What is market sharing?
Market sharing occurs where competitors agree to divide the market(s) among themselves, for example, by agreeing not to compete for each other's customers, or not to enter or expand into a competitor's market or territory. As businesses don’t compete vigorously for customers under market sharing arrangements, consumers end up paying more and having less choice.
Market sharing is a serious form of anti-competitive conduct and could lead to severe penalties for the companies and individuals involved.
Types of market sharing
Market sharing can involve dividing up:
- Specific products or services: for example, company A agrees that it will only produce accessories for Apple iPhones as long as company B agrees that it will only produce accessories for Android phones.
- Customers or classes of customers: for example, companies A and B are the only audio-visual systems suppliers for schools in Hong Kong. They agree with each other that company A will become the sole supplier of such systems to international schools and company B to local schools in order to raise profits for both. Even though companies A and B may act like they are competing (for example by submitting bids), the winner of the competition for respective markets has already been agreed.
- Geographical areas: for example, company A is assigned to sell only on Hong Kong Island while company B and C are assigned to sell only in Kowloon and the New Territories respectively.
- Another common form of market sharing involves companies agreeing not to “steal” a competitor’s existing customer. This includes agreeing not to provide maintenance services for facilities installed by a competitor.
What should I do?
Competition law requires businesses to make independent decisions regarding what products to produce, what services to offer, what prices to charge, where to operate and which customers to pursue.
A Bite of Conspiracy — a two-episode drama on market sharing, 8 minutes in total
"Combat Market Sharing Cartels" brochure