Trade associations serve as important platforms for communication and cooperation among enterprises, and play a critical role in promoting industry development and safeguarding the collective interests of their members. However, when enterprises gather to discuss matters of common concern, failures to observe proper boundaries may inadvertently cross the line of concerted action prohibited under the Fair Trade Act. Such violations may result not only in substantial administrative fines, but also in serious reputational damage. Accordingly, when enterprises participate in trade association activities—whether for networking, social events, or training—they need to clearly understand the relevant legal boundaries to avoid unintentionally crossing the line.

In principle, Article 15 of the Fair Trade Act prohibits enterprises that are in a competitive relationship from reaching consensus, whether by contract, agreement, or any other form, to jointly determine prices of goods or services, or to restrict quantities, technology, products, equipment, trading counterparts, or trading territories, thereby mutually constraining their business activities. The core objective of this prohibition on concerted actions is to prevent enterprises from eliminating or reducing market competition through collusion, which would harm consumer interests and distort market mechanisms. In practice, enforcement actions by the Fair Trade Commission have repeatedly shown that trade associations themselves, as well as participating member enterprises, may be sanctioned for violations of the provisions against concerted actions.

What, then, are the common forms of conduct within trade associations that may constitute unlawful concerted actions?

In the trade associations gatherings, the most common and most dangerous risk arises from price-related discussions. Whether it involves directly agreeing on uniform pricing (such as setting reference prices or fee standards, regardless of whether they are binding), jointly raising prices, or collectively refusing to negotiate, such conduct may constitute a concerted action. Even in the absence of a formal agreement, merely exchanging price-sensitive information or expressing intentions regarding price adjustments may be deemed, or at least presumed, to evidence concerted action. The following three areas warrant particular attention from a compliance perspective for enterprises:

1. Agreements on Production Volumes and Market Segmentation

In addition to price-fixing, agreements among competitors to restrict production volumes, divide sales territories, allocate customer groups, or engage in bid rigging are likewise prohibited concerted actions. For example, stipulating to limit member enterprises to operate only in specific geographic areas, or agreeing not to compete for each other’s customers, may violate the law. Even if motivated by an intent to promote constructive competition or to avoid destructive competition, such conduct carries a high risk of being deemed as an unlawful concerted action.

2. Grey Areas in the Formulation of Technical Standards

Trade associations often participate in the formulation of industry technical standards or norms, which in principle can contribute positively to industry development. However, if the standard-setting process is used to exclude specific competitors, restrict technological innovation, or segment the market in disguise, it may still constitute an unlawful concerted action. Enterprises participating in such processes should ensure that the procedures are open and transparent, and that the standards adopted are reasonable and necessary, rather than serving as tools to restrict competition or exclude new market participants.

3. Boundaries of Information Exchange

One of the core functions of trade associations is to provide a platform for industry information exchange. Nevertheless, both the content and manner of information exchange should be handled with caution. Generally speaking, the sharing of historical or aggregated statistical industry data is less controversial, but the exchange of sensitive commercial information—such as future business plans, pricing strategies, non-public price information, or customer data—may be regarded as facilitating concerted action. Enterprises should therefore strictly avoid sharing such sensitive information during association meetings, informal gatherings, or group communications.

Trade associations play an indispensable role in industry development, but only lawful and appropriate communications within the legal framework can truly enable the trade associations to fulfill their positive functions. To avoid inadvertently crossing legal boundaries, enterprises participating in trade associations are advised to establish the following preventive mechanisms: first, formulate internal compliance guidelines that clearly define employee conduct when engaging in association activities; second, where sensitive issues are involved, withdraw from discussions or expressly state objections when necessary; third, maintain accurate and detailed records of meeting to avoid future disputes; and lastly, conduct regular legal risk assessments to ensure that participation in trade association activities remains fully compliant with applicable laws and regulations.

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This article was published in the Expert’s Commentary Column of the Commercial Times: https://www.ctee.com.tw/news/20251031700123-439901