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3. Exchange of information

 

What are the possible benefits of information exchange?

 

Competition is often enhanced through the sharing of information, for example, in relation to best practices or exchanges of information which allow firms to better predict how demand is likely to evolve. Similarly, information exchanges may facilitate price comparisons by consumers or reduce consumer search costs. As a general proposition, the more informed consumers are, the more effective market competition is likely to be.

 

[Source: Commission’s Guideline on the First Conduct Rule Para 6.38]

 

When does information exchange raise competition concerns?

 

Concerns may arise where undertakings which are competitors exchange competitively sensitive information such as confidential information relating to price, customers, production costs, quantities, marketing and investment plans etc.

 

In particular, if competitors share information in private on their future individual intentions or plans with respect to price, the exchange of such information has the object of harming competition.

 

[Source: Commission’s Guideline on the First Conduct Rule Paras 6.39-6.40] & Hypothetical example 10

 

Hypothetical example

 

A trade association for junk owners collects from and circulates to its members information on their respective proposed future prices. This includes information as to the proposed prices for specific journeys. The information is not made available to the public and is circulated to members in advance of a seasonal price review by the association members.

 

Absent a decision of the association giving rise to the information exchange or evidence of an agreement between members to engage in the information exchange, the Commission would infer that this arrangement is implemented as part of a concerted practice with the object of harming competition. The conduct allows the junk owners to adjust their future pricing to reflect the proposed pricing of competitors and thus reduces price competition in the market. The information exchange arrangement is an indirect form of price fixing.

 

The Commission would also regard the conduct to be Serious Anti-competitive Conduct under the Ordinance.

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