Information Exchange in Non-Cartel Cases – A Norwegian Black Swan?

Exchanging details with competitors can be a minefield. On 29 November 2022, the Norwegian Competition Authority (NCA) fined Norway’s four major e-book publishers and a databases company a full of NOK 545 million (approximately EUR 52 million) in a distinctive hub-and-spoke info trade case. This is only one particular of many information and facts trade instances becoming pursued by the NCA and in one particular of them the parties may possibly encounter even higher fines.

The textbooks databases circumstance

In January 2018, the NCA carried out inspections at the premises of the four greatest publishing homes in Norway (the Publishers), and Bokbasen, a provider of electronic companies for the publishing marketplace.

Bokbasen is jointly owned by the Publishers and generates infrastructure for electronic answers for the industry. The solutions are available by way of diverse subscription models and utilized by little and large publishers, bookstores, libraries and faculties.

The Publishers, who together make up around 90% for every cent of the Norwegian books industry, have been all subscribed to Mentor Forlag, a subscription used to post and obtain info about publications, like long run releases, these types of as release dates and long run prices. Once submitted, the information and facts becomes offered for all other subscribers, such as bookstores or universities paying for stock, but also for competing publishers with the similar membership. In addition to their publishing pursuits, all of the Publishers are energetic on the downstream industry for direct gross sales to close customers.

Subsequent more investigations, the NCA issued a statement of objections to the Publishers and Bokbasen in September 2020, to which all replied in January 2021.

The NCA’s conclusion

On 29 November 2022, the NCA fined the Publishers and Bokbasen for illegally exchanging long run guide costs and other competitively delicate information and facts due to the fact 2009. The NCA took the place that the details trade constituted a by-item infringement of Segment 10 of the Norwegian Opposition Act, which corresponds in substance to Article 101 TFEU.

Though the full textual content of the final decision has not been published nevertheless, the NCA states in its push release that the Publishers, by way of their use of Bokbasen, shared and gained competitively delicate facts about foreseeable future e book releases and that this data offered the Publishers with a “full overview” of every single other’s market perform. The NCA even further concluded that the information and facts was systematically entered into the database by the Publishers, realizing that it would be available to opponents and that this may possibly have led to bigger prices for close clients.

When Bokbasen did not disclose any competitively delicate information about its very own organization, it was fined for acting as an middleman that facilitated the exchange of information amongst the Publishers. The NCA states that the facts submitted to Bokbasen would have been complicated for the Publishers to receive through other signifies and that the membership presented by Bokbasen provided the Publishers with reliable and very easily available information and facts about their competition.

As a outcome, the NCA concluded that the details exchange produced it a lot easier for the Publishers to coordinate selling prices and publications, which might have led to amplified charges and a lessened range of guides for end prospects.

The NCA’s selection may well be appealed to the Competition Tribunal. Some of the Publishers have presently said that they intend to attraction the determination. A ruling in the appeals circumstance can be anticipated in the 2nd 50 percent of 2023. By then, yet another information and facts exchange circumstance may possibly already have been decided – wherever the stakes are even greater.

The value hunters scenario

In a scenario involving the 3 biggest grocery shops in Norway (the Merchants), the NCA has notified the parties in a statement of objections that it intends to concern fines totalling NOK 21 billion (somewhere around EUR 2 billion) for anti-competitive facts trade. Like in the Publishers circumstance, the NCA seems to refrain from categorizing the cooperation as a cartel, but the notified fines would be unprecedented for a countrywide determination.

Considering the fact that 2011, the merchants have reportedly agreed to give each other obtain to every other’s retailers, for the function of getting genuine-time information on shelf charges. In observe, workforce (so-referred to as “price tag hunters”) have been applied to obtain the value data from competitors’ retailers by bodily moving into the outlets and scanning shelf price ranges.

In the NCA’s preliminary assessment, the observe constituted an infringement by object. This is centered on the NCA’s preliminary discovering that the Merchants had utilised the gathered pricing data to coordinate price ranges and cooperate in a way that may well have led to bigger grocery rates in Norway. The NCA believed that the facts exchange weakened the Retailers’ incentives to lower their charges.

According to community statements both equally from the Vendors and from the NCA by itself, the NCA experienced been educated about the agreements and the use of “price tag hunters” given that the commencing of the cooperation. The interaction presumably took place on an informal basis. Like the EU Commission, the NCA beforehand could grant specific exemptions from the competition guidelines adhering to the official notification of agreements, but this technique was abolished upon the entry into force of the current Competition Act of 2004. Though functions still in theory are cost-free to solution the NCA and inform it of their planned agreements, the value hunters scenario illustrates that this technique does not eliminate the possibility involved with possible anticompetitive agreements and procedures.

In a press release, the NCA states that the investigation initiated many years afterwards was brought on by a interval of amplified activity from the Merchants accumulating value facts. The investigation was specially aimed at examining the pricing facts flows and the precise observe of accumulating the details in far more depth.

In light of the NCA’s posture that the practice constituted an ‘object’ infringement, it appears possible that the NCA’s prior awareness of the make any difference will obtain further more awareness must the NCA situation fines of the magnitude indicated.

The NCA is probable to conclude the make a difference in 2023. Should really the NCA go ahead and concern the notified fines, the Vendors have presently indicated that they would attraction a selection to the Competition Tribunal.

Other ongoing facts exchange circumstances in Norway

The NCA at present also has various other information exchange situations in the pipeline. It is investigating suspected anti-aggressive information exchanges in a overall health-linked sector and in the markets for relocation solutions and design solutions. These investigations have been initiated for the duration of 2021 and 2022 when the NCA carried out inspections as a reaction to problems about competitively delicate information and facts being exchanged involving opponents in these sectors. Past the facts in the press releases, minor is publicly identified about which suspected practices the NCA is investigating.

Remark

Irrespective of the final result of the appeals in the books database situation and the other ongoing scenarios, they emphasize the serious competitors regulation risk relevant to competitors’ access to information shared with a person or more third get-togethers.

In the NCA’s press launch in the books database situation, there are no indications that the Publishers’ entry to value details on other publishers’ new releases was an intentional aspect of the company supplied by Bokbasen or that the Publishers used the system with a look at to acquiring this kind of information. If so, the cooperation does not stand out as a typical hub-and-spoke cartel. If the information and facts accessibility was certainly only an incidental part of the technique, this would make the situation an uncommon illustration of information sharing, not minimum in mild of the substantial fines that amount to approximately 10% of the involved companies’ once-a-year team turnovers in 2021.

The cost hunters situation stands out not only for its likely document fines but also for the reason that the info trade concerned actual-time charges fairly than potential rates. Exterior of cartel scenarios, information exchanges would commonly only be thought of as infringements if they involved long term charges or carry out, as reflected in paragraph 448 of the Commission’s 2022 draft Horizontal Tips. The information exchange also transpired in the context of an settlement the NCA evidently was educated about a long time again. Although it remains to be found irrespective of whether the NCA in the close will pick out to problem the indicated fines, the situation nonetheless illustrates that the NCA does not shy away from cracking down on information exchange cases, particularly outside of the much more traditional cartel instances.

The major fines in the textbooks database scenario and potentially in the cost hunter scenarios, jointly with ongoing investigations in many other facts exchange scenarios, spotlight the need to think about information accessibility difficulties extremely diligently in all projects that entail competitors. The simple fact that the facts trade takes put in the context of a legit undertaking or exercise does not avoid the NCA from issuing sizeable fines, even at stages usually viewed in classic cartel instances.