Most Read Contributor in Hong Kong, September 2016
Keywords: competition, Hong Kong, information
Don't Let The Cat Out Of The Bag
Information exchange is an area of competition law that is rife
with risk. There are few bright line rules on what can and cannot
be exchanged, the scope of the prohibition is potentially extremely
broad, and the risk of inadvertent breach is high as
anti-competitive information exchange may occur spontaneously in
informal settings such as social gatherings or trade association
Figuring out what you can and cannot say to a competitor is not
a straightforward task, but it is an important one.
Once you let the cat out of the bag, there's no going
WHY IS INFORMATION EXCHANGE AN ISSUE?
Information is power. Communications between businesses take
place on a daily basis and are more often than not legitimate.
Competitor intelligence enables more informed competition and
business practice, improves market sensitivity and facilitates
industry benchmarking and self-regulation.
But with power comes responsibility, and businesses cannot
always be entrusted with commercially sensitive information. The
disclosure, exchange or use of commercially sensitive information
in and of itself could in some circumstances be unlawful,
especially when it enables competitors to become aware of their
competitors' market strategy. The sharing of commercially
sensitive information artificially reduces competitive uncertainty
in the market, potentially enabling competitors to align their
conduct to maximise profits jointly rather than focusing on
lowering prices and improving the quality of goods and services to
Information exchange is particularly risky where competitors
gather under the auspices of an industry or professional
association, on occasions such as committee meetings, working
groups, conferences and briefings, where the concentration of
competitors in the room means a single disclosure of competitively
sensitive information could be particularly damaging.
WHAT CAN YOU SAY AND NOT SAY?
Whether information can be legitimately exchanged depends very
much on the context of the disclosure/ exchange and what the
parties intend to do with it. Generally, if the information is not
publicly available, and its receipt may influence the
recipient's conduct on the market, disclosing it to a
competitor may be problematic.
The following chart sets out roughly where the risk areas are.
It is not to be taken as a substitute for case by case analysis,
but it provides an idea of when you may need to take a step back
and consult your legal advisors before proceeding with a
Generally, the more frequent and regular the exchanges of
information, the greater the likelihood of anti-competitive harm.
That being said, in some circumstances, even one isolated exchange
of competitively sensitive information can give rise to a concerted
WHAT IF A COMPETITOR DISCLOSES UNSOLICITED SENSITIVE
INFORMATION TO YOU?
The mere receipt of commercially sensitive information could be
sufficient to implicate you if you fail to immediately object to
the disclosure of that information! The burden is on the recipient
to prove that it did not use the information received, and this can
be a challenging burden to satisfy. If in doubt, do not simply sit
on the information received; contact your legal advisors
immediately for assistance to formulate a plan of action.
Next week we will introduce group boycotts, a type of
anti-competitive conduct competition authorities typically regard
as a serious violation of competition law.
1 Additionally, disclosing private information may be a
breach of your confidentiality obligations.
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This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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