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Companies should proceed with caution when it comes to exchanging sensitive information with competitors, warns Kate Newton

The Office of Fair Trading (OFT) has decided to re-investigate Scottish dairies' market practices. In September, it issued a statement of objections to six Scottish dairies - Ballantyne, Grahams, Quothquan, Renfrew, Scottish Milk Dairies and Robert Wiseman Dairies. Its provisional view was that they had infringed Chapter I of the Competition Act 1998 by engaging in price-fixing, exchanging confidential information and market sharing.

It is easy to assume that the companies involved have not learnt their lesson. However, as the dairy market has seen, it is much easier than most companies think to stray into territory that breaches competition law.

The OFT is taking an increasing interest in standard industry practices across a number of sectors, so it's time for a reminder of some of the do's and don'ts of competition law! After all, getting it wrong can have serious consequences. Sanctions include fines of up to 10% of your turnover; up to five years in prison for individuals; up to 15 years disqualification for directors; harm to reputation, wasted management time and impact on profitability; and third-party actions for damages.

So, some tips to keep the right side of the law: don't disclose to your competitors, either directly or indirectly, recent, current or future data relating to prices; discounts; profit margins; costs; production volumes; capacity utilisation; sales; customers; terms and conditions of sale; market shares.

You are only permitted to exchange with your competitors information which is aggregated and anonymous, and is at least 12 months old. Remember also that informal conversations are sufficient to bring an exchange of information within the realms of a so-called 'concerted practice' (a loose form of anti-competitive collusion which falls short of an actual agreement).

Keep notes of any innocent discussions about prices or customers with competitors so as to protect your position if accused of inappropriate contacts. Agreeing prices or the customers they will supply are hardcore breaches of competition law. Companies must determine market strategies independently.

Any contact that would enable companies to co-ordinate their conduct, or that would result in an artificially transparent market, is to be avoided. As the saying goes, the devil is in the detail, and so companies should proceed with caution when it comes to exchanging information with competitors.

Kate Newton is an anti-trust solicitor at legal firm Wragge & Co

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