Background
In 2019, the Portuguese Competition Authority fined 14 banks – including the six largest in Portugal – €225 million for participating in an exchange of information over a period of more than ten years.
The exchange of information was ‘stand-alone’ because it was not linked to any agreement to restrict competition.
The banks brought an action to challenge the decision of the Portuguese Competition Authority before the Portuguese Competition Court.
The court referred to the CJEU the question of whether, and under what circumstances, an exchange of information can be a restriction of competition by object – deemed by its nature to be harmful to competition without any need to assess the effects.
What information?
Two kinds of information concerning the home-loans, consumer-credit, and corporate-lending markets were exchanged among the banks on a monthly basis:
- Current and future ‘commercial conditions’ – charts of credit spreads. The information also related to future changes to risk variables applied to spreads according to the risk profile of customers, and
- Production volumes – individualised figures showing the amount of loans granted in the preceding month, broken down into detailed sub-categories.
The CJEU confirmed that an exchange of information may be regarded, by its very nature, harmful to competition if it is both confidential and strategic.
It also found that, given the level of completeness and organisation of the information, it was not publicly available, or it was difficult to obtain or to organise.
The court clarified the concept of ‘strategic information’ as that which may reveal strategy, once combined with other information already known to the participants in an information exchange.
The CJEU found that the exchange of credit-spread information must be regarded as a restriction of competition, without any need to consider whether it had any actual effects on competition.
Production volumed information, in isolation, was not strategic because it related to the past and, as such, did not reveal future intentions, the court decided.
However, the CJEU said it was necessary to consider the possibility of cross-referencing the different categories of information exchanged.
The information on production volumes was combined with information that the court considered as clearly strategic.
As a result, the CJEU considered it possible that the information could have allowed the banks to infer their competitors’ future intentions or led the banks to follow the same course of conduct on the market.
This aspect of the judgment highlights the need to assess the information holistically, having regard to other information shared or already known, the MHC lawyers state.
This then allows a determination to be made as to whether the information is confidential and strategic or not.
Permissible information exchange
Information-sharing between competitors can also have positive effects and benefit consumers by creating efficiencies and saving costs.
Shared knowledge about best practices can drive innovation and improve quality.
Thus, the judgment highlights that certain types of information sharing between competitors may be permissible:
- Legal obligation to exchange information,
- Information-sharing not revealing future intentions – the sharing of backward-looking information alone is not likely to infringe competition laws,
- Aggregated information is generally non-problematic, if it doesn’t identify any market participant,
- Pro-competitive benchmarking or information concerning the best management or production methods,
- Information publicly available at the time of exchange; however, information that is shared shortly before it is made public may still amount to ‘confidential’ information.