Five tips for information exchange in due diligence investigations and M&A transactions. What is and is not allowed under the cartel prohibition?

Companies involved in a merger, an acquisition or the establishment of a joint venture (an “M&A Transaction”) should beware of gun jumping. That term means that an M&A Transaction is completed or control is exercised before the competition authorities give their consent (see also this blog).The Netherlands Authority for Consumers & Markets (“ACM”) recently imposed an EUR 1.85 million fine for gun jumping on a supplier of modular buildings.

Until the closing of an M&A Transaction, companies must furthermore beware of violating the cartel prohibition (Article 6 of the Competition Act and Article 101 TFEU). This applies in particular to the exchange of information between competing companies. The provision of information, for example during the due diligence phase, is in any event permitted if it is necessary to bring about an M&A Transaction.

In practice, we notice that companies and advisors are nevertheless uncertain as to what is allowed and what safeguards must be observed. Is a non-disclosure agreement (NDA) required, for instance? Is it necessary to use what is known as “clean teams”? And what information may or may not be shared? This blog answers the most frequently asked questions and offers five practical tips.

Information exchange and the cartel prohibition: a brief reminder

The cartel prohibition applies to M&A Transactions until closing (also to transactions that do not have to be notified to a competition authority). This prohibition means that companies may not make agreements or engage in concerted practices that restrict competition. The exchange of sensitive competitive information in that context may also be anti-competitive (see this blog, for instance). The reason for this is that (independent) companies may no longer be able to determine their own market conduct independently if they receive this information. Companies are expected to operate entirely independently during the period up to the closing.

Are NDAs, clean teams and other safeguards always necessary?

Due to the uncertainty as to what is and is not allowed in M&A Transactions, we see that companies and their advisors increasingly opt for strict safeguards to limit the disclosure of information – even in transactions in which that is obviously unnecessary. That may be counterproductive and may even impede the success of a deal, for instance if it prevents directors from having access to all the information needed to make decisions on the M&A Transaction.

A first step in examining what information disclosure safeguards are required is to determine the relationship between the companies involved in an M&A Transaction. If the buyer and the target are not competitors (or potential competitors), there is little reason for concern. That is the case, for instance, if an investment company wants to invest in a construction company but does not yet have a construction company in its portfolio. By its very nature, the provision of information by the construction company to that investment company cannot affect competition (see also this blog). It is advisable to sign an NDA in that case, if only to ensure that the potential buyer will treat the information provided with due care if the deal fails.

What information may be exchanged if the buyer(s) and the target are competitors?

If the buyer(s) and the target are competitors, greater caution is required. But also in that case the provision of information for the benefit of the M&A Transaction is usually permitted.

First, the provision of information by a competitor is permitted if no sensitive competitive information is involved. This includes information that is publicly available or outdated (generally older than one year). Sensitive competitive information is generally understood to mean current data that the companies themselves classify as “business secrets”. Current and future information on prices, volumes and customers is in any event considered sensitive competitive information.

When in doubt as to whether certain information may be shared, the options are to aggregate information (in the case of prices) or to anonymise it (in the case of names/contracts of customers). In most cases, that suffices to mitigate competition risks, while still meeting the information needs.

Second, sensitive competitive information may also be provided if that is truly necessary to bring about an M&A Transaction (also known as an ancillary restraint). The provision of information must then be proportionate and serve a legitimate purpose, such as the ability to value a target. To be on the safe side, companies could also opt to enter into a clean team agreement in addition to an NDA. This means that a limited team of persons is put together that will handle the information in strict confidence.

Contrary to the information provided by ACM in its Guidance on Cooperation between Competitors (paragraph 80), an NDA or a clean team agreement is not an absolute (statutory) obligation when providing information to competitors. And unlike the ACM suggests in its Guidance, there is no legislation or case law that requires that the clean team may not include persons who are involved in the day-to-day operations of the companies in question.

But it is of course safer – if possible – not to have persons on the clean team who are involved in the day-to-day operations. It may depend on the company in question who qualifies as such. Generally, they will be persons who have direct commercial responsibility and who are involved in the operational management in that capacity (and who can therefore use sensitive competitive information to adjust market conduct).

In practice, it will not always be possible to keep persons who are involved in the business operations out of a clean team, or to otherwise prevent them from gaining knowledge of the information. That applies in particular to small businesses, which simply have too small a number of employees or where board members must make their own decisions based on the information required. In those cases, it would be taking things too far to (forcibly) set up a clean team (consisting, for instance, only of external advisors). As stated above, there is no obligation, statutory or other, to do so.

However, it is advisable not to make the circle of persons who have access to sensitive competitive information any larger than strictly necessary. In such cases it is also advisable to treat the most sensitive information with due care, namely information about future prices and volumes (see paragraph 2.6 of the Commission’s Guidance on restrictions of competition by object). As a rule, other information will potentially restrict competition only in specific circumstances. And a great deal can be achieved simply by anonymising and aggregating such information.

Information exchange and M&A Transactions: five tips

The following tips offer some guidance on providing information in an M&A Transaction:

Tip 1: If companies are not competitors, the information may be provided and a clean team agreement is not required. It is advisable, however, to enter into an NDA.

Tip 2: If companies are competitors, an NDA should be signed and only information that is necessary for the M&A transaction should be provided.

Tip 3: If companies are competitors and it is unclear whether information may be provided, that information should be aggregated or anonymised or a clean team agreement should be signed.

Tip 4: If possible, make sure that the members of the clean team are not involved in the day-to-day running of the company and do not make that group of persons any larger than strictly necessary.

Tip 5: If companies are competitors, be cautious with information on proposed market conduct, particularly on future prices, volumes and customers (unless absolutely necessary).

Information on dawn raids by ACM and the European Commission can be found at

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Contact details

Martijn van de Hel

T +31 20 238 20 02
M +31 6 21 210 853

Diederik Schrijvershof

T +31 20 238 20 03
M +31 6 81 364 318