When is a ‘Stand-Alone’ Information Exchange Prohibited by Competition Law?
Information Exchange as Anticompetitive Coordination
▪ May take form of formal agreement between parties (e.g. Asnef-Equifax) or decision of industry trade association (e.g. Insurance Ireland)
▪ More informal information sharing may be caught as ‘concerted practice’ (e.g. Dole, T-Mobile)
▪ Possible that public announcements of sensitive information may constitute concerted practice, if amounting to a collusive device to coordinate market conduct (compare e.g. Wood Pulp with Container Shipping)
Characterising Information Exchange as Anticompetitive Coordination
1. Where IE is essentially means to implement hard-core cartel, it must be prohibited ‘by object’ (e.g. Metal Packaging cartel)
2. IE demonstrating ‘sufficient degree of harm to competition’ by its very nature after contextual analysis may also be prohibited ‘by object’ (e.g. Banco BPN) 3. IE with appreciable actual or potential restrictive effects on competition, viewed in its actual market context, may be prohibited ‘by effect’ (e.g.
Characterising Information Exchange as Anticompetitive Coordination
1. Where IE is essentially means to implement hard-core cartel, it must be prohibited ‘by object’ (e.g. Metal Packaging cartel)
“an exchange of information must be regarded [as an object restriction] where…it can only lead the participants in that exchange, who are reasonably active and economically rational, tacitly to follow the same course of conduct as regards one of the parameters on the basis of which competition on the relevant market is established.” (Banco BPN, para.57)
Characterising Information Exchange as Anticompetitive Coordination
2. IE demonstrating ‘sufficient degree of harm to competition’ by its very nature after contextual analysis may also be prohibited ‘by object’ (e.g. Banco BPN)
➢Does IE make it possible to remove ‘uncertain[ty] as to the future conduct of other participants on that market’? (Banco BPN, paras. 61-62)
➢Distinction between removing uncertainty about ‘the risks of competition’ and addressing market failures caused by lack of information (Asnef-Equifax)
Characterising Information Exchange as Anticompetitive Coordination
▪ Where IE is treated as a cartel, the need for contextual analysis is limited to what is ‘strictly necessary’ to confirm existence of inherently problematic arrangement (Toshiba)
▪ Otherwise, we must consider features and wider context of IE, to determine if it has object or effect of restricting competition:
➢What characteristics of info sharing arrangement and wider context are relevant to this determination?
Contextual Analysis of Information Exchange
1. Nature of Information Exchanged
▪ ‘Confidential information’ = ‘information not already known to any economic operator active on the market concerned’
▪ ‘strategic information’ = ‘information that may reveal…the strategy which some of those participants intend to implement with regard to what constitutes one or more parameters in the light of which competition on the market in question is established’ (Banco BPN, para.62)
▪ Level of aggregation of data?
▪ Historic, current or future information?
▪ Possible to cross-reference with other data provided?
▪ Pricing data particularly sensitive, but need not concern final prices to consumers (e.g. Dole)
Contextual Analysis of Information Exchange
2. Organisation of Information Exchange
▪ How frequently is the information shared?
▪ Information exchanged systematically and regularly is more likely to reduce uncertainty…but even one-off exchange of very sensitive information may breach competition law (T-Mobile)
▪ Is disclosure required/permitted by regulation or does IE go beyond requirements? (Banco BPN)
▪ Are employees engaged in info sharing also engaged in e.g. price-setting? (Dole)
▪ Is sharing of such information common in sector? (e.g. Asnef-Equifax)
▪ Is arrangement ‘accessible in a non-discriminatory manner…to all operators active in the relevant sphere’ (Asnef-Equifax, para. 60; Insurance Ireland)
Contextual Analysis of Information Exchange
3. Market Structure & Barriers to Entry
‘in principle, where there is a truly competitive market, transparency between traders is likely to lead to intensification of competition between suppliers… …however, on a highly concentrated oligopolistic market, the exchange of market information is liable to enable undertakings to be aware of the market positions and strategies of their competitors and thus to impair appreciably the competition which exists between traders.’ (Thyssen Stahl, para. 84)
▪ BUT info exchange may breach competition law even in markets that are not highly concentrated and be permissible even in concentrated markets
➢No ‘straightforward correlation between the level of concentration and the intensity of competition’ (John Deere)
Contextual Analysis of Information Exchange
4. Objective Aims of Information Exchange
‘that concept refers, in its legal sense, to the primary reason for the agreement [etc.], that is to say, to the immediate and direct aims pursued by the coordination in question...’ (Banco BPN, para. 56) ▪ See e.g. Container Shipping
Contextual Analysis of Information Exchange
5. Pro-Competitive Benefits of Information Sharing
▪ Where info exchange generates pro-competitive benefits (e.g. expanding supply and/or reducing prices for consumers, as in AsnefEquifax), this may:
▪ Call into question inherent harmfulness of arrangement, so it cannot be characterized as ‘by object’ restriction (e.g. Generics), and/or
▪ Provide efficiency justification that may counterbalance anticipated or demonstrated harm to competition associated with info sharing (e.g. AsnefEquifax)