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The Antitrust Risk of Competitor Information Exchanges

Seeking out and exchanging information with competitors is a normal business activity for many companies, and there are often legitimate reasons for competitors to do so. However, the exchange of sensitive information that leads to collusion, hurts competition, or harms consumers may violate antitrust laws.
Public purchasers should be alert to situations where they have reason to believe their vendors may be pricing their products according to an exchange of information with their competitors.
The potential for antitrust liability increases if the nature of the information exchanged is:
  1. Not available to the public;
  2. About the company’s current or future operations;
  3. Specific to the company and disaggregated; and
  4. Competitively sensitive information related to price, output, customers, or strategic planning.
On the other hand, an information exchange is unlikely to raise antitrust concerns if the information is publicly available, more than three months old, and aggregated so that no company can discern the data of any other company.
A recent case illustrates what kind of information sharing is appropriate among competitors. In 2012, the Federal Trade Commission (FTC) alleged that McWane Inc. engaged in anticompetitive actions, including the exchange of sensitive sales information, with Sigma Corp. and Star Pipe Products Ltd., its biggest competitors. Together, the three companies supplied over 90 percent of the ductile iron pipe fittings used in municipal water distribution systems in the United States. After prices for ductile iron pipe fittings spiked twice in 2008, the FTC found that the companies had exchanged monthly shipment data and alleged that the exchange facilitated the competitors’ ability to coordinate and raise prices.
However, the court dismissed the claim that McWane improperly exchanged information, saying that the information was sufficiently aggregated, ranged from several weeks to months in age (and did not specify dates), and was disseminated publicly. The dismissal of the FTC’s claim demonstrates that companies can avoid antitrust liability as long as certain safeguards are employed.
The Ohio Attorney General’s Antitrust Section works to foster competition by enforcing antitrust laws. If you suspect that a vendor or competitor has hurt consumers or competition through this type of information exchange, report it to the Ohio Attorney General’s Antitrust Section. By helping catch anticompetitive information sharing, you can help ensure that public entities and other consumers don’t fall victim to artificially high prices.