Background

In September 2019, the Portuguese Competition Authority (the “Authority”) fined a number of credit institutions for having participated in "standalone" exchanges of information between 2002 and 2013. The information exchanged related to conditions applicable to their credit transactions, in particular current and future credit spreads and risk variables. The exchange was “standalone” because there was no allegation that the participating credit institutions had participated in any other form of practice restrictive of competition to which the exchange of information could be linked, such as price-fixing or market-sharing.

Most of the credit institutions appealed the decision of the Authority to the Competition, Regulation and Supervision Court of Portugal, on the ground that the exchange of information could not be regarded as being, in itself, harmful to competition. They argued that an examination of its effects was required, and that the Authority had failed to take into account the economic, legal and regulatory context of the exchange.

The Competition, Regulation and Supervision Court of Portugal referred questions to the European Court of Justice (ECJ), asking the ECJ to rule on whether a standalone exchange of information can constitute a restriction by object under Article 101, taking into account the characteristics of this particular case.

ECJ ruling

The ECJ confirmed that a standalone exchange of information can constitute a restriction by object.

To find this most serious type of infringement, it is key that the information exchanged is both “confidential” (not already known on the market) and “strategic” (potentially revealing others’ strategies and reducing uncertainty about their intentions). The ECJ also confirmed that although it is necessary to consider the legal and economic context of the agreement, this “in no way” requires its effects (actual or potential) to be examined or proven.

In this particular case, the Court noted that the information exchanged by the participating credit institutions related to current and future credit spreads and risk variables and was therefore both confidential and strategic. It was also relevant that the information was exchanged regularly and reciprocally in a concentrated market with high barriers to entry. The ECJ therefore held that in this case the information exchange in question must be regarded as a restriction of competition by object, with no need to consider its effects.

The proceedings before the Portuguese Court will now continue, taking into account the ECJ’s responses to the referred questions.

Importance of competition law compliance

Standalone information exchange cases (where the information exchange is not linked to other anti-competitive behaviour like price-fixing or market-sharing) are relatively unusual, and of course each case will turn on its own particular facts. The ECJ has nevertheless been very clear in finding that standalone exchange can constitute a restriction by object – it can be regarded as so harmful to competition in itself that there is no need to examine its effects.

More generally, this case acts as a reminder of the continued regulatory interest in this area and the significant risks that are involved in exchanging information with actual or potential competitors, particularly where this information is commercially sensitive and relates to current or future conduct.