Identifying the optimal policy approach for competition authorities to deal with information exchange between competitors is a challenge. The law has made clear that under some circumstances sharing information is deemed anti-competitive, and in other circumstances it will be permitted. However, there remains a significant ‘grey area’, where there are no clear economic or legal rules on how to treat information exchange. This results in significant uncertainty for companies and competition authorities alike. This paper analyses the economic literature in the area of information exchange, and considers both the positive effects on consumer welfare and the anti-competitive effects resulting from collusion. Ideally, competition authorities should implement clearer policy rules based on economic research demonstrating when the benefits of sharing information outweigh the negative effects. However, until economic theory can tell us more about the efficiency gains that can only be …
