Every executive in business inevitably meets competitors. Commercial life probably could not function if one did not meet competitors at some point – for example, at meetings of trade associations, where companies come together to tender for a job that none of them could do individually or when regulators and government agencies call industry representatives together to canvass the views of the industry.
There is no legal ban on competitors meeting each other. But there are strict competition law rules and penalties where such meetings result in a breach of competition law.
The seriousness of these penalties should not be underestimated:
- Long and involved investigations by the competition agencies including dawn raids and detailed interviews under oath;
- Fines on individuals (e.g., under Irish competition law, fines of up to €5 million on individuals);
- Fines on businesses (e.g., under Irish and/or EU competition law, fines of up to 10% of worldwide turnover);
- Imprisonment for individuals (e.g., under Irish competition law, terms of up to 10 years).
How should business executives navigate the narrow channel of “safe meetings” and avoid the rocks of “unlawful meetings”?
Dr Vincent Power, partner at A&L Goodbody’s EU, Competition and Procurement Group sets out the following practical advice which should be borne in mind by executives when encountering competitors:
- Ensure that there is a legitimate purpose for the meeting and that is not a cover for anti-competitive behaviour;
- Remember that the fact that the meeting is part of a trade association gives no extra protection or cover to a meeting which is otherwise anti-competitive or illegal;
- Ensure the management team have been trained on the competition law aspects of meeting with competitors;
- Obtain legal advice beforehand before any potentially difficult meeting;
- Don’t ever exchange competitively sensitive information with competitors (e.g., recent, current or future pricing, output, trends or information);
- Don’t jointly set prices or other sale terms (e.g., discounts, rebates or credit terms);
- Don’t agree to allocate markets or customers;
- Don’t engage in joint bids or consortium bids with actual or potential competitors without getting competition law advice beforehand;
- Don’t agree not to bid for any contract;
- In the case of mergers and acquisitions, the vendor, purchaser and target should not exchange competitively sensitive information unless and until competition law clearance has been given - this is part of what is known as the rules on “gun jumping”;
- Avoid aggressive, ambiguous or threatening language in communications or correspondence;
- Have any agenda, memoranda , correspondence and minutes reviewed by a competition lawyer in advance;
- Object to any attempt by others to raise or, worse still, agree on any anti-competitive strategy or arrangement and when the objection has been made, leave the meeting and consult immediately with a competition lawyer;
- If there is to be prolonged exchanges with competitors then it could be useful to have a written protocol setting out the rules of engagement;
- It is useful for an agreed statement to be read at the beginning of meetings (e.g., trade association meetings) where competitors are meeting so as to remind participants of the need, and responsibility, to comply with competition law;
- Be very careful when discussions go off the agreed agenda or beyond the purpose of the meeting;
- Do not speculate, particularly in writing, about possible breaches of law or their consequences unless one is sure about the facts and has taken legal advice;
- Remember there is no such thing as an “off the record” conversation;
- Equally, remember that the competition law rules apply to social events and encounters;
- Seek advice on competition law only from a qualified competition lawyer – no-one else can give privileged confidential legal advice;
- Do obtain legal advice prior to any meeting or discussion with competitors.
Dr Power commented: “it is remarkable how so many executives end up sharing with their counterparts information which would not be shared within their own organisations. They do not have to answer every question asked. They should avoid speculating or discussing issues which are even potentially risky from a competition law perspective. Good rules of thumb are: if this information was lost on a laptop would I be worried? And how many people in my own organisation even know this and what use could a competitor make of this information to harm our business? Even giving misleading information to competitors can be problematical so the watchword is “caution” and perhaps “silence is golden”!”