How the conditions are to be interpreted: Number of members and memberships: What must a CSG consider when recruiting members?
CSGs will need to be careful when recruiting members as one of the conditions of the exemption is that it does not lead to a distortion of competition (See CSE4120). Therefore a CSG must not have the characteristics of an independent operator seeking a customer base in order to simply generate profits. A CSG may gain members in respect of its exempt supplies by recommendation, invitation, word of mouth etc., though if it engages in promotion and marketing on a similar basis to a commercial operator there is more danger that its activities will lead to distortion of competition. CSG supplies to non-members are not covered by the exemption and can include a mark up/margin and be promoted by commercial marketing.