Information exchange: What to expect from the new Horizontal Guidelines

We have already blogged about the new Draft Horizontal Guidelines here. Even though the topic of information exchange and its potential effects on competition is not entirely new, the relevant antitrust limits are still highly relevant and much discussed. Although there may still be changes until the final version, the Draft Horizontal Guidelines indicate which position the European Commission is taking on certain aspects of information exchange between competing undertakings.

A new and less prominent position

While information exchange is covered at the beginning of the current Horizontal Guidelines, the topic is placed “in the middle” of the Draft Horizontal Guidelines. At the same time, the chapter is now considerably longer and supplemented with numerous examples.

Finally clear guidance for information exchange in an M&A context?

One issue that concerns many practitioners is the exchange of information in the context of an M&A process. However, here the guidance provided by the Draft Horizontal Guidelines is rather limited. It only says that “any conduct restricting competition that is not directly related to and necessary for the implementation of the acquisition of control remains subject to” Art. 101 TFEU (the EU’s cartel prohibition). This basically repeats what the ECJ says in its EY judgement (C-633/16), and if one had hoped for more guidance about what could and could not be exchanged in the context of M&A, she or he might be disappointed.

Some clarifications

However, clarifications and additional guidance are provided for a number of topics:

  • The European Commission confirms that information exchange in the course of regulatory initiatives is still subject to Art. 101 TFEU, even if the request to exchange information is issued by a national government or even the European Union. The companies involved are therefore always under an obligation to make sure that the exchange of information in the course of a regulatory initiative is in line with antitrust law.
  • The Draft Horizontal Guidelines remain vague on the much-discussed question of when the use of algorithms can lead to a collusive outcome. The European Commission finds that “for algorithmic collusion to be possible, in addition to the specific design of the algorithms, some structural market conditions are required, such as a high frequency of interactions, limited buyer power and the presence of homogenous products/services”. Thus, when using algorithms that could run a risk of colluding with competitors, undertakings should take into account their respective market conditions.

What is competitvely sensitive

The European Commission also provides a list of information which it considers competitively sensitive. Nothing new, but still helpful to start with:

  • Pricing and pricing intentions
  • Current and future production capacities
  • Intended commercial strategy
  • Arrangements relating to current and future demand
  • Future sales
  • Current state and business strategy
  • Future product characteristics which are relevant for consumers
  • Information concerning positions on the market and strategies at auctions for financial products

The Draft Horizontal Guidelines further provide some guidance on what is considered genuinely public information, which is not competitively sensitive:

  • Obtaining information should not be more costly for customers and undertakings that do not participate in the exchange than for the undertakings exchanging the information.
  • With regard to what is genuinely public, the guidelines mention the – nowadays very popular – example of petrol stations. While the European Commission (not surprisingly, see also here) does not see a problem in the public advertising of petrol prices, it would consider a direct real time exchange of the very same information more critical, since obtaining the same information in a different way, i.e. not through real time exchange, would incur substantial time and transport costs for each individual undertaking.

With regard to the age of the information exchanged, the European Commission provides an example in which it considers information from the past year not as “historic” and clearly emphasizes that an assessment has to take place on a case-by-case basis (so nothing changes after all).

Unilateral disclosures

The all-time favourite in antitrust trainings – unilateral disclosure of information – is of course also discussed in the new Draft Horizontal Guidelines. The European Commission underlines that where one receives competitively information, such information must be actively rebutted with a clear statement. Otherwise, it will be presumed that the information had been taken into account and that the market conduct had been adapted accordingly – this is already outlined in the current guidelines but cannot be mentioned often enough (although people still find it intimidating to actively rebut information they hear during a bathroom break on a trade association meeting).

Clean teams and other safety measures

The Draft Horizontal Guidelines also take up measures that are widely used in practice, such as clean teams or Chinese walls, by stating that such measures can prevent the exchange of competitively sensitive information. As an example, the guidelines cite (exceptionally) permissible horizontal cooperations in which a clean team structure ensures that data is exchanged only to a limited (and the required) extent. The European Commission also emphasizes that participants to a data pool should in principle only have access to their own and the final, aggregated, information of other participants.

Guidance on object restriction?

Lastly, the European Commission confirms that “an information exchange will be considered a restriction by object when the information is commercially sensitive and the exchange is capable of removing uncertainty between participants as regards the timing, extent and details of the modifications to be adopted by the undertakings concerned in their conduct on the market”. The example provided seems to derive from its 2021 car emission decision, drawing the line between reaching a common position concerning future legislative proposals (in line with antitrust) and exchanging information regarding the development of future products (may violate antitrust).

The topic remains highly relevant in practice

In this post, we were by no means able to cover all the points on information exchange in the Draft Horizontal Guidelines. This shows that the topic is extremely comprehensive and has many aspects. It is also highly relevant for practice. Overall, the European Commission’s approach may seem restrictive, but one can at least look forward to more guidance than in the current Horizontal Guidelines. It remains to be seen whether and what will change in the final version. For example, more guidance on information exchange in the M&A context would be more than welcome.