries advertisements. With headquarters in New York, it has chapters in 77 countries. It was founded with the name Export Advertising Association on April 8, 1938 by Thomas Ashwell – a publisher of "Export Trade & Shipper" magazines, along with 12 other managers from the advertising industry in the Harvard Club of New York. Their goal was to exchange information about successful practices in international advertising. In 1954, it adopted its current name.

References

  1. Sutton, Antony (1975). FDR and Wall Street. New Rochelle, NY: Arlington House. ISBN   0-87000-328-3.
  2. Leibowitz, Jon (March 30, 2005). "The Good, the Bad and the Ugly: Trade Associations and Antitrust (remarks to American Bar Association Antitrust Spring Meeting, Washington, DC)" (PDF). Federal Trade Commission. Retrieved 2012-06-03.
  3. "Antitrust: Commission fines members of fasteners cartels over €303 million" (Press release). Europa.eu. Retrieved 2012-06-03.

Further reading