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Competition Law

Analysis - debate - current awareness

31 MAY 2013

Doing what your competitors do ...

By John Cassels

It is generally relatively easy for companies and their executives to identify the most serious manifestations of anti-competitive behaviour and to proscribe it as part of a compliance and risk management programme. 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 can also give rise to unintended antitrust risks.

In addition to restrictive agreements, EU competition law catches concerted practices, defined by the European Court 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 ..."

Parallel conduct is not itself unlawful. Nevertheless, parallel conduct may provide evidence of concertation, particularly where other ‘plus factors' are present. These ‘plus factors' include:

  • conduct evidence, such as:
    • 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; or
    • a history of antitrust violations in the sector.
  • evidence related to market structure, such as:
    • high concentration of suppliers and low concentration of buyers;
    • high barriers to entry; or
    • standardised or homogeneous product or service.

Therefore, doing what your competitors do 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.

If you would like to discuss these issues, please do not hesitate to contact John Cassels at john.cassels@ffw.com.

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