Trade associations have faced frequent criticism due to allegations that they operate not as profit-making organizations, but rather as fronts for
cartels involved in
anti-competitive practices and
price fixing. Critics contend that these associations engage in activities such as
price-fixing, the creation and maintenance of barriers to entry in the industry, and other subtle self-serving actions that are detrimental to the public interest. These criticisms raise concerns about the true nature and intentions of trade associations, questioning their commitment to fair competition and the welfare of the broader economy.
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.
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". ==Copyright trade groups==