From Non-Disclosure Agreements to Trade Secrets: Antitrust Implications

Abstract

Confidentiality of information is considered to be a basic business necessity in order to safeguard the business’s strengths, competitive advantage, commercial value, economic status and market position. However, a business may often need to disclose confidential information to other stakeholders in order to develop its business interests for profitability and better financial position. Through the formal acceptance of a non-disclosure agreement (hereafter “NDA”), the recipient agrees to not disclose the confidential information set out in the agreement. Also termed “confidentiality agreement” or “non-disclosure agreement”, an NDA is an agreement restricting the use of information by prohibiting a contracting party from divulging data and has multiple economic benefits on growth and innovation. Having remained hidden so far, the importance of antitrust implications of trade secrets pairs with their ignorance.The antitrust implications of trade secrets do not solely revolve around the unfair competition view of “non-compete clauses” or “restrictive covenants”. Rather, the antitrust implications of trade secret question the pro- and anti-competitive consequences on the economy in terms of public policy interests with trade secrets being used as a tool for abusing a firm’s dominance. Consequently, trade secrets, from an antitrust perspective, are envisaged as a deliberate and smartly developed tool used by firms for abusing dominance. This part exposes the antitrust implications of trade secrets and places these implications into the wider discussion of NDAs and trade secrets, before providing concluding recommendations.

Keywords: Non-Disclosure Agreements; Antitrust; Trade Secrets

JEL Classification: K21