Bananas and public announcements: Defining the boundaries of anti-competitive information exchanges

• Jurisdiction: South Africa
• Pages: 450-475
• Author: Thandi Lamprecht
• Published date: 25 May 2019
• Date: 25 May 2019

BANANAS AND PUBLIC ANNOUNCEMENTS:

DEFINING THE BOUNDARIES OF ANTI-

COMPETITIVE INFORMATION EXCHANGES

THANDI LAMPRECHT*

Group Legal Counsel at Origin Systems

Information exchange between competitors remains a murky area of

competition law. It is not always clear when pro-competitive informa-

tion sharing ends and collusive conduct begins. There are many shades

of grey in between. It is also an area where there has been much

development in recent years.

A question ref‌lecting the diff‌iculty in identifying anti-competitive

conduct relates to discussions around weather conditions. When does

shooting the breeze with a competitor about climatic events and the

demand for bananas become price-f‌ixing? The European General Court

recently answered that the line is crossed when the market for that

particular commodity is a concentrated one and such discussions affect

the weekly quotation price for bananas.

1

It is clear that advising clients

not to talk about prices is not suff‌icient, and the effects of seemingly

benign conversations must always be considered.

Closer to home, the Competition Commission recently imposed

strict conditions in several merger cases before the Competition Tribu-

nal. The purpose was to prevent anti-competitive information sharing

from taking place where the Commission was concerned that sensitive

information discussed at board meetings may lead to anti-competitive

outcomes.

2

This article considers recent developments in respect of the law

around the exchange of sensitive information between competitors, and

how best to mitigate against anti-competitive information exchange. We

also make suggestions for practitioners as to how best to advise their

clients in this regard.

* BComm (Law) LLB (Stell) LLM (UP). Group Legal Counsel at Origin Systems. This

article is based on a presentation at the Seventh Annual Conference on Competition Law,

Economics & Policy, hosted by the Competition Commission of South Africa, held on 5 and 6

September 2013 at the Sandton Sun, Sandton. The article on which this article is based was

written while the author was employed as an Associate at Werksmans Attorneys and

was supervised by Irma Gouws.

1

See Del Monte v Commission (Case T-587/08) and Dole v Commission (Case T-588/08).

2

For example, the settlement agreement in the large merger between Business Venture

Investments no. 1658 (Pty) Ltd and Afgri Operation Ltd and Senwes Capital (Pty) Ltd Case

No. 87/LM/Dec12 — 015644.

450

(2014) 26 SA Merc LJ 450

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I INTRODUCTION

The exchange of information between competitors is an area of compe-

tition law where the law is still developing worldwide. It will continue to

develop as f‌irms that wish to inf‌luence the competitive dynamics of the

markets in which they operate look for more creative ways to inf‌luence

those dynamics without entering into overtly collusive agreements.

Competition authorities must therefore adopt a more proactive

approach to dissuading such behaviour. This can be, and in many

countries is being, done by providing clear guidelines on what is

acceptable and unacceptable information exchange, clamping down on

various forms of anti-competitive information exchange that may lead

to anti-competitive outcomes, and imposing conditions on merging

parties who operate in oligopolistic markets, sensitive to the effects of an

exchange of sensitive information.

The fundamental diff‌iculty with the regulation of information

exchange is that greater transparency in a market usually enhances

eff‌iciency. It can benef‌it consumers directly and produce eff‌iciencies for

the f‌irms involved. This boosts consumer welfare and should therefore

be welcomed and encouraged.

3

However, it can also produce anti-

competitive effects by facilitating collusion or by providing f‌irms with

focal points around which to align their behaviour.

4

So a careful balance

must be struck to ensure that pro-competitive information exchange is

encouraged and its benef‌its are recognised, while anti-competitive

exchanges are dealt with appropriately.

This article examines the nature of information exchange between

competitors and how competition authorities in the United States of

America (USA), European Union (EU) and the United Kingdom (UK)

deal with it. We discuss recent cases in these jurisdictions that ref‌lect

how closer attention is being paid to unilateral disclosures of informa-

tion with anti-competitive effects and information exchanges between

competitors that take place through a third party (such as an agent or

retailer) — ‘vertical exchanges of information’. We then turn to

consider the South African competition authorities’ approach to infor-

mation exchanges and the steps taken to prevent anti-competitive

information exchange in some of the oligopolistic markets that charac-

3

Organisation for Economic Co-operation and Development (OECD) Policy Roundtables

Information Exchange Between Competitors under Competition Law 2010 (11 July 2011)

DAF/COMP(2010)37 (‘OECD 2010 Report’), Overview.

4

Organisation for Economic Co-operation and Development (OECD) Policy Roundtables

Unilateral Disclosure of Information with Anti-competitive Effects 2012 (11 October 2012)

DAF/COMP(2012)17 (‘OECD 2012 Report’), Overview.

ANTI-COMPETITIVE INFORMATION EXCHANGES 451

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