Trade association

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, setting industry standards, 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. (FEC: Solicitable Class of Trade Association).  Many associations are non-profit organizations governed by bylaws and directed by officers who are also members.   (Library of Congress).

Not to be confused with Trade union.

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
See also: Advocacy group

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.

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. (FEC: Lobbyist). Even so, it can sometimes be difficult to trace the funding for issue and non-electoral campaigns.

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:

  • Association website. The association's corporate website typically explains the association's aims and objectives, promotes the association's products and services, explains the benefits of membership to prospective members, and promotes members' businesses (for example, by means of an online listing of members and description of their businesses).
  • Members newsletters or magazines. Whether produced in print or online, association newsletters and magazines contain news about the activities of the association, industry news and editorial features on topical issues. Some are exclusively distributed to members, while others are used to lobby lawmakers and regulators, and some are used to promote members' businesses to potential new customers.
  • Printed membership directories and yearbooks. Larger trade associations publish membership directories and yearbooks to promote their association to opinion formers, lawmakers, regulators and other stakeholders. Such publications also help to promote members' businesses both to each other and to a wider audience. A typical membership directory contains profiles of each association member, a products and services guide, advertising from members, and editorial articles about the aims, objectives and activities of the association. The emphasis of association yearbooks on the other hand is on editorial features about the association itself and the association's industry.

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.[1]

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 US 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

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.[2] 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.[3]

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".[4]

See also

References
  1. Lockley, Lawrence (1943) [Oct., 1943]. "Trade Associations as Advertisers". Journal of Marketing. 8 (2): 189–193. doi:10.2307/1245317. JSTOR 1245317. Retrieved 5 June 2023.
  2. Sutton, Antony (1975). FDR and Wall Street. New Rochelle, NY: Arlington House. ISBN 0-87000-328-3.
  3. 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. Archived (PDF) from the original on 2012-09-24. Retrieved 2012-06-03.
  4. "Antitrust: Commission fines members of fasteners cartels over €303 million" (Press release). Europa.eu. Retrieved 2012-06-03.

Further reading
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