There are a number of uses of blockchain technology which may give rise to competition concerns. As a distributed ledger where transactions are recorded in real time and are accessible to everyone within that network, blockchain makes at least some transaction information accessible to users within the network. The available information can provide insights on highly sensitive commercial business transactions and/or strategies. Blockchains can also be seen as a decentralized model of data storage including payment transactions, purchase history, corporate accounts, pricing history as well as future changes to pricing. These characteristics can expose users of blockchain technology to competition law concerns, the most obvious of which are detailed in our whitepaper.
1. Information exchange and collusion –
The exchange of commercially sensitive information which reduces strategic uncertainty in the market can create the conditions for competitors to collude and may lead to competition law infringements as it decreases the incentives to compete. Sensitive strategic information can, amongst others, relate to prices, discounts, planned price increases, reductions or rebates, customer lists, production costs, quantities, turnovers, sales, capacities, qualities, marketing plans, risks, and investments. One of the key features of blockchain technology is to utilise transparency to increase efficiency. But transparency may facilitate and/or strengthen anticompetitive collusion. Competitors who are part of the same blockchain network may be able to exchange commercially sensitive information since they have access to identical records of all transactions within the distributed ledger. Whilst ledgers could have many advantages especially in relation to various different types of agreements, notably supply and distribution agreements for the exchange of agreements and contracts, tracking and payment due to every transaction being recorded on a block and across multiple copies of the ledger which is distributed over many computers, this can be highly problematic as there is a risk that sensitive information is shared amongst competitors either at the same level of the supply chain or at different levels. Thus, direct competitors using shared blockchains or collaborating in blockchain consortia are particularly likely to be susceptible to antitrust scrutiny.
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