Competition regulators across the globe have articulated concerns with information exchange between competitors. Although not all forms of information exchange may necessarily raise antitrust concerns, in some instances sharing commercially sensitive information between competitors may generate efficiencies (for instance, in the case of creating legitimate joint ventures). The exchange of commercially sensitive information (such as pricing strategies, bid strategies, customer information, supplier information, etc.) between competitors eliminates uncertainty from the market, thereby allowing competitors to: (i) implement, monitor or enforce a cartel; or (ii) enter into an anti-competitive collusion. That said, there appears to be some uncertainty on whether mere information exchange, without proof of such information being used to cartelise, is sufficient to infer an anti-competitive agreement in contravention of the Competition Act, 2002 (‘Act’). The Competition Commission of India’s (‘CCI’) decisional practice, in this regard has been inconsistent.
Section 3(3) of the Act prohibits cartels, but does not expressly prohibit information exchange amongst competitors. However, Section 3(1), which prohibits all anti-competitive agreements that cause an appreciable adverse effect on competition (‘AAEC’), is broad enough to cover information exchange between competitors.
From a review of CCI’s decisional practice over the past decade, it appears that in the early years of its enforcement (2009 – 2012), CCI viewed information exchange as a key element towards establishing an anti-competitive ‘agreement’ between competitors. In the Jute Mills case, CCI held that the jute manufacturers’ conduct of collecting, disseminating and publishing prices of jute bags in a bulletin through an association, had facilitated a price-fixing cartel for jute bags, coupled with evidence of price parallelism, which was violative of Section 3(3) of the Act. Similarly, in the Cement Cartel case, the National Company Law Appellate Tribunal (‘NCLAT’) agreed with the findings of CCI, and held that the exchange of information through a trade association, in conjunction with price, dispatch and production coordination, proved that the cement manufacturers were operating a cartel. In these cases, although there was no clear finding that the parties had actioned the information exchange to implement price-fixing and/or supply-limiting cartels, CCI adopted a ‘preponderance of probability’ evidentiary standard to conclude that the information exchanged must have been used to fix market behaviour. Notably, in these cases, parties were unable to offer satisfactory exculpatory evidence to show the basis for their pricing or production decisions.
This jurisprudence shifted with CCI’s decision in the 2018 Flashlights Cartel case, where CCI, for the first time, assessed whether the information exchanged between flashlight manufacturers, by itself, violated the Act. In this case, although parties had exchanged commercially sensitive information, there was no evidence that they had acted upon the information exchanged between them. CCI held that mere exchange of information was not enough to establish a cartel.
In contrast, in the 2020 Bearings Cartel case, there was evidence that automotive bearings manufacturers had discussed prices and pricing strategies to be adopted in their negotiations with automobile manufacturers. However, the prices ultimately charged to automobile manufacturers differed from what was discussed at such meetings. CCI held that the automotive bearings manufacturers had formed a cartel, and observed that as the Act presumes that cartels cause or at the very least, are likely to cause AAEC, regardless of whether the information exchanged was implemented. According to CCI, the very fact that the companies had met to decide prices compromised their independence and competitive conditions, enabling them to quote price revisions to the automobile manufacturers, which differed from what they would have otherwise quoted independently.
More recently, in the 2021 Beer Cartel case, beer manufacturers exchanged price, cost and sales information amongst themselves (bilaterally and through a trade association) for aligning beer prices while submitting bids and cost information to State Governments. These companies had also approached State Governments through a common platform, for seeking price revisions and avoiding price wars. Once again, CCI found that by exchanging commercially sensitive information, the beer manufacturers had violated Sections 3(1) and 3(3) of the Act, and observed that exchange of information compromised the integrity of an independent bidding process, and was likely to stifle competition amongst beer manufacturers in the tender process. The parties argued that the agreed prices were not quoted in some instances, and therefore, while the parties had exchanged information, there was no evidence that they had, in fact, fixed prices, limited supplies or allocated markets. CCI disagreed and held that the implementation of an agreement was not a necessary condition for establishing a contravention of Section 3(3) of the Act. Further, given that the prices discussed between parties were quoted to State Governments, CCI held that the ‘agreement’ was in fact implemented (notwithstanding the fact that the price quotes were rejected by the State Governments). Therefore, it appears that CCI considered information exchange to constitute an ‘agreement’ under the Act.
In another recent 2021 Paper Cartel case, there was substantial evidence (in the form of e-mails and depositions) that paper manufacturers had discussed price increases of non-wood based paper, and had implemented and monitored the price increases through meetings of a trade association. CCI clarified that when competitors participate in meetings where commercially sensitive information is discussed, mere attendance at such meetings takes away the independent decision making ability of the participants, such that they can no longer independently decide on price related policies in the market, as required under the Act. Therefore, mere information exchange was held to be sufficient to contravene Sections 3(1) and 3(3) of the Act in this case.
Jurisprudence in Other Jurisdictions
CCI’s recent approach appears to be consistent with the decisional practice in the European Union (‘EU’) and United Kingdom (‘UK’). In Anic, the Court of Justice (EU) held that subject to contrary proof, when undertakings exchanged information and participated in concerted arrangements, it could be presumed that the undertakings had taken into account the information exchanged with competitors, when determining their conduct in the market. The Anic presumption was relied upon in the T-Mobile case to hold that the exchange of commercially sensitive information amongst telephone companies had violated Articles 101(1) of the Treaty on the Functioning of the EU. Similarly, the Office of Fair Trade (UK) held that the exchange of future fees to be charged, between independent schools, was anti-competitive because: (i) the information exchanged related to future intentions, was confidential and not publicly available; (ii) it was done on a regular and highly systematic basis, and for a number of years; and (iii) the timing of the exchange corresponded with the timing in which school fees for the following year were set.
CCI’s stand on information exchange has developed with its jurisprudence. Earlier, CCI was keen to prosecute cartels, and considered information exchange between competitors as evidence towards establishing the existence of a cartel, along with other ‘plus’ factors, in the absence of any direct evidence of cartelisation. In recent times, with the exception of the Flashlights Cartel case, CCI is following a stricter approach, analysing information exchange as a separate violation of the Act, even in the absence of any evidence of the exchanged information being implemented. This casts an added duty on companies to be extra careful when dealing with competitor information, even when pursuing otherwise legitimate objectives (such as joint venture agreements or considering cross investments). Implementing ‘clean team arrangements’, information firewalls and signing non-disclosure agreements are some key mitigating factors that companies should adhere to while sharing commercially sensitive information with competitors.
 The Competition Act, 2002 recognises an exception from the AAEC presumption, for efficiency enhancing joint ventures.
 Indian Sugar Mills Association & Others, v. Indian Jute Mills Association & Others, Case No. 38 of 2011.
 Ambuja Cement Limited & Others, v. CCI & Others, TA(AT) (Compt) No. 22 of 2017, NCLAT.
 In Re: Alleged Cartelisation in Flashlights Market in India, Suo Motu Case No. 1 of 2017.
 In Re: Cartelisation in Industrial and Automotive Bearings, Suo Motu Case No. 05 of 2017.
 Explanation to Section 3(3) of the Act.
 In Re: Alleged anti-competitive conduct in the Beer Market in India, Suo Motu Case No. 06 of 2017, paras 23, 36, 86, 102, 139.
 In Re: Anti-competitive conduct in the paper manufacturing industry, Suo Motu Case No. 05 of 2016, paras 181, 197, 198, 201 to 204.
 Case C-49/92 P, Commission of the European Communities v. Anic Partecipazioni SpA.
 Case C-8/08, T-Mobile Netherlands BV and Others, v. Raad van bestuur van de Nederlandse Mededingingsautoriteit.
 Decision of the Office of Fair Trading No CA98/05/2006, ‘Exchange of Information on Future Fees by Certain Independent Fee-paying Schools’, November 20, 2006 (Case CE/2890-03).
 In transactions, clean team arrangements ensure that only those people have access to another party’s information, who do not have access to commercially sensitive information of their own company (such as prices, sales marketing, customers, suppliers etc.).