Explain when information exchange between

competitors is prohibited by TFEU Article 101(1).

University of Oslo
Faculty of Law

Candidate name: Raja Priyankar Sukhdeo

Candidate number: 3046
Deadline for submission: 21 November 2014
Number of words: 2,467

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

Requirements of Article 101

Article 101 is directed at protecting market competition by prohibiting business entities
from entering into agreements and partaking in practices, primarily classic cartel
behaviour, that have the potential to disrupt competition in the EU internal economic
market. Exchanges of information between firms is captured by this provision under the
head of agreements between undertakings and, in less formal arrangements, under
concerted practices.
In order for conduct to be prohibited by Article 101, four basic elements are required.
First, an undertaking must carry out the conduct; a term with a wide scope of
application used to capture any entity that engages in economic activity.1 Excepted are
employees and public services based on a solidarity for a social purpose.2 Second,
the conduct must be centred on some form of mutual agreement or meeting of the
minds between parties that could be characterised as illegal collusion. This captures
both formal and informal agreements3 between competitors (horizontal agreements) as
well as between undertakings operating in different markets (vertical agreements)4.
Third, the effect of the impugned conduct must be felt in trade between Member States.
If the conduct merely impacts upon domestic trade within a Member State, national
laws of that Member State will govern the matter. Finally, Article 101(3) contemplates
that not all organised conduct between firms necessarily has an adverse effect on the
market by providing exemptions to those agreements and practices which facilitate
improving the production or distribution of goods or to promoting technical or economic
progress, while allowing consumers a fair share of the resulting benefit, and which do
not have an undue adverse effect on the market.

Case C-41/90 Hfner and Elser v Macrotron GmbH [1991] ECR I-1979.

Case C-205/03 P Federacin Espaola de Empresas de Tecnologa Sanitaria (FENIN) v Commission [2006] ECR I6295.

See generally C-32/78 and 36-82/78 BMW Belgium v Commission of the European Communities [1979] ECR 2435,
Case T-148/89 Trefilenrope SARL v Commission [1995] ECR II-1063 and Case T-8/89 DSM NV v the Commission
(Polypropylene) [1991] ECR II-1833 where the European Courts discussed the nature and extent of cooperation
between undertakings required for the purpose of Article 101.

C-6 and 58/64 Consten and Grundig v Commission [1966] ECR 299 where the CJEU applied Article 101 to a vertical
arrangement.

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

Nature of information exchange

The exchange of information between undertakings has historically been a problematic
area to regulate. This is primarily a result of the nature of business information to have
potential for anti-competitive as well as pro-competitive effects. Competition authorities
have their primary concern with the dissemination of sensitive business information
which results in an increase in market transparency. 5 This causes an increased
potential for concerted conduct between firms, which in turn has an adverse effect on
competition.6 Conversely, dissemination of business information allows firms to collect
and analyse data from which economic and technological gains can be achieved, and
better strategic decisions can be made.7 Additionally, potential competitors may use
information, which promotes desirable dilution of the market. Information may also be
used personally by consumers allowing them to compare aspects of various firms to
make an informed choice.8
Further difficulties arise in proving the element of collusion required under Article
101(1). Unlike in circumstances of cartel behaviour where an arrangement between
parties may well take the form of an express agreement or might be readily inferred
from evidence, information exchange practices can be more obscure. For example, it
may be that a firm unilaterally decides to make available information or information is
made available to a third party firm. Moreover, in some cases, one firm acting
independently may permissibly collect information that is prohibited from being shared
between firms.9 For example, a petrol station may use an employee to collect local
competitors fuel prices, form a historical database, and then use that database as an
indicator of future pricing. In such a case, conduct of firms simply sharing information
would likely be prohibited, but the costly exercise of independent collection would be
permissible.
As a result of these issues an analysis of European Commission (Commission)
guidance and European case law should be conducted specifically in relation to

Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union, horizontal cooperation agreements [2011] OJ C11/1 (Guidelines) at [65].

Guidelines at [66] and [78].

See generally Case C-238/05 Asnef-Equifax, Servicios de Informacion sobre Solvencia y Credito, SL v Asociacion de
Usuarios de Servicios Bancarios (Ausbanc) [2006] ECR I-11125 where the CJEU accepted that information sharing can
result in` benefits to customer service.

8
9

Guidelines at [99].
Guidelines at [61] and [89].

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

information exchange in order to determine in what circumstances Article 101 prohibits

the exchange of information between firms. The issues of particular importance to this
analysis are: (i) the extent of the requirement of concerted behaviour, (ii) the
assessment of the characteristics of information exchange captured by Article 101(1),
and (iii) the circumstances which enliven the exemption provided by Article 101(3).

Assessment of requisite concerted behaviour

In order for information exchange to be captured by Article 101(1) there must exist an
agreement, a concerted practice or a decision by an association of undertakings. For
reasons established in the discussion above, what constitutes a concerted practice
requires the most guidance.
BASIC PRINCIPLES
The overarching principle behind competition is that undertakings must operate
independently on the market. In Suiker Unie and Others v Commission (Suiker)10 the
CJEU established that each economic operator must determine independently the
policy which he intends to adopt on the common market 11 . Guidance specific to
information exchange is provided by the CJEU in T-Mobile Netherlands BV and others
(T-Mobile)12:
The exchange of information between competitors is liable to be incompatible with the
competition rules if it reduces or removes the degree of uncertainty as to the operation of the
market in question, with the result that competition between undertakings is restricted.

13

It follows from this that a prohibited information exchange should result in greater
market transparency which adversely affects competition. This requirement of
causation is clarified in Commission v Anic Partecipazioni14:
A concerted practice implies, besides undertakings concerting together, conduct on the market
pursuant to those collusive practices, and a relationship of cause and effect between the two.

10
11
12
13
14
15

15

Joined Cases 40114/73 Suiker Unie and Others v Commission [1975] ECR 1663.
Ibid, at [73].
Case C-8/08 T-Mobile Netherlands BV and others [2009] ECR I-4529.
Ibid, at [35].
Case C49/92 P Commission v Anic Partecipazioni [1999] ECR I4125.
Ibid, at [118].

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

It is clear from these lines of reasoning that cause and effect is key to the
characterisation of the kind of conduct that constitutes a concerted practice. In fact, the
CJEU has gone as far as deeming contact to be a rebuttable presumption for conduct
and causation.16
RECIPROCAL AND UNILATERAL CONDUCT
As indicated previously, information exchange may occur by way of various means, for
example by arrangement or by unilateral or reciprocal conduct. In Cimenteries CBR17
reciprocal conduct was found to be necessary under Article 101(1):
[...] the concept of concerted practice does in fact imply the existence of reciprocal contacts [...].
That condition is met where one competitor discloses its future intentions or conduct on the
market to another when the latter requests it or, at the very least, accepts it.

However, the concept of reciprocal conduct should be interpreted broadly. For

example, the Commission has stated that genuine public announcements made by a
firm unilaterally will generally not constitute a concerted practice within the meaning of
Article 101(1).18 Yet even when a unilateral announcement of information is made,
reciprocal conduct cannot simply be excluded:
[] depending on the facts underlying the case at hand, the possibility of finding a concerted
practice cannot be excluded, for example in a situation where such an announcement was
followed by public announcements by other competitors, not least because strategic responses of
competitors to each others public announcements [...] could prove to be a strategy for reaching a
common understanding about the terms of coordination.

19

Furthermore, mere acceptance by one party of a unilateral declaration by another party

will fulfil the condition of a concerted practice. In Hls v Commission20 the CJEU found
that where a firm is placed in a situation, in this case a meeting of an association of
firms, where a competitor is exchanging information for a prohibited purpose, the onus
is on that firm to make clear that it does not accept that information. The rationale for
this is explained by the CJEU in T-Mobile:

16
17
18
19
20

Case C-199/92 P Hls AG v Commission (Polypropylene) [1999] ECR I-4287 at [162].

Joined Cases T-25/95 and others, Cimenteries CBR, [2000] ECR II-491.
Guidelines at [63].
Ibid.
Case C-199/92 P Hls v Commission [1999] ECR I-4287.

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

[] it must be presumed that the undertakings taking part in the concerted action and remaining
active on the market take account of the information exchanged with their competitors in
determining their conduct on the market.

21

ISSUE OF TACIT COLLUSION

Tacit collusion is the phenomenon of coordination resulting in reduced competition
without direct communication between firms. This is typical of oligopolistic markets, for
example supermarkets and petrol stations in most western countries, where there are
few competitors, homogeneous products, a high degree of natural transparency, highly
informed consumers and prohibitive entry barriers for competitors. 22 With the high
degree of availability of information through the Internet and other media sources,
which could as well be obtained through illegal concerted practices, firms are naturally
placed under the Commissions spotlight. In Suiker the CJEU preserved an
undertakings right to make use of economic information:
[the] requirement of independence does not deprive economic operators of the right to adopt
23

themselves intelligently to the existing and anticipated conduct of their competitors.

The Court went on to delineate contact as the distinguishing feature between tacit
collusion and concerted practice:
[independence] does however strictly preclude any direct or indirect contact between such
operators, the object or effect whereof is either to influence the conduct on the market of an
actual or potential competitor or to disclose to such a competitor the course of conduct which they
themselves have decided to adopt or contemplate adopting on the market.

24

It follows that mere existence of parallel conduct between competitors cannot be

indisputably used as proof of a concerted practice. This was accepted by the CJEU in
Ahlstrm and others v Commission (Wood Pulp)25 where the Court found that:
[] the parallelism of prices and the price trends may be satisfactorily explained by the
oligopolistic tendencies of the market [...]. Accordingly, the parallel conduct established by the
Commission does not constitute evidence of concertation.

However, the Court went on to preserve the usefulness of parallel conduct vis--vis
proof for the purpose of Article 101(1) by maintaining that parallel conduct can be

21

T-Mobile, above n 12, at [51].

22

Dutch Independent Post and Telecommunications Authority (OPTA), Is Two Enough?, Economic Policy Note, No 6,
September 2006.

23
24

Suiker, above n 10, at [174].

Ibid.

25

Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 Ahlstrm and others v
Commission (Wood Pulp) [1988] ECR I-5193.

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

regarded as furnishing proof of concertation if concertation constitutes the only

plausible explanation for such conduct.26

Assessment of information under Article 101(1)

Economics, by its nature, depends on assumptions and facts, with different sets of
assumptions or facts often producing different outcomes.27 Some economists argue
that all behaviour other than blatant price fixing and market sharing should be analysed
on a case-by-case basis. 28 However, despite the complex nature of information
exchange, solely employing a case-by-case approach is resource intensive and leads
to a reduction in commercial certainty. These considerations provide justification for the
grouping together of similar kinds of conduct.29
RESTRICTION BY OBJECT
In T-Mobile the CJEU accepted that certain forms of collusion between undertakings
can be regarded, by their very nature, as being injurious to the proper functioning of
normal competition 30 . The Court went on to say that information exchange that
directly or indirectly fix[es] purchase or selling prices 31 or which is capable of
removing uncertainties between participants as regards the timing, extent and details of
the modifications to be adopted by the undertaking concerned32 should be restrictions
by object. It is noteworthy that the Court confined restriction by object to information
pertaining to future conduct only. This approach was confirmed by the Commission in
its Article 101 Guidelines.33
RESTRICTION BY EFFECT
For all other types of information an assessment should be carried out on a case-bycase basis. Information exchange that has the character of removing uncertainties in

26

Ibid, at [71].

27

M Bennett and P Collins, The Law and Economics of Information Sharing: The Good, the Bad and the Ugly,
European Competition Journal, Vol 6, No 2, p 312.

28

Ibid.

29

M Bennett, A Fletcher, E Giovannetti and D Stallibrass, Resale Price Maintenance: Explaining the Controversy, and
Small Steps Towards a More Nuanced Policy in B E Hawk (ed), International Antitrust Law & Policy: Fordham
Competition Law 2009, Juris Publishing, New York, 2010.

30
31
32
33

T-Mobile, above n 12, at [29].

Ibid, at [37].
Ibid, at [41].
Guidelines at [74].

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

the market will generally be restricted by effect.34 The removal of uncertainty must be
referable to an economic parameter, namely price, output, product quality or variety, or
innovation.35 As such, the exercise of assessing information that may be restricted by
effect must take into account particulars of the market as well as the information itself.
In general, markets that are transparent, concentrated, non-complex, stable and
symmetric are more prone to anti-competitive effects as a result of information
exchange. However, even markets that are less susceptible can be adversely affected
in certain circumstances. Moreover, such markets can even be changed over time by
on-going concerted information sharing to make them prone to misuse of information.
An effects analysis must consider the following market characteristics: transparency,
concentration, complexity, stability and symmetry.36 Other characteristics may also be
material depending on the circumstances; for example, the length that an undertaking
has been operating in a market is considered to be directly proportional to the
likelihood of collusion.37
The characteristics of information likely to produce anti-competitive effects are as
equally dependent on circumstances as the market. Briefly, some of the considerations
outlined by the Commission are: a) individualised information is more likely to contain
potential for coordination as opposed to aggregated information;38 b) genuinely public
and readily accessible information is not likely to raise competition concerns (cf. private
information or public information with substantial accessibility barriers);39 c) information
pertaining to commitments assured by firms raises competition issues as competitors
can rely on that information when designing strategy (cf. speculations and mere
ideas);40 d) current and future information as well as past information that foretells
future conduct presents competition risks by way of reducing uncertainty;41 e) frequent
exchanges facilitate greater accuracy of information and further reduces uncertainty;42

34
35

T-Mobile, above n 13.

M Bennett and P Collins, above n 27, p 331.

36

E sterud (2014), Cartels/Horizontal Agreements (Article 101 TFEU) [PDF], retrieved from the University of Oslo EU
Competition Law Fronter Classroom: www.fronter.com/uio.

37
38
39

Ibid.
Guidelines at [74].
Guidelines at [92] and [94].

40

M Motta, Cartels in the European Union: Economics, Law, Practice, in X Vives (ed), Competition in the EU: Fifty
Years on from the Treaty of Rome, Oxford University Press, Oxford, 2009, pp 95-104.

41
42

Guidelines at [62]
Guidelines at [91].

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

and f) parties to the exchange should cover a sufficiently large part of the relevant
market for the coordinated practice to have appreciable effect and not be stymied by
other competitors.43

Assessment of information under Article 101(3)

Article 101(3) provides an exemption for information exchanges which restrain
competition by object or effect, but also provides pro-competitive advantages resulting
in a net benefit to consumers. Four elements are required for Article 101(3) to apply:
first, that there be some efficiency or innovative gain; second, that consumers enjoy a
fair share of the benefit of such gain; third, that the coordinated practice does not
impose upon firms any unnecessary restriction; and fourth, that competition must not
be eliminated as a result of the arrangement. Research and development agreements
are a frequently cited example of an arrangement between firms where information
sharing is necessary to achieve the benefit of the endeavour and to which Article
101(3) is of particular relevance. 44 On the other hand, information exchanges that
constitute cartels are very unlikely to fulfil the conditions of Article 101(3).45

Conclusion (summary of findings)

The exchange of information between firms has the potential to have both anticompetitive and pro-competitive effects. The challenge for competition authorities is to
protect markets, and ultimately consumers, from anti-competitive practices whilst
fostering firms to carry out pro-competitive initiatives. Article 101(1) addresses the
former interest while Article 101(3) protects the latter.
In appreciation of the diverse ways in which information can be disseminated, the
CJEU has held that in order for conduct to be captured by Article 101(1) it is necessary
that there be some form of concerted conduct between undertakings. This implies that
there must exist some form of reciprocal contact. This requirement should be

43
44
45

Guidelines at [87].
Guidelines Part 3: Research and Development Agreements.
Guidelines at [74].

Raja Priyankar Sukhdeo 3046 MARL5110 EU Competition Law

interpreted broadly and extends to the mere acceptance of information by an

undertaking.
The information must have been shared with an anti-competitive object or have the
potential for anti-competitive effects on the market. Restriction by object in the context
of information exchange is confined to information on prices and economic strategy.
Restriction by effect must be evaluated on a case-by-case basis with analysis of the
potentially affected market and the nature of the information.
Finally, Article 101(3) operates to exclude an agreement from the scope of Article
101(1) under limited circumstances where information sharing is necessary to result in
some net gain, benefits are passed to consumers, and competition is not eliminated.

10