by Frank L. Fine
Wall Street Journal
August 4, 2010
The European Commission is seeking to drastically expand its power to fine companies for their participation in so-called "information exchanges," a form of cartel under EU competition law involving the communication of sensitive business information between competitors. The commission's new cartel-enforcement powers were revealed earlier this year in its draft Horizontal Guidelines, which are due to enter into force next January. These changes would criminalize a wide range of currently legal, and in some cases innocuous, conduct.
The commission has already been turning the screw on companies that transmit sensitive business information to their competitors, such as intended future prices or output. In June, the commission handed down a cartel decision involving producers of bathroom fittings and fixtures. This case relied heavily on their exchange of intended future prices. One of the producers, Ideal Standard, was fined €326 million. Similarly, in the commission's pending investigation of airfreight carriers, the commission's case depends largely upon the alleged exchange of carriers' rates and surcharges.
The commission argues that by engaging in such exchanges, competitors create "artificial market transparency." It is seen as anticompetitive for competitors to "announce" to each other their future prices, for example, because doing is seen as an invitation to collude on prices. Even the communication of one's recent prices is viewed as inviting future collusion.