Practical Guide to Navigating the Exchange of Competitively Sensitive Information

Nicolene Schoeman-Louw | SchoemanLaw Inc   

Category: Commercial Law | Contract Drafting

In today’s fast-moving business world, staying competitive often requires companies to gather market insights. However, when these insights involve sharing information with competitors, businesses need to tread carefully. The Competition Act 89 of 1998 (the "Act") sets strict guidelines on how Competitively Sensitive Information (“CSI”) can — and cannot — be shared. Let’s break it down. 

What is Competitively Sensitive Information? 

Section 1 of the Act defines CSI as: 

"Information that is important to rivalry between competing Firms and likely to have an appreciable impact on one or more of the parameters of competition (for example price, output, product quality, product variety, or innovation)." 

This can include: 

• Prices 

• Customer lists 

• Production costs 

• Turnover and sales figures 

• Capacities and marketing plans 

• Research and development (R&D) details 

• Investments and technology insights 

Essentially, if the information impacts how businesses compete, it’s likely classified as CSI. 

When Can You Share Competitively Sensitive Information? 

The Competition Commission, through its Guidelines on the Exchange of Competitively Sensitive Information, acknowledges that sharing certain types of data can benefit the market — but only under the right conditions. Examples include: 

• Improving investment decisions 

• Enhancing product positioning 

• Facilitating industry entry for newcomers 

• Benchmarking best practices 

• Understanding market demand trends 

Rule of Thumb - Safe-to-share data: 

• Historical, aggregated market data 

• Industry-wide health and safety practices 

• Governance and compliance standards 

Risky-to-share data: 

• Current or future pricing strategies 

• Customer-specific details 

• Production capacities or costs 

• Marketing and strategic plans 

How Information is Shared Matters 

Information exchanges can happen directly between competitors or through third parties like trade associations, accounting firms, or data aggregators. The Commission watches these exchanges closely — especially when they could enable collusion or coordinated behavior. 

The key factors the Commission looks at when determining potential harm include: 

• Timeliness: Sharing current or future plans is more harmful than historical data. 

• Accessibility: How easily is the information accessed or distributed? 

• Necessity: Is the information genuinely essential to achieving a legitimate business goal? 

Legal Boundaries and Defenses 

Section 4(1)(a) of the Act prohibits sharing CSI if it substantially lessens competition — unless a company can prove Procompetitive Gains that outweigh the harmful effects. In other words, if the information exchange leads to better products, lower costs, or innovation that benefits consumers, companies might have a valid defense. 

Important reminder: The exchange of personal data is separately regulated by the Protection of Personal Information Act (POPIA). Always ensure data privacy compliance, too. 

Conclusion 

Exchanging market insights can be a powerful tool for businesses, but the line between competitive intelligence and unlawful collusion is thin. To stay on the right side of the law: 

• Stick to historical, aggregated, or non-sensitive data. 

• Avoid discussing pricing, customers, or future strategies with competitors. 

• Consult a legal expert if you’re unsure — the penalties for getting it wrong can be severe. 

Need guidance on compliance or competition law? Contact SchoemanLaw for practical, expert advice tailored to your business.

Nicolene Schoeman-Louw | SchoemanLaw Inc    

Specialist Technology, Commercial and Contract Law   

https://schoemanlaw.co.za/our-services/commercial-law/   

https://schoemanlaw.co.za/our-services/contract-drafting/