How to avoid a cartel before completing M&A deals?

Dr Gábor Hacsi and Dr Endre Várady // // 7 January 2015

Exchange of business information between the parties of M&A deals may be considered anti-competitive. Namely, the parties that are competitors may coordinate each other’s business behaviour via exchange of such information, so they run a serious risk of cartel formation.

First and foremost, the Competition Act prohibits competitors to coordinate each other’s business behaviour as it may result in prevention, restriction, or distortion of competition. Such illegal collusion may also be carried out by exchanges of sensitive and confidential business information.

Usually, before completing M&A (i.e. mergers and acquisitions) deals, the parties carry out detailed due diligence investigations and intense negotiations. Needless to say, the parties exchange business information in this process.