Timber Exchange is committed to providing useful insights for actors on the timber market, essentially by a benchmarking service using a price index. Here, it is essential to abide by the rules of competition law to uphold a sound market in a sensitive commercial area as a third-party service. In the following, our legal expert Daniel Tornberg from Advokatfirman MarLaw confirms the legality of our service.
Concerning the European market, competition law is primarily ruled by Article 101.1 of the Treaty of the Functioning of the European Union (“TFEU”). It prohibits cartels, price co-operation, information exchange which limits competition, etcetera, by contract or by coordination. The limits of said concepts have been developed in jurisprudence, exposing legal space to develop services which fulfil commercial demands without infringing on competition rules. Anti-competitive cooperation is further analysed based on its advantages and disadvantages from a competition perspective.
Among the most scrutinised practices under this article is the exchange of commercially sensitive information, such as future pricing, business strategies, costs, or volumes. When not properly controlled, such exchanges may facilitate collusion or reduce uncertainty between competitors, thereby harming the market.
Creating a successful and legally sound model depends on the how, not the if, concerning competition rules and on the design of the benchmarking study. Price index models might be sensitive if they are applied incorrectly. However, there are clear ways to design and publish data while upholding legal principles of competition law. An OECD paper from 2011 underlines the importance of data being aggregated, historic and open to all. Underlying principles of competition law have further been developed by the European Commission in their Blue Book. Case-law also highlights that the threshold of sufficient data subjects increases if the relevant market is narrow.
The timber market has certain specific features that Timber Exchange has considered carefully. Most sales involve future production (for example, selling March production in February), and while the products are globally standardized, a wide range of variations exist based on quality, species, dimensions, and length. Different markets also prefer different specifications, and this market segmentation adds a layer of complexity. Moreover, final prices can vary by 5-10 % based on factors such as seller or buyer characteristics, payment terms, brand reputation, and access to market information, leading to potential imbalances. Timber Exchange’s benchmarking service is designed to help reduce these asymmetries without restricting competition.
The Court of Justice of the European Union has emphasised in cases such as T-Mobile Netherlands (C-8/08) that even a single instance of information sharing may constitute an infringement if it reduces strategic uncertainty between competitors. The ruling confirmed that an anticompetitive object alone is sufficient to breach Article 101(1), regardless of actual market effects.
However, EU law also recognises that not all exchanges are harmful. Under Article 101(3) TFEU, certain arrangements may be exempted if they generate efficiency gains that benefit consumers – for example, by improving transparency, reducing uncertainty, or supporting rational decision-making.
Timber Exchange’s benchmarking model is designed not to restrict competition, but to enhance market efficiency and transparency in a legally compliant manner. For pricing, Timber Exchange employs a maximum price model (highest survey response) for the main products per market, meaning the highest price indicated is used for each product with a corresponding description, e.g., “RW VI 50x150 Falling Lengths to Egypt”. Moreover, to reflect market reality more accurately, Timber Exchange’s service differentiates between large and small deliveries, recognising that smaller volumes often attract a higher price premium. Capturing and analysing this difference helps to ensure that customers are treated fairly and that no unreasonable price premiums are charged.
This approach not only contributes to fair pricing for buyers, but also supports smaller or less resourceful sawmills – for instance, those without international sales offices or access to deep market insights. By offering visibility into price expectations across global destinations, the index helps prevent underselling in unfamiliar markets. This may, in turn, reduce the risk that smaller operators inadvertently drive down market prices, thereby contributing to more stable and transparent pricing for the entire sector.
When properly structured and supervised, benchmarking can be a tool for competitive neutrality – especially in sectors like timber, where pricing opacity may otherwise favour dominant actors.
Timber Exchange offers a competitive benchmarking solution which respects competition law. In practice, this means that the data is anonymized and aggregated without the possibility to identify singular actors. In fact, such information is not even revealed to Timber Exchange. Timber Exchange does not facilitate or engage in any exchange of individualised or forward-looking data. There is no possibility for users to derive current or future pricing strategies of other market participants, thus avoiding risks related to tacit collusion or price alignment.
Further, data is only published on a delayed basis, showing historical records without exposing real-time data. All data is used on a license basis, creating financial and legal security for both parties. Timber Exchange is also committed to promoting the internal proficiency of relevant rules, why staff is trained and examined on competition rules and on the company competition policy.
In addition to price benchmarks, Timber Exchange aims to provide hyper-personalised recommendations and scores. For instance, sellers will be able to track their performance relative to peers on specific markets, e.g., whether they are among the top 10% in Saudi Arabia or the bottom 10% in India. Users can also analyse past financial impacts, such as an average loss of €8 per cubic metre when selling to India the previous month. These insights are presented in a way that enhances internal efficiency and competitiveness, without infringing competition law principles.
Our service is used by operators in the EU and beyond, so we have designed our price reporting according to internationally recognised principles of independence, transparency, and data security - such as the ICC/ESOMAR International Code on Market and Research. This ensures that our methodology is of a high standard even in countries with different competition laws, including the US, Canada, and the UK. By applying principles such as aggregated and anonymised data, clear methodology and controlled use of our indices, we comply with both European and international competition law practices.
By making use of the Timber Exchange service, both buyer and seller could benefit, while contributing to transparency and thereby improved decision-making parameters. While abiding by competition rules, the solution encourages sound competition and aims to decrease information asymmetry. Research has shown that benchmarking allows both companies may enhance their internal efficiency and thereby also potentially consumers, in their quest for informed companies. Benchmarking, when properly designed, can promote market efficiency by enhancing transparency, reducing information asymmetry, and fostering better-informed decision-making, in line with the objectives of Article 101(3) TFEU.
In conclusion, the service is designed based on competition law. By building the service on clear requirements and an informed staff, Timber Exchange is committed to contributing to a legally solid market and to upholding business ethics in the timber market. For any legal queries, please do not hesitate to reach out.
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[1] OECD (2011), “Information Exchanges between Competitors under Competition Law: Key findings, summary and notes”, OECD Roundtables on Competition Policy Papers, No. 115, OECD Publishing, Paris, https://doi.org/10.1787/327f7dd3-en, p. 89.
[2] OECD, Information Exchanges between Competitors under Competition law, p. 397.
[3] Ibid, p. 396.
[4] European Commission, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements.
[5]OECD, Information Exchanges between Competitors under Competition Law, p. 24.
[6]Ibid, p. 27.