News October 2024: Beware of sharing information between competitors: this should not be taken lightly!

 

 

 

 

• Reminder

On a given market, companies (even in a situation of  partial competition) may exchange strategic information with each other - without malicious intent and in full transparency - in order to assess their respective market positions.

This sharing of information can take place, for example, at informal meetings within the framework of joint ventures, consortiums or other authorized business associations.

If they individually represent only a small share of the market, the companies concerned may believe that the sharing of strategic data does not infringe any competition law, rules as long as the market itself is not likely to be significantly affected.

This is a serious misjudgment, as reminded by the decision of the Court of Justice of the European Union (CJEU) on July 29, 2024.

• Key take-aways from this decision

In this decision, the CJEU highlights that the exchange of information between competitors can be punished as an unlawful agreement (within the meaning of Article 101 TFEU) without having to assess the effective impact of such a practice on the market, if the information exchanged is to be regarded as confidential and strategic.

In particular, the CJEU recalls three important points:

• for a market to work under normal conditions, operators must autonomously determine the policy they intend to follow, without being influenced by the likely behavior of their competitors.
• yet, an exchange of information may prevent the determination of an autonomous policy on the market if the information shared is of such nature that it inevitably leads to an alignment of the policies of companies competing on the same market.
• most confidential and strategic information shared between competitors is therefore potentially dangerous, insofar as it reveals the future behavior of competitors on a market and therefore leaves no room for uncertainty, allowing them to determine their policy (particularly pricing) independently. As the Court ruled in this case, “in the context of this exchange, the shared information can only lead participants, who would be reasonably active and economically rational, to tacitly follow the same course of action”.

And it is this very fact that characterizes the restriction “by object” of the practice consisting in the exchange of confidential and strategic information.

It is however true that the scope of this decision needs to be put into perspective, since in this case the banking sector companies - fined up to 225 million euros by the national competition authority - were operating in a highly concentrated market, and had exchanged specific, extremely strategic information over a long period of time.

Still, this decision is really worthy of interest, as it clearly points out the inherent risk of sharing information between competitors, since such practice may be regarded as a restriction by object per se, and can therefore be punished as such.

• Practical Tips

All companies - and particularly those belonging to business groups, associations or consortiums - must be extremely cautious when it comes to sharing information between competitors.

Any information shared must remain strictly necessary for the collaboration and must under no circumstances encourage the coordination of market behavior, especially in terms of commercial and pricing policies.

Setting up a moderation process internal to those groups, in order to ensure constant vigilance over the flow of information exchanges and to certify, when necessary, compliance with competition law rules, may be a best practice to implement within all business associations.

 

Sarah Temple-Boyer                                                                                           Zoé Moura de Castro

Attorney at law                                                                                                       Legal intern