Tag Archives: Rivals

A Study report on Information Exchange in Facilitating Collusion- Insights

Abstract: There is increasing recognition by the Competition Commission that cartel members may engage in practices such as information exchange that facilitate collusion by reducing strategic uncertainty of rivals’ behaviour without constituting explicit agreements. If firms are uncertain about their competitor’s prices, tacit collusion is harder to maintain as price undercutting is harder to detect. The key concern with information exchange therefore is that it increases transparency, allowing for better monitoring and more effective punishment of deviating members of a cartel. This paper draws on key international and South African cases that deal with information exchange to gain insights on conditions under which such exchanges could lead to anticompetitive outcomes.

Introduction: Suppressing competition by engaging in collusion or concerted practices even in very highly concentrated industries often requires ‘something more’ than mere parallelism in behaviour to ensure that consensus is reached and that this consensus is adhered to. It is generally understood that for collusion between competitors to be sustainable, the following three elements should hold- the ability to reach agreement, the ability to monitor adherence to the agreement and the ability punish deviation from the agreement.Information exchange could facilitate collusion by enabling these three elements. It could arguably allow for agreement between competitors to be reached if the information discloses market strategies or works as a recommendation of a particular future market conduct. Keep reading on Facilitating Collusion