How to react when you receive confidential information from a competitor?

When a company receives confidential information from a competitor, it finds itself in a delicate situation. How should it react to avoid serious consequences under competition law? Such unsolicited exchanges, whether they take place during a meeting, an informal discussion or an accidental transmission, may be construed as an anti-competitive agreement if they influence the company's strategic decisions.

Competition law strictly prohibits any sharing of sensitive information between competitors where this reduces uncertainty in the market and alters the commercial behaviour of the companies concerned. The Autorité de la concurrence monitors these practices closely, and any company receiving this type of information must react swiftly to avoid being implicated in a breach of the applicable rules.

This issue concerns many sectors of activity and can have a significant impact on a company's commercial relationships and reputation. Adopting the right reflexes as soon as confidential information is received helps to limit the risks and ensure compliance with the applicable regulations.

Which information is concerned?

Not all information exchanged between competitors is problematic.

The information concerned is generally that which is not publicly available and which influences a company's strategic decisions. This includes:

• The prices charged or contemplated, including discounts, margins and commercial terms.
• The market shares and production volumes, which make it possible to measure a player's influence over a sector.
• The commercial strategies, such as development plans, future investments or financial objectives.
• The internal costs and financial data, which reveal the company's economic structure.
• The contractual information, in particular relationships with suppliers or commitments made with customers.

Competition law draws a distinction between historical information and forward-looking information. Where a competitor transmits recent data or future forecasts, the Autorité de la concurrence considers that this may affect free competition and create a risk of an unlawful agreement.

Companies must therefore be particularly vigilant when they receive this type of information, even unintentionally, since merely holding it may be sufficient to establish an infringement if it influences their strategic decisions.

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What are the risks in the event of mishandling such information?

Accepting or using confidential information transmitted by a competitor may be regarded as an infringement of competition law rules. Companies must therefore assess the risks involved, which may be legal, financial and reputational at the same time.

Under French and European law, the exchange of sensitive information between competitors may be treated as an anti-competitive agreement. The Autorité de la concurrence considers that, even without an explicit agreement, merely receiving and using such information can distort competition. The companies involved then face penalties of up to 10% of their worldwide turnover.

In addition to financial penalties, the mishandling of confidential information may also give rise to legal proceedings brought by competitors or consumers, who may claim damages for anti-competitive practices. The Autorité de la concurrence may also require corrective measures, such as amending commercial terms or putting in place commitments to restore healthy competition.

Finally, reputational risk is a major concern. A company involved in a case of sharing sensitive information may see its credibility called into question with its business partners and customers. The resulting loss of trust can have direct consequences on its activity.

In the face of these risks, it is essential to put in place clear procedures for managing these situations and to react immediately when confidential information is received from a competitor.

How to react when confidential information is received?

When a company receives confidential information from a competitor, it is imperative to immediately adopt the right reflexes in order to avoid any legal risk. The responsiveness and traceability of the measures put in place are essential to demonstrate a willingness to comply with competition law.

The first rule is to neither use nor disseminate the information. Any exploitation, even indirect, could be construed as an attempt at collusion. It is also inadvisable to share it with other colleagues or business partners.

The company must then inform its legal department or its compliance officer as soon as the information is received. This internal notification makes it possible to assess the nature of the data received and to adopt the best response strategy. In some cases, it may be necessary to seek advice from a competition law expert to ensure the compliance of the steps taken.

Once the analysis has been carried out, it is advisable to formalise a written refusal. This document must clearly state that the company does not wish to receive confidential information from a competitor and that it will under no circumstances use such information. This step makes it possible to retain evidence of the immediate reaction adopted.

Finally, the company must archive the exchanges and keep all evidence attesting to its lack of involvement. In the event of an investigation by the Autorité de la concurrence, the ability to demonstrate proactive and rigorous management of the situation can avoid penalties.

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How to prevent these situations?

To avoid finding themselves in a risky situation, companies must anticipate and put in place internal compliance protocols tailored to their sector of activity. These measures help to raise awareness among teams, to structure exchanges with competitors and to minimise the risk of receiving confidential information.

One of the first actions to take is to train staff in the rules of competition law. Employees in contact with competitors, particularly in sales and purchasing departments, must be informed of the practices to adopt. Awareness sessions can be organised to recall what confidential information is and how to react in the event of accidental receipt.

It is also essential to establish clear rules during exchanges with competitors. Whether at trade shows, sector meetings or inter-company associations, discussions should be framed to avoid any inadvertent sharing of sensitive information. An internal code of conduct may be put in place to recall the prohibitions and the reflexes to adopt.

Companies must also secure their communication channels. Some information leaks may result from human error or insufficiently rigorous management of exchanges. Putting in place control and alert systems in the event of inappropriate transmission of information strengthens compliance.

Finally, in the event of doubt as to the nature of the information received or the conduct to adopt, it is advisable to seek legal advice.