Whether the use of information, which was unilaterally disclosed by a competitor, to fix prices be considered anti-competitive?
To put it in very simple terms, a cartel is formal/ informal association of manufacturers or producers, who try to limit competition. This may be done by practices such as sharing of markets between competitors, fixing prices, limiting production or by any other form of collusion. Since the cartel need not have any set structure, sharing of sensitive information between competitors may be sufficient for concluding the presence of a cartel. The potential for anti-competitive effects of the cartels depends on a number of key factors, such as the type of information exchanged and the structural characteristics of the market involved.
Every undertaking must independently determine its intended pricing policy. Therefore, sharing of information that may influence pricing conduct is prohibited. However, a doubt that is generally raised in the minds of undertakings is that whether price fixation on the basis of a unilateral disclosure of information will also be anti competitive or not. The undertaking may feel that since the information was not a part of any agreement as such, using the same may not qualify as an arrangement between competitors. However, this understanding is not correct.
The CCI decision in the case of In Re: Anticompetitive conduct in the Dry-Cell Batteries Market in India (Suo Motu Case No. 02 of 2017) has illuminated on this issue. Even if an enterprise was merely a recipient of information on pricing of a ‘larger cartel’ from a competitor which was not sought by it and such disclosure of commercially sensitive information by the competitor was of unilateral nature, the undertaking cannot escape liability. The understanding behind this is that such information reduces strategic uncertainty as to the future operation of the market for all the competitors involved and increase the risk of limiting competition and collusive behaviour.
Therefore, if the undertaking went ahead with the agreement so as to further its larger business interests despite having the option to refuse the use of the information, it cannot escape liability under competition law. Choosing to maintain price co-ordination in line with the prices of the other players of the cartels is sufficient to make a undertaking an active participant of the cartel. Therefore, an undertaking should not use information for price fixation even if the information was hurled upon them by other competitors without them asking for the information.
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