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It is generally relatively easy for companies and their legal advisers to identify the most serious manifestations of anticompetitive behaviour and to proscribe such behaviour as part of a compliance and risk management strategy. Price fixing, bid rigging and market sharing are all examples of conduct that exposes companies to a serious risk of substantial fines and which can be described or explained to business executives with relative ease.
It is, however, often difficult to distinguish the lawful from the unlawful when dealing with less extreme transgressions. The line between innocent parallel behaviour and illicitly coordinated behaviour can be unclear, particularly in markets with a limited number of players where competitors' commercial strategies are interdependent. This uncertainty creates substantial costs by inhibiting commercially desirable and perfectly lawful behaviour. It also gives rise to unintended antitrust risks. This note provides practical guidance on identifying and assessing those risks.
Prohibited agreements and concerted practices
Article 101 of the EU's antitrust rules prohibits agreements and concerted practices which have as their object or effect the restriction or distortion of competition. An actual or potential restriction or distortion of competition is sufficient but it must be appreciable and there must be an effect in the EU. The notion of agreement is very broad, capturing everything from a written contract to an unspoken or tacit meeting of minds.
A concerted practice falls short of an actual agreement and has been defined by the European Court of Justice as:
" .. a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition .... By its very nature, a concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants".
For example, five mobile telephone operators that met in The Netherlands only once and at the meeting discussed, but did not agree, dealer remunerations were found to have concerted in an anti-competitive practice. Therefore, even without evidence of agreement having been reached, if there is evidence that competitors have met, even only once, and discussed commercially sensitive information such as pricing or capacity, an unlawful concerted practice is likely to be inferred. Mere presence at a meeting of this kind gives rise to antitrust risks unless executives take steps actively to distance themselves by, for example, noting that they object to the discussion and if it does not immediately stop, departing, ensuring that their departure is noted.
Parallel conduct is not itself caught by Article 101 and does not necessarily create a presumption of collusion. For companies that are active in markets where a limited number of players account for the majority of supply, parallel conduct can be the result of rational and autonomous decision-making, and this is acknowledged by the EU antitrust authorities. Nevertheless, parallel conduct provides strong evidence of concertation, particularly where other "plus factors" are present. These "plus factors" include:
- contacts between competitors, including at trade association meetings;
- ongoing commercial relations such as reciprocal supply agreements or having board members in common;
- disclosing the course of conduct that is being adopted to competitors, including making announcements of price changes and the exchange of information amongst competitors;
- a history of antitrust violations in the sector;
- high concentration of suppliers and low concentration of buyers;
- high barriers to entry;
- standardised or homogeneous product or service.
Therefore, parallel conduct is not sufficient to an infringement finding, but where other evidence relating to conduct and market structure points to the existence or likelihood of concertation, the risk of, at the very least, investigation, is substantial.
One of the most common forms of concerted practice falling short of actual agreement, is the exchange of commercially sensitive information. The EU authorities recognise that in many instances, information exchange is procompetitive. However, when the exchange of information reduces or removes the degree of uncertainty as to the operation of the market in question, there are substantial antitrust risks.
The European Commission has recently published draft guidelines which provide that the exchange of "individualised data regarding intended future prices and quantities" will be regarded as having the objective of restricting competition. That is because, by its very nature, the exchange of such information would tend to be injurious to competition.
All other types of information exchange (excluding those that are part of a cartel) must be assessed by reference to characteristics of the information and the market. The following factors are indicative of a high antitrust risk:
|Market factors||Information type|
|Stable conditions of supply and demand||Current or future|
Symmetrical, i.e. companies have homogeneous costs, product ranges, capacities, etc
The point at which legitimate parallel conduct becomes concertation, and procompetitive information exchange becomes anticompetitive, depends upon a number of variables including market structure and dynamics, commercial relations amongst the market participants, and the types of information exchanged. The magnitude of the costs now associated with antitrust infringements mean that a realistic assessment of the risk profile of these variables, both individually and collectively, must be a key part of every business's decision-making process.