6 October 2021
On October 1 the Belgian competition authority (Autorité belge de la Concurrence/Belgische Mededingingsautoriteit (“ABC/BMA”)) explained that it has decided to prosecute four cigarette manufacturers for exchanges of information between competitors on prices. According to the press release the practice consisted in the manufacturers sending information on their own future prices to their wholesalers and, through the wholesalers, receiving information on the future prices of competitors. Doing so may infringe the prohibitions on agreements or practices that restrict competition in Article IV.1 of the Belgian Code of Economic Law and Article 101 TFEU.
Announced Prices and Exchanges of Information
It will be recalled that going back as far as the Wood Pulp case (Ahlström and others v Commission, Judgment of 31 March 1993) competition authorities have viewed public announcement of prices with some suspicion of so called ‘conscious parallelism’. Of course, when Wood Pulp was decided by the Court of Justice there was no judicial decision practice on the prohibition of exchanges of information between competitors. Judicial decisions began with the UK Tractors Registration Exchange cases (New Holland Ford Case C-7/95 P; and John Deere Case C-8/95 P, Judgments of 28 May 1998) which concerned voluntary exchanges of information where there was no direct evidence of any collusive conduct contrary to Article 101 TFEU.
Case by case analysis of information exchanges
The majority of legitimate ‘information exchanges’ occur within the controlled environment of trade associations independently collecting and aggregating historical statistical information for the benefit of both the participating companies and consumers. Yet, even if that is a recognised use-case which normally falls outside the competition law provisions, it is difficult to generalise.
Historically, the first guidance under the EU anti-trust rules about exchange of information schemes was provided by the Commission’s 1968 ‘Notice concerning agreements decisions and concerted practices in the field of co-operation between enterprises’.
There is no EU Block Exemption Regulation that provides a framework for exempting information exchange practices from the application of competition law. Indeed the current economic and legal framework suggests that a case-by-case analysis should be performed. Guidelines continue to be available (‘Guidelines on the applicability of Article 101 TFEU to horizontal cooperation agreements’, OJ C11 of 14 January, 2011, and particularly pages 13-25 on information exchange). These Horizontal Guidelines are currently subject to a review and up-date process.
Matters to be taken into account
Making an assessment of the actual or potential restrictions of competition resulting from an exchange of information is difficult. There is no definitive list of information that may or may not be exchanged between competitors. The case-by-case analysis should take into account a series of factors, including the type of information exchanged, the manner in which it was shared, the features of the market, and its particular economic context. The level and detail of the information and the frequency of the exchange are also relevant.
The Belgian competition authority’s case
It appears that the ABC/BMA has made careful preparations before announcing the current proceedings. As long ago as May 2017 it confirmed that it was conducting ‘dawn raids’ at manufacturers and wholesalers of tobacco products. In 2019, after a public consultation, it issued guidelines on information exchanges in the context of business associations. Paragraph 48 (page 17) outlines factors to be analysed in deciding whether price announcements may be anti-competitive. That analysis depends on: (…) “the characteristics of the market, the strategic nature of the information (i.e. the extent to which the information enables undertakings to influence the behaviour of a competitor in the market) and the method of exchange.” (Our informal translation).
Analysis
In general, distinguishing between coordination arising through intelligent adaptation to the conduct of others, and coordination arising through illicit communication can be very difficult.
It may, perhaps, be relevant to the ABC/BMA’s announcement, that in September 2020 the Netherlands Authority for Consumers and Markets imposed fines totalling more than €uros 82 million on four major cigarette manufacturers for distorting competition by exchanging information, through wholesalers, about future prices of cigarette packs.
Similarly, on 10 April 2019, the Spanish Competition Authority fined three tobacco companies and their common distributor, a total of almost €uros 58 million for participating in an exchange of commercially sensitive information. (An appeal by one of the companies against the legality of the dawn raids that established information on which the fining decision was based was dismissed in August 2021).
Conclusions
Think twice and make a thorough assessment of the actual or potential impacts of directly or indirectly sharing information with competitors before allowing any such practice to develop, particularly if you participate in a narrow oligopolistic market with a small number of competitors.
Disclaimer: This general memorandum may not deal with every important topic or cover all important aspects of the subject matter. It is not intended, and should not be used, as a substitute for seeking appropriate legal advice on specific questions.
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