Sherman Act - Sharing of Information
When is Sharing Information Among Competitors Illegal?
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When is Sharing of Information Illegal Under the Sherman Act?
A horizontal restraint on trade is commonly understood to be illegal. Under the Sherman Act 1, sharing of information among competitors with the purpose of restraining trade (i.e., a naked restraint of trade) is per se illegal. So, the question of whether information sharing is illegal turns primarily upon whether there is some way the information sharing is or could be harmful to competition and restrain trade. If no, the practice is not a naked restraint and therefore not per se illegal. As such, a court will generally apply the rule of reason and look at the actual effect of the sharing activity.
Next Article: Sherman Act - Refusal to Deal Back to: ANITRUST LAW
What are the Factors for determining whether Sharing of Information is Illegal?
Factors used in determining whether information sharing is harmful may include the:
- Nature of the Information - Where the parties are sharing future, present, or past information?
- Actions taken by Either Party - Was there any enforcement of the sharing relationship by either party, monitoring of another partys activity, or coercive mechanisms involved with the sharing of information?
- Availability of Information - Was the information available to insiders, publicly available, or available at a reasonable cost?
- Market Structure - Is the market concentrated to the point that sharing between the parties looks like collusion?
If the pro-competitive justifications outweigh the anti-competitive aspects of the activity, it may not violate the Sherman Act.
Discussion: Why do you think the court does not deem the sharing of information among competitors to be per se illegal? Do you agree? Why or why not? Do you agree that the above-referenced considerations are adequate for determining whether the sharing of information is per se illegal?
Practice Question: ABC Corp and 123 Corp occupy 55% of in-store consumer goods sales in the Midwest. ABC Corp regularly shares information with 123 Corp about product sales and customer transactions within its store. 123 Corp, in turn, shares the same information with ABC Corp from its operations. This information is strictly guarded from disclosure to the public or other competitors. If the FTC challenges this sharing of information, what factors would a court consider in determining legality?