Keywords: competition, Hong Kong, information exchange
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 meetings.
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 back.
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 win customers.
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...