MarIus

2.3.1 Introduction

Determining when information exchanges reach the lower threshold of a concerted practice raises complicated issues. Naturally, not all types of information are suited to take part of a collusion, nor is information announced autonomically regarded as exchanged. Furthermore, the extent of exchanges necessary to constitute a concerted practice is not obvious. The concept of a concerted practice requires a concrete assessment of the information exchange, where these factors are highly relevant.

A concerted practice essentially marks the distinction between independent conduct, which is not captured by Art. 101 (1), and collusive conduct, which is. Since information can be disclosed in a variety of forums and manners, a broad approach is required to uncover the legal test. Principles from fundamental case law provide some starting points.

The existence of an “exchange” has been heavily discussed since the case Suiker Unie (1975), which concerned the exchange of information between sugar producers via letters and messages. Although not amounting to an agreement, it was deemed a concerted practice. The Court specified that the condition extends to any “direct or indirect contact” having the object or effect

“to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market”(1) Cases C-40/73 Suiker Unie para.174. (emphasis added).

Although the case is old, the principle has been consistently affirmed and remains fundamental to the assessment. The broad definition requires only that the exchange consists of “direct or indirect contact.” Regarding what kind of information may be captured, the standard is broad, requiring only to “influence the conduct on the market” of one’s competitor or to disclose information regarding its conduct. Information regarding commercial operations is thus relevant, and exchanges regarding competitors’ freight rates, capacities, or strategies in different regions and routes may be adequate to influence the conduct of competing carriers.

In the same case, the critical distinction between independent conduct and collusive conduct was set out. The Court ruled the principle as “inherent” that “each economic operator must determine independently the policy which he intends to adopt.”(2) Ibid. para.173.

The principle of independence was an important precedent in Suiker Unie. However, the Court added an important nuance that complicates the assessment further, namely the right for undertakings to adapt to the changing nature of the market. Should for instance one liner carrier suddenly change its pricing strategy, the competitors may suffer losses of customers or revenue if they do not alter their own strategies. Therefore, the provision “does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors.”(3) Ibid. para.174. The aligned conduct of competitors is thus only prohibited if it stems for “direct or indirect contact.”(4) Ibid.

In summary, the way liner shipping companies receive and send information is important. Since the provision’s objective is to restrict collusive outcomes, the decisive assessment concerns the border between independent adaptation to competitors’ conduct and indirect contact having the object or effect to influence a competitor. Where that line is drawn is not self-evident.

2.3.2 The borderline between independent conduct and collusion

The borderline between independent conduct and collusion is generally unclear, also in the liner shipping services market. For instance, a concentrated market where the carriers operate on several of the same trading routes, uses the same ports, and are part of the same trade associations, can arguably facilitate more “points of contact” than would be the case in a highly fragmented and diversified market. It may also be easier to coordinate conduct according to competing carriers’ public announcements if competitors are few and each hold a substantial market share.(5) Case C-455/11 P Solvay v Commission para.39. The liner shipping market may therefore facilitate “contact”, due to its concentration on the supply side, significant barriers of entry and homogeneous services offered. Different understandings of the scope of “contact” are evident also in national cases.

The combined cases of Replica Kit & Toys and Games before the British Court of Appeal illustrate the complex ‘contact’-consideration. Addressing indirect information exchanges via third parties, the court’s reasoning was based on the fact that if retailer A disclosed information to supplier B and was “taken to intend” that B would pass that information to another retailer C, then all three parties would be regarded as parties to a concerted practice.(6) Case No: 2005/1071, 1074 and 1623 Argos and Littlewood v OFT & JJB Sports v OFT para.141.

In the case Esso and Others before the Paris Court of Appeal, the court found that competing motorway service stations’ exchange of fuel prices did not amount to cooperation, assuming that the exchange was deemed not to affect the companies’ individual pricing decisions.(7) Case BOCCRF 2004-02 Esso and Others (Summary).

The European Courts have been somewhat more general when interpreting the scope of “contact.” Although each information exchange case is assessed concretely, it is, as a starting point

“sufficient that, through its declaration of intention, the competitor has eliminated or, at the very least, substantially reduced the uncertainty as to the conduct to be expected from it on the market”(8) Case T-279/02 Degussa para.133. (emphasis added).

Consequently, there is no requirement that the competing carrier has undertaken, nor planned to adopt, a particular course of conduct. The decisive is whether the information reduces competing carriers’ uncertainty.

Having in mind that undertakings remaining active on the market are presumed to make use of the information disclosed by competitors, the Court has chosen a standard where the competitor must actively distance itself from the information disclosed.(9) Ibid. para.134. Accordingly, a “clear and express objection” may be capable of rebutting the presumption.(10) Case C-74/14 Eturas and Others para.48. However, this must be considered in light of the Court’s threshold for reciprocal contact being “met where one competitor discloses its future intentions or conduct on the market to another when the latter requests it or, at the very least, accepts it.”(11) Joined Cases T-25/95 Cimenteries CBR v Commission (Cimenteries) para.1849. This solution arguably blurs the lines further and places considerable responsibility on undertakings, somewhat shifting the burden of proof to undertakings required to show that they do not “accept” the information announced by competitors.

The theoretical starting points can be summarised as requiring three criteria. First, a form of contact must be established, separating the practice from independent conduct. Secondly, the information exchanged must result in subsequent conduct. Thirdly, causation must exist between the information exchanged and the subsequent conduct.(12) Whish & Bailey (2021) pp.118-119.

2.3.3 Public announcements as concerted practices in Container Shipping

Container Shipping provides an example of how seemingly independent announcements, which when “genuinely public” typically do not constitute concerted practices,(13) Communication 2011/C11/01 para.63. falls under the scope of Art. 101 (1). A genuinely public announcement is presumed to be equally accessible to all customers and competitors in terms of costs of access.(14) Communication 2022/C164 para.425. Arguably, there is also a requirement of genuine relevance for customers, as it is held that announcements “directed at users” usually evade Art 101.(15) Case C-89/85 Ahlström Osakeyhtiö and Others v Commission para.64 Figure 1 presented in Container Shipping is illustrative. It shows that the parties announced their respective GRIs within a short period, with similar amounts of increase, intended for the exact same implementation date.(16) Case AT.39850 Container Shipping para.28.

Although the GRIs were unilateral, the condition of reciprocal contact was deemed fulfilled as the competitors “responded” to each other’s announcements.(17) Ibid. para.38. Such practice falls under the scope of requesting or, at the very least, accepting the information disclosed.(18) Joined Cases T-25/95 Cimenteries para.1849.

Regarding the content of the information, this is clearly relevant when assessing whether a carrier has eliminated or substantially reduced the uncertainty of its future conduct. This requires a concrete assessment,(19) Case T-279/02 Degussa paras.133-135. where relevant factors include whether the exchange is “likely to influence the commercial strategy of competitors”(20) Communication 2022/C164 para.423. and whether it “reduces or removes the degree of uncertainty as to the operation of the market in question.”(21) Case T‑588/08 Dole Food and Dole Germany v Commission (Dole (GC)) para. 62; See also Case C‑7/95 P John Deere v Commission para.90.

Announcing one’s intended future price increase, as in Container Shipping, falls directly under the scope of eliminating or reducing the uncertainty regarding future conduct. The Commission briefly held that an information exchange can constitute a concerted practice if it “reduces strategic uncertainty in the market thereby facilitating collusion - that is to say, if the data exchanged is strategic” and further, that future pricing information constitutes “the most sensitive commercial information.”(22) Case AT.39850 Container Shipping para.35.

The importance of “strategic data” has been apparent in the practice of the Commission. In the Horizontal Guidelines (2011) the Commission presumed that sharing

“strategic data between competitors amounts to concertation, because it reduces the independence of competitors’ conduct on the market and diminishes their incentives to compete.”(23) Communication 2011/C11/01 para.61.

Agreements or practices involving information exchanged regarding capacity-sharing, and cargo-sharing may diminish competing carriers’ incentive to compete when offering shippers liner shipping transport.

In the New Horizontal Guidelines, the Commission somewhat shifts its focus, and does not repeat the notion that exchange of strategic data facilitates collusion. Rather, the Commission points to the concern that the exchange of “commercially sensitive information” can create mutually consistent expectations, thus resulting in a collusive outcome.(24) Communication 2022/C164 para.417.

Within the liner shipping sector, the difference between “sensitive” and “strategic” data is arguably modest. Information concerning each company’s fleet capacity, operational costs, performance, and pricing policies are likely to fall within both categories. However, the category “strategic data” may be interpreted more widely, as most information concerning a carrier’s operations, to some extent, can be deemed strategic. Consequently, the shift towards focusing on commercially sensitive information may imply a somewhat stricter approach.

Conversely, the new guidelines leave little room for the condition of reciprocal contact or coordination between the parties. The guidelines clearly state that when only one undertaking unilaterally discloses commercially sensitive information, such as its future pricing policies, this will constitute a concerted practice. Since competitors are presumed to take account of information disclosed unilaterally, competitors must actively report the disclosure to the authorities or respond with a clear statement that it does not wish to receive such information.

The statements above indicate a modest threshold for information exchanges to amount to concerted practices, particularly in liner shipping, as several parameters concerning e.g. capacities, vessel performances, and sailing routes can be deemed “strategic” or “commercially sensitive.” Even though the practice in Container Shipping resembled “responses” between the competitors, statements in case law may imply that also “purely” unilateral announcements, depending on its degree of sensitivity, are likely to constitute concerted practices when another requests or accepts it. This choice of interpretation may be justified as a way of capturing the increasingly complex forms of information exchanges, but it simultaneously reduces legal predictability since the lines between independent conduct and collusion are increasingly blurred.

Chapter 2 has examined when information exchanges between competing carriers amount to agreements, decisions by associations or concerted practices under Art. 101 (1). The analysis has uncovered that much cooperation in liner shipping is based on formal written agreements such as pooling agreements, consortia, and alliances. However, information exchanged outside of such forums can amount to concerted practices, as in Container Shipping.

Although the lines between independent conduct and collusion remain blurred, the existence of a concerted practice presumes contact between competing carriers, subsequent conduct by the carriers on the relevant market, and causation between the two. Interpretations by the enforcers have resulted in a situation where undertakings are presumed to make use of information announced by competitors, and even public announcements are included should they reduce the strategic uncertainty in the market. Exchanges of information, either privately or publicly, concerning strategic parameters such as freight rates, carrying capacities, and vessel performances, may therefore be deemed concerted practices, should the competing carriers remain active on the market and not distance themselves from the information. The next chapter presumes the existence of a concerted practice and addresses the condition requiring the cooperation to restrict competition “by object or effect.”