The exchange of information between credit institutions could constitute a restriction of competition Author: Christina Scicluna Published on September 6, 2024 In a request for a preliminary ruling, made in proceedings between several credit institutions and the Competition Authority in Portugal concerning the latter’s decision to impose a fine on those credit institutions for an infringement of national competition law and of Article 101 TFEU[1], the participating credit institutions brought an action against the Competition Authority in Portugal claiming that the exchange of information at issue was not in itself sufficiently harmful for it to be classified as a restriction of competition. On 9 September 2019, the Competition Authority in Portugal adopted a decision by which it imposed a fine on certain credit institutions for having participated in a standalone exchange of information, which consisted in an exchange of information that was not alleged to be ancillary to a concerted practice restrictive of competition. That exchange related to the conditions applicable to their credit transactions, in particular current and future credit spreads and risk variables, and to the individual production figures of the participants in that exchange, in infringement of Article 101 TFEU and various provisions of national law. In reaching its conclusion, the Competition Authority in Portugal considered that the exchange of information in question constituted a restriction of competition by object, which relieved the authority of the obligation to investigate the possible effects of that exchange on the market. However, the Competition Authority in Portugal did not allege that the participating credit institutions had participated in any other form of practice restrictive of competition to which the exchange of information could be linked, such as a pricing or market-sharing agreement. The referring court states that it is of the view, in the light of the foregoing, that the exchange of information at issue could contribute to reducing commercial pressure and uncertainty with regard to the strategic conduct of competitors on the market, which may lead to informal coordination restricting competition, and therefore considered it necessary to ask the Court of Justice to clarify the conditions for the application of Article 101 TFEU, given the absence of precedents concerning standalone and informal exchanges of information. In determining whether such an exchange of information constitutes an infringement of Article 101 TFEU, the referring court asks, whether Article 101(1) TFEU must be interpreted as meaning that a comprehensive and reciprocal monthly exchange of information between competing credit institutions, which took place in markets where concentration is high and there are barriers to entry, relating to the conditions applicable to transactions carried out on those markets, in particular current and future credit spreads and risk variables, and the individual production figures of the participants in that exchange, must be classified as a restriction of competition by object. It is necessary, to examine the object of the agreement between undertakings, the decision by an association of undertakings or the concerted practice at issue. If, at the end of that examination such agreement, decision or practice proves to have an anticompetitive object, it is not necessary to examine its effect on competition. Thus it is only where such an agreement, decision or practice cannot be regarded as having an anticompetitive object that it will be necessary to then examine that effect. The referring court further noted that the information relating to credit spreads, which was exchanged on a confidential basis between the participating credit institutions, was not, to the same level of completeness, in the public domain when the exchange took place and that that information related, mainly, to possible future actions. More specifically, it is apparent that that information related to the intention to change the conditions applicable to transactions carried out on the market in question or, at the very least, to the changes adopted but not yet applied. Since the information related to one of the parameters on the basis of which competition is established in the three markets in question in the main proceedings, any information relating to the future intentions of credit institutions to alter those spreads must be regarded as constituting strategic information. As a result, an exchange of information which is organised in a confidential manner and relates to the future intentions of credit institutions with regard to credit spreads, serving to determine the rate offered to their customers, is a form of coordination between undertakings which must be regarded, by its very nature, as being harmful to the proper functioning of normal competition and, therefore, as establishing a restriction by object within the meaning of Article 101(1) TFEU. Consequently, the existence of an exchange of such information could constitute, in certain circumstances, a form of coordination which must be regarded, by its very nature, as harmful to the proper functioning of normal competition, of which it is a component. In conclusion, the referring court concluded that Article 101(1) TFEU must be interpreted as meaning that a comprehensive and reciprocal monthly exchange of information between competing credit institutions, which takes place in markets where concentration is high and there are barriers to entry, and which relates to the conditions applicable to transactions carried out on those markets, in particular current and future credit spreads and risk variables must be classified as a restriction of competition by object. [1] Treaty on the Functioning of the European Union Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘The Malta Independent’ on 04/09/2024. Go back