Summary: Any corporate compliance programme should address the potential antitrust risks faced by the business. In this article, the fourth in a series from BCLP’s Global Investigations team, we consider why this is so important and the key steps involved in devising an effective programme.
Why should a corporate compliance programme address antitrust risk?
Antitrust law can be complex and its application in particular circumstances very fact-specific. Without tailored guidance, it can be easy for employees inadvertently to infringe the rules.
Nevertheless, the consequences of infringing antitrust law can be significant. In the EU, an infringing company can be subject to fines of up to 10% of its worldwide group turnover and can be sued by third parties for damages suffered as a result of the infringement. In the US, an infringing company can be subject to fines of up to $100 million and liable for treble damages. In many jurisdictions, including the UK, France, Russia and the US, individuals can face significant prison sentences for participation in cartel activity. The reputational damage a business will face if it is found to have engaged in anti-competitive conduct will often be substantial.
A good corporate compliance programme will reduce the risk of antitrust law infringements by the company and its employees, and increase the likelihood that any issues are identified and addressed quickly. This may include an application for immunity or a significant reduction in fines for “blowing the whistle” on the anti-competitive behaviour. Making employees more confident of the “rules of the game” may also enable them to recognise when the business is the victim of anti-competitive behaviour by others and allow them to compete more vigorously without fear of infringing antitrust law. A clear policy on the company’s commitment to antitrust law compliance can also assist if disciplinary action is to be taken against staff involved in infringing behaviour.
What makes a good antitrust compliance programme?
In our experience, the most effective antitrust compliance programmes usually adopt an approach similar to that recommended by the UK’s Competition and Markets Authority.
This involves a risk-based, four-step process intended to achieve a “culture of compliance”. “Risk-based” means that the approach is tailored to the specific risks faced by the business.
The four steps can be summarised as follows:
- Risk identification – identify the key antitrust law risks faced by the business. For some businesses, these may include direct exchanges of commercially sensitive information with competitors or indirect exchanges via a third party (such as a common customer, supplier or other intermediary). For other businesses, frequent collaboration with competitors may give rise to antitrust risk; for some, abuse of market power may be a principal concern.
- Risk assessment – rate the identified risks according to their seriousness (e.g. low, medium or high) and assess which employees are in high risk areas (e.g. those who are likely to have contact with competitors and those in sales and marketing roles).
- Risk mitigation – set up appropriate policies, procedures and training to mitigate the risks identified and to detect any issues that do arise.
- Review – review steps 1 to 3 regularly, and consider the circumstances in which an additional review may be required (e.g. because the business has acquired another business).
These four steps are unlikely to be successful without a commitment to compliance from the top down (i.e., from the board and senior management). This commitment can be communicated and demonstrated by, for example, ensuring one board member has the role of driving compliance within the business and that he/she reports regularly to the board on compliance efforts; regular email or other director communication by senior management underlining the importance of antitrust compliance and what individuals should do if they have concerns; and implementing business policies under which managers of all levels must demonstrate their commitment to antitrust law compliance.
Businesses active in the EU may in particular benefit from instructing external counsel to assist with this process, given that, in investigations by the European Commission and various other EU antitrust authorities, legal privilege only attaches to communications between a client and its EU-qualified external lawyers and does not protect from disclosure communications which involve only in-house counsel.
BCLP’s Investigations, Financial Regulation and White Collar Team regularly advises corporates on implementing and strengthening their antitrust and other legal compliance programs. We have designed and operated bespoke global risk assessment processes for corporates and are well placed to advise on the best processes and approaches to developing an appropriate compliance programme. Through our years of experience, our team can help the company adequately address risks and better prevent and detect wrongdoing. In addition, our team can effectively and efficiently conduct global investigations to help prepare a company to respond to a corporate crisis and to defend the company from government prosecutors.