The ex-ante regulation of information exchange: A new look at the prophylactic rule
Abstract
It is trite law that the exchange of information betweenhorizontal competitors may amount to anti-competitiveinfringements under Art 101 TFEU. The conceptual basis for thisrule, however, is far less obvious. In this article, we attempt toelucidate the fundamental nature of the rule. If the rule is to beconsistent with the welfare-maximising objective of competitionlaw, it must be grounded on the conception of prophylaxis – aform of ex-ante regulation. However, given the prophylacticnature of this rule, we argue that enforcement of it through thestatutory medium of Art 101 TFEU is problematic. We providethree reasons for why this is so. First, we argue that the classicaldichotomy between “object-type” infringements and “effect-type”infringements in Art 101 TEFU aims to address bothpresumed and actual anti-competitive harm. Regulating the riskof future anti-competitive harm from information exchange,however, requires further inferential leaps that may not bejustified. Second, drawing on the literature in industrialeconomics, we assert that any clear dichotomy separatinginformation exchange practices into distinct categories of“object-type” infringements and “effect-type” infringements islikely to be arbitrary. Third, we contend that in contrast to theambit of Art 101 TFEU, the rule prohibiting informationexchange has a far more limited scope – that of preventing thefacilitation of collusion. In light of the aforementioned reasons,we suggest potential avenues for reform. In particular, wesubmit that liability for information exchange betweencompetitors should only be imposed when firms breach clearand bright-line standards specifying the exact practices that areprohibited ex-ante.