EU Trends and Developments Contributed by: Andrzej Kmiecik, Richard Burton and Catherine Gordley, Van Bael & Bellis
in plain sight: scenarios where companies signal their future pricing or other aspects of their future commercial strategies to one another through public announcements. Although public signalling has long been on the enforcement radar and has already been the subject of investigation (eg, the 2016 Container Shipping case), the Commission made clear in its recent Horizontal Guidelines that this is an area where it intends to intensify its scrutiny. In its Guidelines, the Commission makes clear that the fact that a disclosure of competitively sensitive information is made through a public announcement will not exclude the possibility of the announcement forming part of a concert - ed practice, and that public disclosures may constitute a communication channel by which competitors signal their future intentions to one another. According to the Commission, the touchstone is whether the public announcement of future price or commercial strategy can be regarded as having a consumer benefit. For example, the announcement of a binding future price can be considered to have a consumer benefit in allow - ing customers to plan their purchasing strate - gies. By contrast, the announcement of a future price that does not commit the disclosing party to its customers may be regarded as a trial bal - loon being floated by the disclosing company to judge the reaction of its competitors and invite price alignment. In light of the potentially far-reaching approach being espoused by the Commission, this is an area where companies may face significant compliance risk and need to carefully assess their public statements. The risks are clearly illustrated by the Commis - sion’s ongoing investigation into tyre manufac - turers, which reportedly centres on manufac -
turers’ investor earnings calls, during which commercially sensitive information was dis - closed, including what the disclosing compa - nies intended to do and how they would react to their competitors’ conduct. Concrete precedent from the Commission would be welcome to help companies and advisers determine where the line lies. This is particularly important given that companies have legitimate interests in inform - ing not only their customers but, most impor - tantly, their shareholders and investors of their intended commercial strategies and future out - look for their performance during earnings calls In addition to shifting trends in the areas where the Commission is most likely to prioritise enforcement of the competition rules, the Com - mission’s enforcement toolbox is also evolv - ing, impacting on how the Commission detects suspected cartels and what powers it uses to investigate. and similar investor presentations. Revisiting the Enforcement Toolbox Until relatively recently, the Commission had for several years seen a marked fall-off in leni - ency applications being made to it. While the reasons for this development were not entirely clear, it is thought that the growth of private damages actions in the EU, under impetus from the Commission itself, had had an impact on companies’ risk assessments when considering whether to apply for leniency. In the past, apply - ing for leniency was considered to have limited downsides in many cases. However, the risk of facing damages awards in the EU had signifi - cantly increased complexity and often made the assessment of the incentives and disincentives of applying for leniency a more finely balanced exercise for companies and their advisers. While a fall-off in leniency applications was a trend reported in other jurisdictions more generally
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