In business, is a problem shared, a problem doubled?
In life, it often happens that when someone shares an issue with a friend, they find that "the problem shared is a problem halved". That is a good outcome.
In business, however, sharing a problem or an issue with a competitor can exacerbate the situation no end.
Competition (or antitrust) law is quite strict. And these strict rules apply not only to companies but to executives personally leading to criminal and civil liability.
Competitors must not form anti-competitive arrangements or concerted practices with others. Moreover, they must not exchange competitively sensitive information (e.g. costs, pricing and future plans). Doing so through trade associations or other bodies is no defence. Even doing so in response to invitations or requests from government or the state is usually no defence. Indeed, doing so even on a once-off basis can be problematical.
In the current COVID-19 crisis, some competition agencies have expressed a willingness to tolerate some limited forms of co-operation between competitors but the tolerance is strictly limited. It is usually to address COVID-19 specific issues. The European Competition Network (ECN) (including the Irish Competition and Consumer Protection Commission (CCPC)) has opened a very narrow window for co-operation: link to article.
Competition law has plenty of examples of executives reaching out to competitors alerting the latter about what they are going to do, asking competitors what are their intentions or even discussing how they would react to issues and developments. Sometimes, those interactions are acceptable but very often they are not. The distinction is a fine line and competition law advice may be needed.
So during this COVID-19 crisis, executives would be well advised to think very carefully (and seek advice from their own General Counsel or externally) as to whether they should:
• Call their opposite number in a competitor about an issue facing them
• Share competitively sensitive information with a competitor
• Discuss or share competitively sensitive information in a trade association or industry forum
• Tip-off or alert a competitor about a likely change of plan or decision which is not yet public
• Agree a course of action with a competitor
While such interaction can be sometimes lawful, it is worth remembering that one's actions now in "wartime" will be judged later in "peacetime" when the questions will include "did they really do that?" and "why did they need to do that?"
Business leaders who reached out to competitors in previous crises have found that competition law is usually unforgiving of such interactions particularly in the calm of the ensuing peacetime. This crisis is probably no different.
For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.
Date published: 29 April 2020