European Union: Information Exchange 2019 – European Union

Last Updated: July 18 2019
Article by David Wood

1 DESCRIBE THE PRINCIPAL COMPETITION RULES GOVERNING INFORMATION EXCHANGE IN YOUR JURISDICTION.

Information exchanges are assessed under article 101 of the Treaty on the Functioning of the European Union (TFEU). The first step is to analyse whether the information exchange restricts competition under article 101(1); the second, to assess the extent to which it is possible to raise efficiency arguments under article 101(3) (see question 8).

The constituent elements of article 101(1) are as follows:

Existence of an agreement, concerted practice or decision by associations of undertakings

Information exchanges between competitors are typically assessed as concerted practices under article 101(1) TFEU, which is a looser form of coordination not requiring the establishment of a binding agreement. There are three key components to a concerted practice: concertation; subsequent conduct on the market; and a relationship of cause and effect between the two.

Concertation is a form of coordination between economic operators by which, without having reached the stage where an agreement has been concluded, they knowingly substitute practical cooperation between them for the risks of competition (see Case C-8/08 T-Mobile Netherlands BV v Raad van bestuur van de Nederlandse Mededingingsautoriteit, at para 26). This is underpinned by the principle that each economic operator should independently determine the policy that it intends to adopt on the market (T-Mobile Netherlands, at paragraphs 32–33). It is sufficient that, through a declaration of intention, a competitor has eliminated or, at the very least, substantially reduced the strategic uncertainty as to the conduct to be expected from it on the market. It follows that a concertation takes place where strategic data is shared between competitors, because it is presumed to reduce the independence of a competitor's conduct on the market and diminishes their incentives to compete.

Information exchange in the context of agreements between competitors may also fall under article 101(1) TFEU, as well as decisions of associations of undertakings. Both concepts are relatively broad and the latter can include an association's rules and regulations, codes of conduct, binding decisions and recommendations.

Between undertakings or associations of undertakings

Under EU competition rules, an "undertaking" encompasses any entity engaged in economic activity (ie, offering goods or services on a market), regardless of its legal status or financing. Economic activities are distinguished from tasks carried out in the public interest, forming part of the essential functions of the state (imperium): activities within the exercise of public powers are not of an economic nature justifying the application of article 101 TFEU. However, public entities may qualify as undertakings to the extent that they are engaging in an economic activity.

Article 101(1) requires that the coordination take place between two or more distinct undertakings. Exchanges between companies forming part of a single economic unit (eg, within the same group) are therefore not caught.  Article 101(1) also applies to decisions of associations of undertakings, without the need to identify a formal agreement by the association.

Restriction of competition by object or effect

This distinction is described in more detail in question 5.

Jurisdictional threshold

There are three key elements to establish EU jurisdiction: 

  1. "trade between EU member states": this is a broad concept covering all cross-border economic activity. It requires an impact on cross-border economic activity involving at least two EU member states. A list of EU member states is maintained here.
  2. "may affect trade" threshold requires it to be possible to foresee with a sufficient degree of probability, based on a set of objective factors of law or fact, that the conduct may have an influence, direct or indirect, actual or potential, on the pattern of trade between EU member states. Conduct that affects the entire territory of a single member state is presumed to have this effect.
  3. "appreciability": EU law jurisdiction is limited to practices which have effects of a certain magnitude. Appreciability is assessed on a case-by-case basis and depends, among other things on the nature of the practice, products concerned and market position of the undertakings. Note that the effect on trade produced by cross-border cartels is generally, by its very nature, appreciable.

EU Guidelines on the Effect on Trade Concept can be accessed here.

2 WHICH BODIES ARE RESPONSIBLE FOR ENFORCING COMPETITION RULES ON INFORMATION EXCHANGE IN YOUR JURISDICTION?

Pursuant to Council Regulation No. 1/2003, the Commission, the national competition authorities of the member states (NCAs) and national courts all have parallel competences to apply article 101 TFEU.     At EU level (where the EU jurisdictional threshold is met), the Directorate General for Competition (DG COMP) of the European Commission (the Commission) is the main organ competent to investigate information exchanges.

Commission's initial investigative phase

Information exchange investigations can be triggered by a complaint, an own-initiative investigation or subsequent to an application for immunity (cartel whistle-blower). At the early investigative stage, the case team (comprising a case manager, case handlers, and assistants) takes the lead on the initial investigation. Following an internal consultation, DG COMP then decides either to carry out an in-depth investigation and initiate proceedings or to close the case.

Pursuant to article 11 of Regulation 1/2003, a system of cooperation exists between the Commission and the NCAs (see Commission Notice on cooperation within the Network of Competition Authorities). NCAs and the Commission can investigate an information exchange in parallel, up until the point in time the Commission formally initiates proceedings, relieving NCAs of their competence to apply article 101. Where there is no effect on trade between member states as described above, only the NCAs are competent to investigate the information exchange under national competition rules (which closely reflect article 101(1)). Note that the principle of uniform application of EU competition laws (article 16 of Regulation 1/2003) requires that NCAs, when examining the rules applicable to an information exchange already the subject of an article 101 Commission Decision, cannot act counter to that Decision.

Interplay between Commission, NCAs and courts

Once investigations are complete, the College of Commissioners (made up of political appointees from each EU member state) adopts any eventual Decision, following consultation with the Advisory Committee of Restrictive Practices and Dominant Positions, comprising representatives from the NCAs. Defendants, complainants and, with leave of the court, other parties able to show standing can seek leave to appeal a Commission Decision to the Court of Justice of the EU (ECJ), the EU's highest court, pursuant to article 263 TFEU. They have two months to lodge an appeal.

At first instance, the General Court (GC) has jurisdiction to hear and render judgment as regards the legality of a Commission Decision. The GC's judgment can be appealed on a point of law to the ECJ.

Article 3 of Regulation 1/2003 obliges NCAs and national courts to apply article 101 in parallel to national competition rules when the effect on trade criterion is fulfilled. Like NCAs, when applying article 101 in the context of information exchange, national courts cannot take decisions counter to a Commission decision. National courts must avoid conflicting with a decision contemplated by the Commission and for this reason, often stay national court proceedings pending the outcome of a Commission investigation. National courts can also refer questions of interpretation of article 101 to the ECJ for a preliminary ruling pursuant to article 267 TFEU. The ECJ's opinion on the interpretation of article 101 is binding on the national court. For more information, see Commission Notice on cooperation with courts of the EU member states in the application of articles 101 and 102 TFEU.

National courts are also competent to hear damages claims, either on a stand-alone basis or as a follow-on action to a Commission Decision taken pursuant to Regulation 1/2003. Directive 2014/104 on antitrust damages actions aims to facilitate national damages claims.

3 DESCRIBE THE TYPES OF INFORMATION EXCHANGES THAT MAY BE CAUGHT UNDER THE COMPETITION RULES IN YOUR JURISDICTION.

Information exchanges can be horizontal (between actual or potential competitors or through a third-party facilitator) or vertical (for example, between suppliers and retailers or retailers and customers). Horizontal information exchanges can take place directly, through third parties (such as a trade association or market consultancy company) or as a result of publication (for example, on a website, see question 7). They carry significantly higher risk of restricting competition than vertical information exchanges and are, therefore, the focus of this chapter.

There is no hard and fast list of types of permissible and impermissible information exchanges under EU competition rules. The Commission assesses this on a case-by-case basis according to the general framework set out in its Guidelines on the applicability of Article 101 of the TFEU to horizontal co-operation agreements (Horizontal Guidelines). However, certain types of individualised information exchanges on future quantities or price, especially when individualised, will almost always be prohibited under article 101(1) TFEU and are typically treated as cartels. A distinction must therefore be drawn between how the Commission examines information exchanges in the context of cartels; and in other contexts (such as part of a horizontal agreement).

(1) GENERAL FRAMEWORK FOR ANALYSING INFORMATION EXCHANGES

The Commission's Horizontal Guidelines set out a general framework for the competitive assessment of an information exchange, according to which the Commission takes into account the type of information exchanged, and market characteristics.

(a) Type of information

The more strategic the data (ie, the more it reduces uncertainty in the market), the more likely it is the Commission will find it to restrict competition. The Commission takes into account:

  • Market coverage: The Commission may take into account the extent of the market coverage of the information exchange (ie, whether it covers a "sufficiently large part of the market") to consider whether the conduct can be constrained by those not participating in the information exchange (see Horizontal Guidelines, at paragraphs 87–88). This is particularly relevant to information exchange in the context of industry associations and/or data collected and published/distributed by market research companies.
  • Individualisation/aggregation of the data: The Commission considers individualised data more likely to restrict competition because it facilitates a common understanding on the market and allows coordinating companies to single out a deviant or recent market entrant. By contrast, the more aggregated the data, the less likely it is to restrict competition (see Horizontal Guidelines, at para 89).
  • Age of the data: Data that is genuinely historic is less likely to restrict competition. For example, historic data is unlikely to facilitate the monitoring of deviations from normal competitive conditions. What is historic is decided on a case-by-case basis and will depend on the relevant market. In the past, the Commission has considered data exceeding one year to be historic (see Case IV/31.370, UK Agricultural Tractor Registration Exchange, at para 50).
  • Frequency of the information exchange: The more frequent the information exchange, the more likely the Commission considers it may have led to a better common understanding on the market and allowed participants to monitor deviations (see Horizontal Guidelines, at para 91). Note, however, that in some circumstances, depending on the structure of the market and the overall context of the exchange, an isolated exchange or disclosure may be considered to be sufficient (see Case C-8/08 T-Mobile Netherlands and Case C-74/14 "Eturas" UAB and Others).
  • Accessibility of the information: exchanges of public information (ie, information easily and equally accessible in terms of costs of access to all competitors and consumers) are unlikely to constitute an infringement of article 101(1) (see joined Cases T-191/98, etc, Atlantic Container Line and others v Commission, para 1154). Information referred to as being 'in the public domain' will not be considered public if their accessibility requires excessive costs deterring other companies or consumers to access the information (see Horizontal Guidelines, at paras 92-93) (see question 7 for more details).
  • Nature of the information exchanged: public exchanges of information equally accessible to all competitors and consumers are less likely to lead to an infringement of article 101(1 (see Horizontal Guidelines, at para 94) (See question 7 below for more details).

(b) Market characteristics

The Commission considers that certain market conditions – in particular markets that feature high barriers to entry and are transparent, concentrated, non-complex, stable and symmetric – render it easier to sustain coordination because it becomes easier to monitor and punish deviations. Moreover, the Commission considers an information exchange to be more likely to restrict competition where markets are concentrated, feature high barriers to entry, non-complex, stable and symmetric. In particular, the Commission considers that tight oligopolies can facilitate a collusive outcome as it is easier for fewer companies to reach a common understanding on the terms of coordination (see Horizontal Guidelines, at paras 77–85).

(2) INFORMATION EXCHANGE OUTSIDE A CARTEL CONTEXT

There are two types of information exchange that can occur outside a hardcore cartel context:

  1. Those ancillary to legitimate "horizontal cooperation agreements" (such as R&D agreements, joint production agreements, joint purchasing arrangements and joint commercialisation agreements) (see Horizontal Guidelines, at paragraphs 111–149, 150-193, 194–224 and 225–256, respectively). These are assessed as part of the agreement and are not likely to carry additional competition risks, so long as they are strictly limited to the information objectively necessary to explore a genuine transaction (see Horizontal Guidelines, at paragraph 56 and point 3(b) to this question below); and
  2. Pure information exchanges, where the economic function lies in the information exchange itself. The Commission typically applies the general framework described above to assess the extent to which these types of information exchanges are capable of restricting competition. In doing so, the Commission considers (see Horizontal Guidelines at paragraphs 64–71):

    • the extent to which the information exchange results in a collusive outcome (ie, whether it can facilitate coordination (alignment), increasing transparency in the market as regards companies' competitive behaviour); and/or
    • the extent to which the information exchange may result in anticompetitive foreclosure in the market where the exchange takes place and/or a related downstream market (see Horizontal Guidelines at paragraphs 64–71).

(3) INFORMATION EXCHANGE IN THE CONTEXT OF HARDCORE CARTEL CONDUCT.

Information exchanges of individualised future price and/or quantities are normally treated as hardcore cartels pursuant to article 101(1)(a), which expressly prohibits restrictions on competition that "directly or indirectly fix purchase or selling prices or any other trading conditions". A cartel can be described as a group of similar, independent companies joining together to fix prices, limit production or share markets or customers. By relying on their agreed-upon course of action and/or by acting in concert, cartel participants' incentives to compete in the market are reduced. The Commission sanctions information exchanges between competitors as cartels in two principal scenarios (see Horizontal Guidelines at paragraph 59 and Case COMP/39188 – Bananas (question 13)):

  1. Where the information exchange has the object of fixing prices or quantities. For example,where the information relates to: quotation prices (Case COMP/39188 – Bananas); future interbank offered rate submissions (Case AT.39914 – EIRD), price forecasts and prices charged to specific customers (Case AT.39574 – Smart Card Chips); information on sales volumes and orders received and at what price (Case COMP/39406 – Marine Hoses); pricing policies, production capacities and sales to individual customers (Case AT.38589 – Heat Stabilisers).
  2. Where an information exchange forms part of the monitoring or the implementation mechanism for an existing cartel. In this scenario, the Commission assesses the information exchange as part of the cartel (irrespective of whether the information relates to current, past or future prices or quantities). For instance, exchange of information intended to facilitate monitoring of current deliveries in order to ensure that a pricefixing and quota allocation cartel was effective was found to constitute, in and of itself, a concerted practice (Case T-148/89 – Tréfilunion SA v Commission). In a different context, information on sales and exports data formed part of a monitoring system allowing cartel participants to verify that the price increases decided in earlier meetings were in fact being implemented (Joined Cases T-379/10 & T-381/10 – Keramag Keramische Werke AG & Others v Commission (appeal of Case COMP/39092 – Bathroom fittings and fixtures)).

(4) Facilitators Although cartels normally take place between competitors, this does not preclude a third party that is not active on the allegedly cartelised market (for example, a consultancy, market research company or industry association) from being liable as a participant or facilitator. This will be the case where the third party contributes actively and intentionally to the cartel. In finding a third party liable, the Commission applies the following criteria: the third party, through its own conduct, contributed to the common objectives pursued by the participants; and it was aware of the substantive conduct planned or implemented by other undertakings in pursuance of those objectives, or that it could reasonably have foreseen that conduct and that it was ready to accept the risk (see Case AT.38589 – Heat Stabilisers, at paragraph 382 and Case T-99/04 – AC Treuhand v Commission, at paragraph 122, Case T-180/15 Icap v Commission, on appeal C-39/18 P, not yet decided, and Case C-74/14 "Eturas" UAB and Others). See Example 3 in question 13 for a recent example application of the facilitator doctrine.

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