Talking with competitors - what is legal?
Discussion
This is what I do for a living. Though I am of course not your lawyer and this is but my online musings. Competition law analysis is complicated and economics driven and formal legal advice should be sought before entering into any sort of agreement with competitors.
There would definitely be a risk that this was an unlawful anti competitive agreement. The precise legal analysis would depend on an economic analysis of the effects of the conduct on competition. There may be an argument that even if it gives rise to anti competitive effects it could be justified if it gives rise to efficiencies i.e. it leads to lower costs for consumers. However this could be a hard argument to run - if really all it does is pushes up your margins then you wouldn't be saved. Risks are however much lower if your combined market shares are low.
Fines can be significant and there is a risk of director disqualification and criminal penalties (though suspect unlikely on the facts of the case...provided it did not in fact lead to more egregious forms of cooperation with your competitors).
Not sure if this would require you to share sensitive information with your competitors which could be illegal in it's own right.
Plus the google ts and cs risk
You run the risk a competitor that is part of your agreement decides to dob you in and claim leniency ie immunity.
In short...would stay well away...from any sort of agreement with your competitors unless the gains were large and with prior legal advice.
There would definitely be a risk that this was an unlawful anti competitive agreement. The precise legal analysis would depend on an economic analysis of the effects of the conduct on competition. There may be an argument that even if it gives rise to anti competitive effects it could be justified if it gives rise to efficiencies i.e. it leads to lower costs for consumers. However this could be a hard argument to run - if really all it does is pushes up your margins then you wouldn't be saved. Risks are however much lower if your combined market shares are low.
Fines can be significant and there is a risk of director disqualification and criminal penalties (though suspect unlikely on the facts of the case...provided it did not in fact lead to more egregious forms of cooperation with your competitors).
Not sure if this would require you to share sensitive information with your competitors which could be illegal in it's own right.
Plus the google ts and cs risk
You run the risk a competitor that is part of your agreement decides to dob you in and claim leniency ie immunity.
In short...would stay well away...from any sort of agreement with your competitors unless the gains were large and with prior legal advice.
Edited by PrinceRupert on Tuesday 2nd June 00:03
To follow up on Princerupert’s views, you probably need to give us some more info... what’s the market, how dominant are you and your competitors, and how much influence do you have? Competition law is a complex, nuanced area with many downside risks. IANAL but have experience for various reasons. Being raided at dawn can be a nasty experience!
Have to do some training around this as part of my role, so I'm no legal expert, but if this happened to me I would have had to terminate the conversation, make notes and share it with a compliance manager - different for the OP as they are the business owner.
Personally, I'd make some notes at least, just in case this comes up again, then avoid any more meetings with the other businesses.
Sounds against competition law to me.
Personally, I'd make some notes at least, just in case this comes up again, then avoid any more meetings with the other businesses.
Sounds against competition law to me.
Whilst this might be technically illegal / in bad faith, I am curious to know just how frequent this sort of stuff is. There must be LOADS of MDs playing golf together and coming up with these ideas that sail under the radar and don't attract any attention.
I guess the key is to keep schtum?
I guess the key is to keep schtum?
I'm sure it happens all the time, but the CMA is a regulator with real teeth (as is the EC). In recent years they have ramped up enforcement with a number of director disqualifications and a few criminal cases. Fines can also be eyewatering - up to 10% of worldwide annual turnover - fines have been issued in excess of 1 billion. And its not iust big businesses. See for example
https://www.gov.uk/cma-cases/residential-estate-ag...
Where they took action against small estate agents for fixing commission fees and secured a number of director disqualifications.
The risk you run is they have a leniency program ie grass yourself up and you get immunity from fines and disqualification but your rivals do not. So you can benefit from the conduct and then dob your rivals in!
It isn't something I'd want to risk for a few quid. As mentioned above, would you want ten suited officials pitching up at your business at 9am on a tuesday to image all all your computers (including every email anyone within your organisation has sent for years!) and rifle through your documents? If they have need to they can even search your home, car and personal phone...
The story of Keith Packer is a harrowing one (see
https://www.airmic.com/news-story/d-o-how-honest-e... - a uk citizen who spent 8 months in an american jail because a subordinate was using sensitive information obtained illegally from a competitor to set prices. He now does seminars on his experience.
https://www.gov.uk/cma-cases/residential-estate-ag...
Where they took action against small estate agents for fixing commission fees and secured a number of director disqualifications.
The risk you run is they have a leniency program ie grass yourself up and you get immunity from fines and disqualification but your rivals do not. So you can benefit from the conduct and then dob your rivals in!
It isn't something I'd want to risk for a few quid. As mentioned above, would you want ten suited officials pitching up at your business at 9am on a tuesday to image all all your computers (including every email anyone within your organisation has sent for years!) and rifle through your documents? If they have need to they can even search your home, car and personal phone...
The story of Keith Packer is a harrowing one (see
https://www.airmic.com/news-story/d-o-how-honest-e... - a uk citizen who spent 8 months in an american jail because a subordinate was using sensitive information obtained illegally from a competitor to set prices. He now does seminars on his experience.
Edited by PrinceRupert on Tuesday 2nd June 10:10
I work in lead generation and advertise heavily on Google. Trying to run a cartel on keywords is almost impossible to police and I doubt Google would be impressed if found out. If you arrange with 5 or 6 others, thats 5 or 6 others, plus the staff involved, who can blackmail you over it at any time. You can't control people outside of the cartel, either.
If people are worried about the CPC it means the medium has become too expensive for their business model/pricing. If that's the case they need to change their business somehow rather than trying to fix an auction.
If people are worried about the CPC it means the medium has become too expensive for their business model/pricing. If that's the case they need to change their business somehow rather than trying to fix an auction.
happytobealive said:
The basic idea is we agree a mechanism which means we still compete for share but our bids are restricted - so basically, we all still get all get a good portion of clicks but at a lower cost.
is it anti-competitive - arguably yes, because you are looking to give yourself market advantage through rigging the bidding process - as others have said, the nuances may be subtle, but the consequences could be huge...is it ethical - clearly no, because the only purpose in doing this is to artificially reduce costs and pay Google less for the same service - as above, if this as an option is now too expensive, look elsewhere...
happytobealive said:
However, he says it would work more like a buying group, where companies can pool together their purchasing power in order to get better value from suppliers.
If Google offer you a discount by pooling your buying and buying more, then he would be right, and all would be above-board - but they don't, so clearly this is not the case... it is nothing like buying gas or other options where you pool to reduce cost...wouldn't touch it with a barge pole and I would be making clear to the competitor who made contact exactly why...
I work for a public listed company, we do regular training on anti competition laws and the consequences. Its really not worth the risk of fines/being shut down/going to prison. If you are in business and considering it, perhaps worth reading up on
https://www.pinsentmasons.com/out-law/guides/compe...
https://www.pinsentmasons.com/out-law/guides/compe...
bogie said:
I work for a public listed company, we do regular training on anti competition laws and the consequences. Its really not worth the risk of fines/being shut down/going to prison. If you are in business and considering it, perhaps worth reading up on
https://www.pinsentmasons.com/out-law/guides/compe...
It is very sensible to read up as to what the law is (there is some useful user-friendly guidance published by the regulator here https://www.gov.uk/topic/competition/competition-a... but I would advise anyone that does so to take a very cautious approach to assessing their conduct against the rules and advise against trying to justify conduct to yourself under any of the rules that permit exemptions, or trying to conduct your own effects analysis. It is very complicated, economics driven, and based on a very large body of case law. It would be very easy to get it wrong (and there are a lot of grey areas), and as explained above the consequences are severe. https://www.pinsentmasons.com/out-law/guides/compe...
Friendly health warning.
Edited by PrinceRupert on Tuesday 2nd June 11:39
Given the size of the market influence: 60% of click share between you of 10% of the relevant adwords...
Why bother risking your access to adwords (google could easily ban you for breach of T&C) or even getting involved in anything that might head towards getting competition authorities taking an interest?
Your time could be so much better spent
Why bother risking your access to adwords (google could easily ban you for breach of T&C) or even getting involved in anything that might head towards getting competition authorities taking an interest?
Your time could be so much better spent
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