Antitrust compliance programs in Europe: status quo and challenges ahead point of view of the Commission/NCAs

Transcription

1 Antitrust compliance programs in Europe: status quo and challenges ahead point of view of the Commission/NCAs ENTraNCE launch workshop, European University Institute Florence Hein Hobbelen, Advocaat (Amsterdam, Brussels) 26 June 2015

2 Overview Today Why competition compliance? The Commission and NCA s: guidance on antitrust compliance programs Policy implications of having an antitrust compliance program Final observations and points for discussion 2

3 Why competition compliance? 1 Section

4 WHY competition compliance? Competition law is about fines and damage claims, is there anything positive in it for us? A. Not really and I believe this is yet another of these trainings to quickly attend and then forget. B. Perhaps but you do not understand the hard world of sales I live in. C. Yes, it allows me to do business on a level playing field, avoid risk and behave ethically. 4

5 Competition law is about fines and damage claims, is there anything positive in it for us? C. Yes, it allows me to do business on a level playing field, avoid risk and behave ethically. 1. Competition law allows me to compete on the merits and do not forget it applies to all of your business partners. 2. Non-respect may bring about significant exposure for the company and for you. 3. Complying with competition law and high standards of ethics will benefit not only the company but also each and every one of you (Group CEO). 5

6 Drivers of competition compliance Fear of detection and punishment - ethical obligations Also referred to as the negative or affirmative bases for compliance Mitigation of risks and costs of non-compliance Being seen as an ethical company How do compliance programs and antitrust authorities views on such programs fit in here May increase understanding and commitment ex-ante - in literature referred to as the increase of normative commitment In light of policy goals of preventing and education may contribute to disseminating compliance culture (and may thus prevent infringements) May contribute to early detection/leniency and thus early termination of infringement Views on the role of antitrust agencies differ: positive and negative 6

7 The Commission and NCA s: guidance on antitrust compliance programs 2 Section

8 The Commission and NCA s Many antitrust authorities have adopted some form of guidance on antitrust compliance programs Commission Compliance matters brochure UK How your business can achieve compliance with competition law famous wheel of compliance France Antitrust compliance and compliance programmes corporate tools for competing safely in the marketplace Also note the ICC Antitrust Compliance Toolkit Some have no specific guidance (but there may be guidance in public statements and decision-making practice) Netherlands (commitments decisions, (recent) public statements Chairman) Italy/Germany Let s look at the key building blocks of a good compliance program according to authorities 8

9 Key aspects of a good compliance programme strategy/organisation A clear strategy Enshrining an antitrust compliance culture and policy Evaluating the antitrust risks faced by a company Making the strategy explicit Visible and lasting commitment by senior management Adequate compliance organisation and resources Appointment of compliance officer to oversee implementation Reporting channels from compliance officer to higher management Involvement (possibly) of external antitrust lawyers to develop policies and guidance 9

10 Key aspects of a good compliance programme know-how/concerns-system Compliance know-how Should be tailored to company Interactive training (face-to-face, online, virtual or a combination) Manuals / handbooks etc should have easily understandable rules e.g. simple Do s and Don ts Constant updating as well as contact points for advice and training Concerns-handling systems Should be tailored to the company Culture of reporting Possibly having a hotline to deal with compliance concerns 10

11 Key aspects of a good compliance programme monitoring/staff commitment Internal monitoring, due diligence and disciplinary actions Internal compliance investigations (use of internal/external lawyers, audit or special board committees) at regular intervals Due diligence when: (i) hiring new employees; (ii) considering memberships of trade associations and (iii) in M&A situations Penalties for breach of internal compliance rules Putting in place positive incentives for employees, e.g. recognition in appraisals, promotion or even perhaps bonuses Monitoring, auditing and continuous improvement Periodic independent review of the antitrust compliance programme processes and controls Request and track all feedback on the programme, including feedback on training and processes, internal audits and independent reviews Act on feedback and change compliance programme as company risks change 11

12 Identifying staff is key High risk staff Senior managerial roles Staff in sales, marketing and pricing departments Staff dealing with competitors (including trade associations) New staff involved in the areas above joining from competitors Medium risk staff Management roles that do not involve regular contact with competitors Staff in other departments (i.e. finance, communications, operations) whose activities may be used to support cartel activity Other staff joining from competitors 12

13 Identifying staff is key (cont) Low risk staff Manual labour staff Back-office staff HR staff that do not have contact with their HR counterparts in other businesses Persons involved in clerical or administrative roles, and Front-line retail sales staff 13

14 Setting up a hotline? Pros Some NCAs consider it an effective tool for a good compliance programme Could serve to identify whether compliance training is working Could encourage people to voice concerns and thus lead to a more open firm culture Could allow for serious concerns to be acted upon quickly Cons Many competition authorities including the Commission do not take into account the existence or not of an effective compliance programme as a factor in determining the level of fine (see further later) Data protection issues may be complex to resolve Potential obligation to apply for leniency in certain jurisdictions No legal privilege of internal documents on reported concerns Stigma against anonymous reporting in certain countries Hotline needs to be effective and function properly! 14

15 Policy implications of having an antitrust compliance program 3 Section

16 Policy implications (Commission) To those who ask us to lower our fines where companies have a compliance programme, I say this: if we are discussing a fine, then you have been involved in a cartel; why should I reward a compliance programme that has failed? Former Competition Commissioner Joaquín Almuñia 16

17 Policy implications European Commission In eighties existence compliance programs considered mitigating factor National Panasonic (1982), John Deere (1984) But now standing policy (confirmed by EU courts) compliance program no reason to grant reductions in fine No aggravating factor but British Sugar (1991) increased fine for not respecting program as announced to Commission in earlier case And may be one of many factors in establishing control of parent over subsidiary Schindler (2011) 17

18 Policy implications NCA s Fine reductions possible in number of selected countries (not exhaustive) Italy: may be mitigating factor possible 15% reduction in fine France: commitment in settlement procedure possible 10% reduction in fine (no reduction for the past, relates to the future) UK: possible 10% reduction if adequate steps to ensure compliance have been taken But not in all! Germany: compliance is a legal obligation of undertakings [ ] and there can be no reward for not observing the law Netherlands: chairman Chris Fonteijn in May 2015: no reduction because of a compliance program He emphasizes the possibility of early termination of infringement + possibility to reduce fine for full cooperation 18

19 Policy implications: NL example ACM investigation into mobile operators KPN, Vodafone and T-Mobile Employees made public statements on planned price increases before internal decision was taken At conferences and in trade journals Statements could significantly reduce the uncertainty about competitors behaviour and therefore lead to collusion and harm consumers Settlement negotiated Commit to refrain from publically making verbal or written statements about future prices Include commitment in compliance programme Commit to organize staff trainings so that these commitments are complied with Fines avoided 19

20 Final observations and points for discussion 4 Section

21 Final observations/points for discussion General Is guidance by agencies useful? Do companies merit a discount? Australian example, UK Rogue employee Facts-based analysis Risks? Reward for breaking the law? Learning and monitoring effect? 21

22 Final observations/points for discussion (cont) European Union Although Commission and NCA s may emphasize particular points number of similar key aspects of good compliance programs in guidance documents Experience in Italy/Portugal? Do we need further harmonization? Are NCA s too much reinventing the wheel? What about guidance to SMEs? 22

23 Thank you Hein Hobbelen T E Hein.Hobbelen@freshfields.com LinkedIn Practice Antitrust Competition and Trade BRU