Crossing the line anti-competitive information sharing by Jocelyn Katz, Marlon Dasarath and Derushka Chetty1.Introduction1.1.Pro-competitive, efficiency enhancing information sharing leads to innovation and growth. Several benefits can be derived from trade associations whose objectives are increased standardisation and transparency. There are, however, inherent dangers in information sharing between competitors in the form of tacit coordinated conduct or, in fact, naked collusion. In this paper we weigh the benefits of pro- competitive, efficiency enhancing sharing of information between competitors against the anti-competitive effects thereof and draw the line for companies between competitively neutral or pro-competitive and anti-competitive information sharing.1.2.We set out the benefits of information sharing of the type found in trade associations and the like and show how it can and does build dynamic, innovative industries.1.3.However, even pro-competitive or efficiency enhancing information sharing may lead to anti-competitive effects. Setting aside calculated collusion or naked cartel activity, we explore the internal and external risk factors that may lead to anti- competitive outcomes. We premise that the risk associated with information sharing depends on, inter alia, the type of information that is shared, the way that the information is shared, the structure of the market in which the information-sharing participants are active and the competitive dynamics or the way in which companies compete with each other in the affected industry.1.4.We will then go on to examine how trade associations and other information sharing would be affected by the complex monopoly provisions proposed by the Competition Amendment Bill.2.Overview of the South African Competition Act No. 89 of 1998 (the “Competition Act”)2.1.The South African Competition Act aims to regulate the behaviour of market participants and to prevent certain anti-competitive structures in order to achieve a more effective and efficient economy such that consumers can freely select the quality and variety of goods that they desire.2.2.Information sharing arrangements would fall to be analysed in terms of section 4 of the Competition Act, i.e. the section that deals with restrictive horizontal practices between competitors. Section 4 is comprised of two parts.2.3.Section 4(1)(a) of the Competition Act provides that, should an agreement between parties in a horizontal relationship have the effect of substantially preventing or lessening competition in a market, such agreement will be prohibited unless a party to the agreement can prove that any technological, efficiency or other pro- competitive gains resulting from that agreement outweighs that effect (i.e. the rule of reason test). The burden of proof in this regard rests on the party engaging in the activities that are the subject of the allegations.2.4.Section 4(1)(b) of the Competition Act, on the other hand, sets out what are referred to as “per se” prohibitions. The prohibitions falling within section 4(1)(b) of the Competition Act are automatically and absolutely prohibited and cannot be justified on the basis of the rule of reason test. The only enquiry in such circumstances is whether or not, as a matter of fact, the conduct complained of is correctly categorised as being automatically prohibited. G:/fileroot03/2018-81970e764d8-1a81-4ed9-b44c-660037a184c035fb59fdd6532de749cef7b69009fe32.pdf-A 2 Document last saved: 22/08/2009 07:58 下午2.5.While a full discussion of the requirements for a contravention of section 4 of the Competition Act is beyond the scope of this paper, it is important to note that the mere exchange of information between competitors is not automatically prohibited unless it has the effect of price fixing, market allocation or collusive tendering in contravention of section 4(1)(b). 2.6.Accordingly, the focus of the present paper pertains to the exchange of information between competitors resulting in anti-competitive conduct or tacit collusion of the kind which falls short of the automatic prohibitions referred to above and which is analysed in terms of the rule of reason test contained in section 4(1)(a) of the Competition Act. 3.Definition of Information Sharing3.1.The sharing of commercial information of a sensitive nature between competitors has recently attracted a mass of attention from the competition authorities both abroad and in South Africa. The notion of perfect competition in a market place is premised on participants in that market having access to perfect information and as such, information exchanges are considered to be of paramount importance in order for competitors to actively participate in a competitive market place.13.2.Notwithstanding the foregoing, increased access to information results in increased transparency in respect of the conditions of the market and the conduct of the