Friday, April 8, 2016
Businesses using online platforms should avoid sharing commercially sensitive information with competitors. They should be aware that this can happen indirectly or via a third party.
In a recent judgement[i], the ECJ considered when a message, sent by the administrator of a shared online booking platform, could cause the recipient to be guilty of a breach of competition law.
E-TURAS is an online travel booking system which allows travel agencies to offer travel bookings for sale on their websites. Each travel agency had a personal electronic account within the E-TURAS system, with a specific mailbox which functioned like an e-mail.
The message sent by the administrator informed the travel agencies that discounts for products sold through the system would be automatically capped. It was possible to grant higher discounts, but that would have required additional steps to be taken.
The Lithuanian Competition Council found that 30 of the travel agencies had engaged in anticompetitive practices. Those that had used the system and expressed no objection had indirectly informed each other of future discount rates. The travel agencies and E-TURAS were fined.
On appeal, the Lithuanian District Administrative Court partly upheld the actions and reduced the fines. Upon further appeal, the Lithuanian Supreme Administrative Court referred questions to the ECJ.
The issue before the ECJ was whether, in that situation, the following could be presumed:
A concerted practice can occur when undertakings have direct or indirect contact which doesn’t quite amount to an agreement but which could constitute co-operation. Passive participation, such as attending a meeting and not participating actively or receiving a message but not replying, is also covered.
The ECJ held that simply sending the message was not sufficient to infer that the travel agencies were aware of its’ contents. They could possibly be presumed to be participating in a concerted practice in the following circumstances:
The travel agencies could rebut the presumption, for example, by proving the following:
The ECJ set out some guidance on how to prove non-participation. Undertakings could prove that they had not participated in the concerted practice by doing the following:
There are lessons to be learned from this case. Simply receiving unsolicited information can lead to liability if the message has been read and understood and nothing has been done about it. Liability can be avoided by having a policy of checking mails and reacting quickly to report or distance oneself from anything suspicious. It is significantly riskier to ignore mails as proving non-participation in those circumstances would be much more complicated.
Competition law can be breached in many ways. Agreements to fix prices, share markets or customers or limit output are obviously anti-competitive. More subtle offences involve sharing information or co-ordinating somehow about pricing, rebates, output, capacity, investment plans or strategic future business moves. Formal, informal, frequent or isolated meetings or contact can lead to liability.
Businesses can protect themselves from liability by taking a few simple steps. Have a clear policy in place regarding messages and any information shared with other businesses. Inform your employees of the main competition law offences and what to do when they become aware of a possible infringement.
[i] ETURAS v UAB and Others v Lietuvos Respublikos konkurencijos taryba Case C-74/14