Trade association

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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, they are not per se "profit-making" organizations, but 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, a 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, DC, in March 2005 called "The Good, the Bad and the Ugly: Trade Associations and Antitrust". For instance, he said that 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 and have outlawed such practices. Cartel behavior includes price fixing, bid rigging, and reductions in output. 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, is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anticompetitive practices in their incipiency. That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices that were 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 was a United States federal law which established the Federal Trade Commission. The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts or practices that affect commerce.

United States antitrust law American legal system intended to promote competition among businesses

In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. 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 may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization.

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

Price fixing is an anticompetitive 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.

Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to attain objectives forbidden by law; for example, by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve "unions, wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties". In legal terms, all acts effected by collusion are considered void.

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.

Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usually smaller, businesses or consumers. These laws are formed to promote healthy competition within a free market by limiting the abuse of monopoly power. Competition allows companies to compete in order for products and services to improve; promote innovation; and provide more choices for consumers. In order to obtain greater profits, some large enterprises take advantage of market power to hinder survival of new entrants. Anti-competitive behavior can undermine the efficiency and fairness of the market, leaving consumers with little choice to obtain a reasonable quality of service.

Competition law is the field of 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. It is also known as "anti-monopoly law" in China and Russia, and in previous years was 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.

Non-price competition

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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.

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 American lawyer

Jonathan David Leibowitz is an American attorney who served under President Barack Obama as Chair of the Federal Trade Commission (FTC) from 2009 to 2013. Leibowitz was appointed to the commission in 2004, and resigned in 2013. During Leibowitz's tenure, the FTC brought privacy cases against Google, Facebook and others for violating consumer privacy, as well as enforcement against "pay-for-delay" deals in which pharmaceutical companies paid competitors to stay out of the market. Prior to joining the FTC, Leibowitz was Vice President for Congressional Affairs from 2000 to 2004 of the MPAA.

Promotional merchandise Products branded with a logo or slogan and distributed at little or no cost to promote a brand or event

Promotional merchandise are 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 promo products, 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.

Federal Antimonopoly Service

The Federal Antimonopoly Service of Russia (FAS) is the federal-level executive governmental organ that controls the execution of the antitrust law and related areas.

Native advertising, also called sponsored content, 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.

Software monetization is a strategy employed by software companies and device vendors to maximize the profitability of their software. The software licensing component of this strategy enables software companies and device vendors to simultaneously protect their applications and embedded software from unauthorized copying, distribution, and use, and capture new revenue streams through creative pricing and packaging models. Whether a software application is hosted in the cloud, embedded in hardware, or installed on premises, software monetization solutions can help businesses extract the most value from their software. Another way to achieve software monetization is through paid advertising and the various compensation methods available to software publishers. Pay-per-install (PPI), for example, generates revenue by bundling third-party applications, also known as adware, with either freeware or shareware applications.

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