Trade associations sometimes use blacklists to warn their members or consumers about dishonest suppliers or competing companies. Such blacklists can have a major negative impact on the companies affected. The ANVR (Dutch Association of Travel Agents and Tour Operators), for instance, was severely criticised when it again published a blacklist this summer of dozens of travel organisations that allegedly had not lived up to their statutory warranties towards travellers. According to the travel agents in question, the ANVR had only one purpose in doing so: to favour its own members by maligning non-members, thereby forcing them to join the ANVR. The ANVR’s defence, however, was that the blacklist was necessary to avoid reputational damage to the travel sector. Moreover, dodging the rules allegedly gave rise to unfair competition. But do the Netherlands Consumers and Markets Authority and the European Commission allow such blacklists?

Blacklist

Trade associations have a range of tools at their disposal to assist their members. They may do so, for instance, by promoting their interests or by providing information. Promoting the quality of products and services in the sector is also permitted, for instance by introducing a quality mark or a code of conduct; that is permitted as long as it does not restrict competition. The main condition is that the arrangement may not relate to aspects on which companies are in fact required to compete with each other, such as the price or the supply of their products.

Trade associations are also permitted to use a blacklist of unreliable market parties, such as a list of bad debtors or a list of companies that fail to comply with statutory rules. However, that may not result in a collective decision no longer to do business with those companies. Trade associations must also guard against companies being wrongly blacklisted. Spreading incorrect information on companies may lead to those companies wrongly incurring loss. It is apparent from decisions of foreign competition authorities that it may be prohibited to spread negative information on other companies.

Prohibition

The French competition authorities, for instance, last year imposed a penalty of more than €40 million on pharmaceutical company Sanofi for deliberately making derogatory comments about a competitor’s products. Also relevant is the penalty of more than €50 million that was last year imposed on pharmaceutical company Schering-Plough in France because it had deliberately shed a bad light on products of competitors among doctors and pharmacists. Also worth mentioning is that the Italian competition authority has recently started an investigation into two groups of companies in the plastic recycling industry because they had spread information that cast doubt on the reliability of a new market player. That allegedly made it difficult for that competitor to enter the market.

Risk

From the perspective of the promotion of interests or protection of consumers, a blacklist is often justifiable. It is important, however, for trade associations to perform a careful investigation before blacklisting companies. A blacklist may also not be used to force “questionable companies” to join the trade association. If it is established that a trade association too easily labels companies as questionable, that may conflict with competition rules, in which case the trade association would even be breaching rules of law. Trade associations should therefore beware of being blacklisted by the supervisory authorities.