Be careful what you discuss with competitors

Partner, Dorit McCann recently wrote an article for Business Plus on what you should and shouldn't be discussing with your competitors. Read the original article here or below.

Be careful what you discuss with competitors

EU and Irish competition law requires competitors to act strictly independently of each other in the market and prohibits businesses from entering into anti-competitive agreements or engaging in concerted practices. This is not limited to formal agreements, and includes any sort of informal arrangement or discussion between businesses, whether written or verbal, that has an anti-competitive object or effect.

Trade associations, companies and individuals (such as directors) may all be liable for breaches of the competition
rules. Sharing competitively sensitive information (whether directly or indirectly through a third party) can breach competition law, as it may facilitate collusion between companies, allowing those companies to engage in cartel activities such as price fixing, market sharing, limiting output and bid rigging. 

It can also increase market transparency to such a degree that companies are aware of their competitors’ future
intended behaviour, reducing the incentive to compete and potentially causing damage to consumers.

In the recent case of Balmoral Tanks v Competition and Markets Authority [2017] CAT 23, the Competition Appeal Tribunal in the UK held that a single meeting between competitors can amount to an infringement of competition law, even if the intention of the meeting was not to exchange sensitive information. It was also not an excuse that suppliers could receive similar information on competitor pricing from customers, as the meeting provided an  opportunity to have that information confirmed directly by competitors.

What are the potential penalties for breaching Irish competition rules?

The risks are considerable. An individual involved in a cartel in Ireland faces a prison sentence of up to ten years and potential fines of up to €5 million, while a company faces fines of up to 10% of annual global turnover. Directors face automatic disqualification if convicted on indictment, which precludes them from acting as director of a company in Ireland for up to five years.

Both the European Commission and the Competition and Consumer Protection Commission (together with the Director of Public Prosecutions) run leniency programmes under which cartel participants can benefit from immunity or reduced fines by blowing the whistle on their fellow cartel members. Under the Irish scheme, this benefit is limited to the first member of a cartel to come forward.

What you can (and can’t) talk with competitors about

Some exchanges of information are entirely legitimate, e.g. a discussion of general health and safety or environmental concerns. However, a discussion relating to the adoption of a company’s specific technological
solution may amount to a breach of competition law. The CCPC has clarified that it considers the following types of information to be commercially sensitive in most circumstances, and that it must not be shared between competitors:

• Current and future pricing information (e.g. actual prices, discounts and rebates)
• Current and future output and sales information (e.g. volumes, turnovers and market shares)
• Current and future commercial plans (including product development, marketing and promotional plans)
• Information about costs
• Customer lists

This list is not exhaustive, however, and other types of information can be commercially sensitive.

What should businesses do?

Companies should ensure that their employees are well trained on what can and cannot be discussed with competitors, particularly those employees who regularly attend meetings or events with competitors.