Compliance programmes

Commitment to competition compliance

How does a company demonstrate its commitment to competition compliance?

Commitment to compliance may take different forms. One example is making a public statement regarding a commitment to compliance on the UK business’s websites. Other measures include board resolutions affirming the business’s commitment to compliance, audits and internal compliance investigations, the adoption of a competition compliance code for employees, and employee-focused compliance training.

Any compliance programme will be expected to include appropriate steps relating to the four-stage approach to compliance recommended by the Competition and Markets Authority (CMA).

Risk identification

What are the key features of a compliance programme regarding risk identification?

Key features of risk identification normally include those listed below.

  • Employee risk: Are they aware of competition law? Do they come into contact with competitors? Do employees frequently move between competing businesses? Do they seem to have information about competitors’ prices or activities?
  • Agreements with competitors: Are competitors also customers or suppliers? Is there any partnership with competitors? Are there any agreements with competitors that contain requirements to share commercially sensitive information?
  • Business practice: Does the company have significant market shares in any market? Does the business impose resale restrictions on retailers?
Risk assessment

What are the key features of a compliance programme regarding risk assessment?

Once identified, risks can be assessed in terms of their seriousness. The CMA suggests UK businesses do so qualitatively (ie, low, medium or high risks). Businesses should pay particular attention to employees in high-risk areas of the organisation (eg, sales, marketing or other target-related roles) or who are likely to be in contact with competitors.

In addition, or alternatively, risk assessment could be predicated upon the financial impact on the business should a breach occur. The assessment should evaluate the reputational consequences of an infringement-related investigation or those that flow from fines or criminal sanctions.

Risk mitigation

What are the key features of a compliance programme regarding risk mitigation?

Key features of compliance risk mitigation will depend on the risks. They include:

  • competition law training for high-risk employees;
  • implementation of codes of conduct, checklists and manuals;
  • establishment of a system for logging all contact with competitors;
  • making available before-the-event legal advice for employees;
  • implementation of confidential reporting; and
  • making breaches of competition compliance a disciplinary matter.
Compliance programme review

What are the key features of a compliance programme regarding monitoring and review of business practices?

The CMA recommends that UK businesses review and monitor their compliance programmes regularly to ensure their effectiveness. This may be annually or less frequently, depending on the business. There may also be occasions where a business reviews its competition compliance programme outside its review cycle, such as on the commencement of a competition investigation in that sector or on the acquisition of a competitor.