Another update on information exchange?!

It’s been almost exactly two years since we last blogged about information exchange (see here). We have been desperately waiting for an opportunity to revisit this topic dear to our heart, and the ECJ has now provided us with one. In its decision of 29 July 2024 (C‑298/22), the ECJ addresses the exchange of information in great detail and offers valuable guidance that extends beyond the specifics of the case. In the following, I will try to extract this guidance and formulate general principles based on it.

Quick recap – what is the case about  

The case concerns a request for a preliminary ruling by a Portuguese court, which had to handle an appeal against a fine imposed by the Portuguese Competition Authority on certain credit institutions for participating in an information exchange related to their current and future credit conditions. The exchange was not alleged to be ancillary to a particular agreement (like raising those conditions) or concerted practice but rather “standalone.” The Portuguese Competition Authority found that the exchange constituted an infringement by object, and therefore, it did not need to investigate any effects.

According to the decision, the exchange of information was regular and took place within a closed circle. The information exchanged was not publicly available and differed from what was provided to consumers. The Portuguese court’s request centered on whether such a frequent exchange of information between competitors in a concentrated market with barriers to entry could be classified as a restriction by object under Art. 101 TFEU.  

General observations

Before delving into the details of the information exchange, it is useful to reiterate the well-known principles that the ECJ has established on object infringements and information exchange, which are also noted in the case at hand:

• The concept of “restriction by object” is limited to cases that reveal a “sufficient degree of harm to competition”, making it unnecessary to assess their effects.
• Harm from information exchange can arise when it leads participants who are “reasonably active and economically rational” to tacitly align their conduct on one of the key parameters of competition in the relevant market.
• However, even if this is not the case, information exchange can still constitute a restriction by object if it reduces uncertainty about the future conduct of other participants in the market. For this to occur, the exchanged information must be both confidential and strategic.
• According to the court, “confidential information” refers to information not already known to any economic operator active in the relevant market, while “strategic information” is understood as information that, when combined with other information already known to participants in the exchange, may reveal the strategy that some of those participants intend to implement regarding one or more key parameters of competition in that market.

And now to specific guidance regarding the information exchanged

With regard to the information exchanged, the decision includes valuable guidance. The following summary of the key points may be helpful for future internal and external advice:

• In the absence of specific circumstances and considered in isolation, the standalone exchange of past sales volumes is unlikely to restrict competition. However, what is meant by “past” is not specified in more detail and the wording leaves room for interpretation.
• While the exchange of information mandated by national legislation does not infringe Article 101 TFEU, an exchange that goes beyond what is required can infringe Article 101 TFEU.
• The frequency of information exchange is not decisive in determining an infringement. A single exchange can be sufficient to reduce uncertainty about future conduct in the market.
• The exchange of information for benchmarking purposes can facilitate competition. However, the exchange of confidential information that refers to future intentions regarding a competitive parameter in the relevant market does not facilitate but rather restricts competition.
• Information exchange can lead to an infringement by object even if it concerns only one parameter of competition, such as a single component of the final price charged to customers.
• As for the timing of the information exchange, the ECJ held that an infringement can be assumed even if (i) the exchange takes place shortly before the information is published, and (ii) it is impossible for the participating parties to change their market behaviour immediately. This is because the exchange still allows them to react faster than they would have in the absence of the exchange. Furthermore, it does not matter whether the information was actually taken into account or not.

Confirmation of a tough policy

The ECJ confirms its strict approach towards information exchange. This might not be surprising. For antitrust trainings, the decision underlines again the importance of that topic. Despite being a longstanding topic in antitrust law, the topic remains difficult to communicate and is often met with a lack of understanding (even more so if the information is exchanged publicly). However, it is crucial for employees to understand that merely exchanging information carries significant risks of fines. The principles outlined in the ruling should therefore provide a solid foundation for the next antitrust law training. Go for it. 

Photo by Jakob Owens on Unsplash