information agreement

information agreement

an agreement between rival suppliers which involves them in furnishing each other with details of their prices, discount terms, output and sales figures, profit margins etc. Although some of the information exchanged may be innocuous and could be obtained from normal trade sources (for example, rivals' prices), some data is of a highly confidential nature, and prompts one to ask why firms are prepared to disclose such information to competitors. In the UK, concern that information exchanges between competitors might well be used as a cloak for COLLUSION between firms has led to their prohibition. See COMPETITION ACT, 1998.

information agreement

an arrangement under which firms undertake to furnish a central agency, usually their TRADE ASSOCIATION, with data on such things as prices, discounts, conditions of sale, etc. These data are compiled and then circulated to each firm involved in the agreement. Information exchanges can take place either on a post- or prenotification basis. In the former case, information is made available to other firms only after, for example, a change in prices, while in the case of prenotification schemes, firms are notified of proposed price changes, etc., in advance of a definite commitment being made. It will be readily apparent that such information exchanges, particularly prenotification exchanges, provide a cloak for COLLUSION between competitors.

In the UK, under the COMPETITION ACT 1998, information agreements are a form of CONCERTED PRACTICE and are prohibited outright and referred for investigation to the RESTRICTIVE PRACTICES COURT.

See COMPETITION POLICY.

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