Information is integral to making informed decisions. When conducting business, obtaining information on the market in which one competes is important to the success of a well-functioning firm. However, when competitors share information a line can be crossed and therefore caution is required due to the risk that it may result in anti-competitive outcomes.
In line with the approach followed by other international jurisdictions, the Competition Commission has recently released draft Guidelines for comment relating to information sharing between competitors.
What does information sharing mean in the context of competition law?
Information sharing refers to exchanging information that is “commercially sensitive” in that it has a particular economic value to a company such as information relating to prices, costs or internal business strategies.
Are competitors never allowed to share information?
One of the main challenges that firms and competition authorities face is determining the types of information exchanges that would be regarded as having pro-competitive and anti-competitive effects. While acknowledging that there are situations where information exchange can be beneficial and pro-competitive, the publication of the draft Guidelines seeks to highlight situations where firms may engage in information exchange that could have the effect of facilitating collusive behaviour among competitors.
What types of platforms could be used for direct or indirect information exchange?
Although not exhaustive, the draft Guidelines identify a variety of platforms where caution should be exercised in information exchange between competitors. These include trade associations, industry associations, information provided to government and regulators, information supplied within the context of governmental supplier development initiatives, public announcements (which could be a form of signaling), joint venture arrangements, market and benchmarking studies, and customer quotation requests.
Although there may still be room for interpretation, the release of the draft Guidelines is an attempt by the Competition Commission to provide businesses with some direction on how to deal with information exchange among competitors.
To view the draft Guidelines and request for comments, please click here.