On October 4 the IAA has adopted the guidelines on how to structure an antitrust compliance programme and its treatment in the context of an antitrust investigation. They make clear that only compliance programme satisfying international best practices will be rewarded. Also considering the increasing level of fines imposed by the IAA and the proliferation of antitrust damages actions which will likely soon be strengthened by a reformed class action currently in course of approval by the Italian parliament, now is the time to implement an effective antitrust compliance programme.
The Italian Antitrust Authority (IAA) fining guidelines provide that specific compliance programmes (CPs) in line with European and national best practices may lead to a reduction of fines that may otherwise be imposed for anti-competitive conducts. This way to promote the adoption of compliance programmes is only shared by certain competition authorities1, whereas others do not see the reason to reward compliance programmes that have failed2.
Yesterday the IAA published a set of guidelines on (i) how to structure a CP; (ii) the content of the request for the IAA to recognize the CP as a mitigating circumstance; (iii) the criteria used by the IAA to quantify the sanction reduction (the Guidelines).
The Guidelines intend to strengthen the prevention of antitrust infringements by promoting the adoption of effective CPs, as well as to give certainty to the parties involved in an antitrust investigation on the procedure to be followed and the criteria applied by the IAA to calculate sanctions reductions.
The content of a compliance programme
According to the Guidelines, a CP must be tailored to the nature, dimension and market position of the company as well as take into account the specific criticalities presented by the specific market in which the company is active.
In this respect, the Guidelines closely reflect the ones set out by the ICC Antitrust Compliance Toolkit. On this line, the Guidelines say that an antitrust CPs shall: (i) be an integral part of the company’s policies and culture; (ii) identify and evaluate the company’s specific antirust risks; (iii) contain training courses and know-how activities; (iv) appropriately manage the company’s processes which present higher antitrust criticalities; (v) incentivise the compliance with the CP itself through a system of rewards and disciplinary measures; (vi) provide for auditing procedures as well as improvement systems.
Interestingly, in line with a comment made by A&O in the context of the public consultation launched on 20 April 2018, the Guidelines contain a non-exhaustive list of risks typically related to the activities carried out by undertakings.
Content of the request to be submitted to the IAA
The request to obtain a further reduction shall be submitted within 6 months from the notification of the decision to open the investigation so as to allow the IAA to properly assess the effectiveness of the CP. This is the only major change applied in respect to the draft of the Guidelines published by the IAA in the context of the public consultation.
The Guidelines do not provide for any procedure regulating possible interactions between the applicant and the IAA which as suggested by A&O could have been a useful way to structure and/or amend the CP consistently with the IAA requirements.
The request should demonstrate the fulfilment of the following two conditions.
First, the applicant must show that the CP adequately prevents anticompetitive behaviours – that is to say that the CP is able to reduce the specific antitrust risks faced by the company also considering the nature of its activity (for instance, if it systematically participates to public tenders, the CP should be focussed on the contacts and cooperation agreements with competitors), and its position on the market (for instance, if it is a dominant undertaking vertically integrated, the CP should be focussed on the terms and conditions for the provisions of the inputs to its clients / competitors in the downstream market).
Second, the applicant must be able to show that the CP has been actually and effectually implemented. In this respect, the undertaking will have to submit the documentation which constitutes the CP, such as the appointment of the compliance officer duly empowered by the board of directors, presentations for the training of the employees, whistle-blowing procedures, etc. In the cases in which a CP is adopted before the start of the investigation, the applicant will have to specifically explain: (i) the reasons the CP should be deemed effective; (ii) the reasons why the undertaking was involved in the investigated activities despite having a CP in place; (iii) any change of the investigated conduct which is the result of the application of the CP.
The Guidelines specify that this may be proven without the need for the applicant to breach its right of non-self-incrimination and to legal privilege. The difficulty in showing the effectiveness of a CP without breaching these fundamental rights was also highlighted by A&O during the consultation. The specification provided is welcome, but the tension remains and how this point will be addressed in practice is still to be seen.
Criteria used by the IAA to quantify the sanction reductions
The Guidelines indicate the amount of maximum reductions which can be awarded depending on whether the CP has been implemented before or after the decision to open the investigation.
4.1. If the CP is adopted before the IAA starts the investigation:
The IAA will grant a sanction reduction up to 5% if:
the undertaking has substantially modified a CP which was manifestly inadequate (because, for instance, the contents of the CP were insufficient / the CP was not practically enacted / the undertaking’s top management had taken part in the infringement).
The IAA will grant a sanction reduction up to 10% if:
the undertaking has modified a CP which was not manifestly inadequate (although not able to prevent the company from committing antitrust infringements) in such a way to fill the gaps which prevented the original CP from being fully effective.
The IAA will grant a sanction reduction up to 15% if:
the undertaking has an adequate and effective CP in place, which (i) has allowed the company to timely detect the antitrust infringement and (ii) has interrupted the anticompetitive conduct in a reasonably short period of time
if the necessary conditions applied, the undertaking has also submitted a leniency application.
The need to satisfy the second condition does not seem fully appropriate. The decision whether to apply for leniency should not negatively affect the applicant which has implemented an effective CP by means of which it was able to detect an antitrust infringement and put an end to it. However, the IAA considered that otherwise the undertaking could adopt opportunistic behaviours by waiting until the start of the investigation to apply for leniency so as to obtain a reduction up to 65% (50% in the context of the leniency programme plus 15% as mitigating circumstance).
4.2. If the CP is adopted after the IAA has started the investigation:
The IAA will grant a 5% sanction reduction if the undertaking has adopted and implemented an adequate CP after the IAA has started the investigation,
4.3. CPs and commitments
In the cases in which the undertaking submits commitments including the adoption of a CP, the acceptance of such commitments by the IAA does not imply a positive evaluation on the adequacy and efficacy of the CP. In order to benefit from fine reduction in future investigations, the undertaking will still have to provide all the necessary elements to prove the correct implementation of an adequate CP.
4.4. Groups of companies
With regards to the adoption of CPs within groups of companies, for the CP to be considered as a mitigating circumstance, it must be adopted and implemented through the whole group. The adoption of an antitrust CP by the sole parent company will not be deemed sufficient to exonerate the parent company from the subsidiary's conduct.
4.5. Antitrust CPs as an aggravating circumstance
Although the IAA does not usually consider the existence of an antitrust CP unfavourably, it may do so when (i) the adoption of such CP has been used by a company to facilitate/ hide a breach of antitrust rules; (ii) a company has effectively acted with the intention to mislead the IAA with regard to the existence/nature of an antitrust infringement, by hiding/hindering/delaying an investigation; (iii) the company is a repeated offender which has already benefitted from a reduction in sanctions in a precedent investigation; (iv) a company does not comply with an IAA decision.
4.6. Repeated offers
Sanctions reductions will not be granted to repeated offenders which have already benefitted of this mitigating circumstance in the context of previous proceedings.
The Guidelines represent a step in the right direction in the promotion of compliance programmes which, when effectively implemented, significantly increase undertakings’ capacity to prevent antitrust infringements.
In consideration of the fact that: (i) the sanctions applied by the IAA are consistently the highest among EU national antitrust authorities, (ii) follow-on damage actions are gaining popularity and may be expected to be significantly strengthen by the reform of the class action which is currently being approved by the Italian Parliament, the Guidelines come at the right time to offer to undertakings needed support in the prevention of antitrust infringements.
On a negative note, the Guidelines missed the opportunity to address the fact that the sanction reduction is often not actually received by the parties as after the application of the mitigating circumstance the amount is still above the 10% turnover statutory limit. The IAA could have specified its willingness to grant further reductions after the application of the 10% turnover statutory limit on the basis of the discretionary power provided by art. 34 of the IAA Fining Guidelines.3
The Guidelines are available at: http://www.agcm.it/dotcmsdoc/linee-guida-compliance/linee_guida_compliance_antitrust.pdf, an English version is also available at: http://en.agcm.it/dotcmsdoc/guidelines-compliance/guidelines_compliance.pdf