Trade Association Of China Legal Issues Of Restriction Of Competition

With the development of China's market economy, trade associations have presented themselves as spokesman for businesses of the same trade. Being a double blade sword, trade associations promote and preserve free and fair competition on the one hand, while restraining market competition for the maximization of the interest of its member enterprises on the other, which impairs social welfare with increasing intensity.Despite of the non-profit nature of trade associations, the members are profit-oriented enterprises competing with each other. As a collective body of profit-oriented enterprises of the same trade, trade associations serve the interests of these profit-making enterprises, which will unavoidably lead to conflict between specific industry interests and welfare of the entire society. When engaged in furious market competition, trade associations are tempted to turn from the ability to coordinate to the ability to conspire, and act against competitors, clients, customers and the disadvantaged enterprises inside association. In practice, trade associations are usually used as tool to restrain competition. The interest-seeking nature and functional advantage of trade associations make them—a special body of competition restriction—target of restriction in competition restriction.Feasibility and possibility of the research into issues concerning competition restriction by trade associations are based on vacancy in legislation, rising theoretical divergences and extensive existence of legal ambiguities. Discussions in the paper are expanded against such a background.The paper is mainly composed of four parts. Part one outlines the basic elements of trade associations, introducing such elements as concept, features and functions of trade associations, and analysis is made both on the positive and negative impacts of trade associations on market competition. Part Two summarizes competition restriction by trade associations. The concept of competition restriction by trade associations is firstly introduced, and analysis is made on the features of trade associations. Based on which and by reference to the features and functions of trade associations, reasons for the competitions restriction by trade associations are deduced. The principle is then expounded to identify the illegal nature of competition restriction by trade associations, and discussions are made concerning differences between principle of per se violation and principle of rationalization and their applicability. Relevant cases are presented in this part as well. Part Three elaborates on the manifestation and analysis of competition restriction by trade associations. The paper categorizes trade associations into associations of industry and commerce and professional associations. Cases are cited to analyze price setting, quantity restriction, market segmentation and exchange of information on the part of associations of industry and commerce and such competition restriction manifestations as bottom price setting and restriction on competitive quotation on the part of professional associations. In addition, the author put forward her point of view on the widely disputed trade self-discipline pricing of domestic trade associations. Part Four describes the status quo of legislation on competition restriction by domestic trade associations and legislation perfection. In this part, the status quo of legislation and existing problems are firstly analyzed regarding competition restriction by domestic trade associations. Laws regarding supervision of the competition restriction behavior by trade associations are still not well established due to the forever delayed appearance of the long-awaited Anti-Trust Law. By reference to relevant laws and regulations of the developed countries and considering domestic realities, the author discusses about perfecting legislation of competition restriction by trade associations in respect of enacting both the Anti-Trust Law and the Law on Trade Associations.