Compliance Policy
Dealing with Different Jurisdictions


The UK Competition Act 1998, which came into force on March 1 2000, has introduced a competition law regime which is radically different to the previous regime. However, it is very similar - at least in its substantive rules - to the regime which has applied in the Republic of Ireland since 1991. It therefore makes sense for companies that trade north and south of the border to coordinate their competition compliance policies in both jurisdictions. This approach is also likely to ensure that they comply with EC competition law, since the substantive provisions of the Irish and UK legislation are modelled on the competition rules set out in the Treaty of Rome.

Broadly, the competition rules that apply under each of these regimes prohibit agreements or concerted practices which prevent, restrict or distort the normal operation of competition in the relevant market. In addition, they prohibit a dominant company from abusing its dominant position (eg, by excluding its competitors from the market or by unfairly exploiting its suppliers or customers). Prohibited agreements and practices are void and unenforceable. Entities that engage in prohibited activities face fines of up to 10% of their turnover (in the Republic, up to a maximum of I£3 million). These entities also face the possibility of being sued by third parties adversely affected by prohibited activities.

Behaviour which infringes the competition rules of these separate but similar regimes can expose the party or parties concerned to enforcement proceedings and fines (and imprisonment in the case of the Republic) in a number of different jurisdictions. Increasing cooperation between the agencies involved in enforcing competition law in the different jurisdictions means evidence obtained in one country that relates to anti-competitive activities in another may be referred to the relevant agency for further investigation there.

Well-managed companies will thus ensure that they operate competition law compliance policies which are effective in all the jurisdictions in which they operate. Since the UK Competition Act came into force, the scope of the new regime is much more extensive than the regime which applied previously. However, an advantage of the new regime for companies that operate on a cross-border basis is that the coordination of compliance policies between the two jurisdictions has become more straightforward.

Compliance Policy

The form of compliance policy will vary from company to company, depending on the nature of its business (eg, manufacturing, distribution and services), the sector in which it is involved and the size of the firm.

Among the more obvious advantages of having a formal competition law compliance policy are the following:

  • It should assist in early detection of infringements and avoid invalidity of agreements;

  • It helps to preserve a company's reputation as a law-abiding entity;

  • It assists in avoiding the danger of fines, injunctions and damages, as well as the cost and expense of defending legal actions;

  • If infringements do occur, it may help in mitigating penalties. The European Commission has treated the establishment of a compliance programme after the initiation of proceedings as a mitigating factor. The UK director general of fair trading has stated that he is likely to take into account the existence of a compliance programme in determining penalties, provided that the programme is actively implemented, evaluated and regularly audited; and

  • It helps to identify opportunities to challenge the anti-competitive behaviour of third parties.

An effective competition law compliance policy will contain the following essential elements:

  • analysis of the relevant legal rules;

  • a careful assessment of the activities which may be affected by these rules (often known as a 'competition audit');

  • the adoption and effective communication to staff of decisions designed to ensure that the firm's business is conducted in compliance with the relevant competition rules - this could require changes in the way that business is carried on; and

  • guidelines on action to be taken in the event of a visit by competition regulators (so-called 'dawn raids').

Dealing with Different Jurisdictions

Although the substantive similarities between the EC, Irish and UK regimes facilitate the adoption of coordinated compliance policies, there are some significant differences between the regimes which should also be borne in mind. For example:

  • unlike the UK or EC regimes, infringement of the Republic's competition legislation is a criminal offence, which exposes the guilty parties (including managers who knowingly authorize such infringements) to criminal sanctions, including imprisonment;

  • the UK's Office of Fair Trading and the European Commission may impose substantial fines on parties whom they find have infringed the relevant competition rules. The Irish Competition Authority has no such power and must institute proceedings in the courts if it wishes to have fines imposed; and

  • there is a wider range of general exemptions under UK law; indeed the exemptions under all three legal codes contain important differences.

Notwithstanding the similarity of the substantive rules underlying the competition laws of the different jurisdictions - and the desirability of coordinating compliance policies in those jurisdictions - the differences between the regimes mean that competent local advice must be taken before a compliance programme is finalized. This local advice will be of critical importance when specific competition law issues arise in a particular jurisdiction.

For further information on this topic please contact Gerald FitzGerald or Paul Heffernan at McCann FitzGerald by telephone (+353 1 829 0000) or by fax (+353 1 829 0010) or by e-mail ([email protected] or [email protected]).

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