Price increases: Public discussion by competitors and their trade associations can contravene competition law.

The media has recently reported extensively on forthcoming price rises that consumers are likely to feel. Various essential consumer goods have been discussed, such as food and electricity.

Competitors and business interest groups have taken part in this public debate. For example, employees from two companies that are competitors in the production of a specific category of goods appeared together on a talk show and discussed price increases. In their conversation, it was argued that rising raw material prices had led to an increase in the prices of the aforementioned products to
Consumers, and they also announced that further price rises were on the horizon. In another instance, managers of grocery chains were interviewed and quoted as saying that significant increases were on the way.

There are also recent examples of representatives of business interest groups publicly stating that increases in the price of various essential goods are forthcoming and, where appropriate, arguing for the necessity of such increases.

The Competition Act restricts competitors and their associations.

On this occasion, it is worth reminding you that competition law prohibits any form of collusion between companies that has the object or effect of preventing or restricting competition. For example, it can be considered unlawful collusion if competitors discuss forthcoming price increases or exchange information about each other, including in public discourse, for instance in the media.

For competition to thrive, companies need to live with a certain uncertainty about how their competitors intend to respond to external circumstances at any given time, such as price increases from
suppliers. In a competitive environment, companies seek different ways to offer products or services at the most favourable price, such as streamlining operations, seeking better terms from other suppliers or reducing dividends. However, if a company has knowledge of its competitors' responses, it reduces their incentive to compete and keep prices down.

For these reasons, competition law also prohibits all forms of anti-competitive conduct by business interest groups. This prohibition includes, for example, the exchange of information by groups about forthcoming price increases or their joint justification for such increases.

It is recognised that conduct of this kind is particularly harmful in oligopolistic markets. Companies and their trade associations can expect the Competition Authority to treat indications of the anti-competitive conduct described here as a matter of serious concern. Breaches of competition law can result in severe penalties.

A reminder to companies and their organisations

With the above in mind, the Competition Authority considers it important to stress the following to companies and
their organisations:

• Companies should under no circumstances
  provide information to competitors about proposed or likely changes to
  becomes, neither publicly, in the sphere of interest groups, directly, nor by means of
  otherwise.
• Business interest groups must proceed with caution.
  when it comes to discussion and education that can influence market behaviour
  of the members. All their participation in discussions about price and pricing is
  particularly hazardous and should not take place unless it is guaranteed that it is
  within the limits permitted by law.

• In a competitive market, a rise in the input price should not
  automatically lead to an increase in the price to consumers. Competition law provides for
  for each and every company to make its own arrangements and take
  independent decisions to respond to such challenges, in their own
  on operational grounds and without any consultation with competitors or incentives
  from interest groups.

• The above applies regardless of whether production companies are involved,
  importing companies, other suppliers or retailers.

Further guidance for business interest groups and information on previous cases of this kind can be found on this instructions page.