1 - compliance_matters_en DG COMP PUBLICATION.pdf

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CompetitionEuropean Commission

Compliancemaers

What companies can dobeer to respect EU

competton rules


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Compliance

maers

What companies can dobetter to respect EU

competition rules

Special first editon

November 2011

Copyright European Union 2011

Reproducton is authorised

provided the source is

acknowledged

Printed in Belgium


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FOREWORD

by Joaqun AlmuniaVice-President of the European Commission and Commissionerresponsible for Competition

The European Union is an open market economy, based on principles of freecompetton: It relies to a large extent on market mechanisms, on the play ofsupply and demand.

Competton maximises incentves to innovate, engage in new promisingactvites, offer beer services and wider choice at lower prices. The contnuousquest for efficiency and improvement is not merely a result of the compettveprocess, it is the compettve process. Where companies - small, medium-sizedor large - concentrate on becoming as effi cient as possible, rather than on

surviving by other (illegal) means, their compettveness will increase whetherthey operate in their domestc market, in the European market, or on theworldwide stage.

If competton is to be an open contest, why should there be strict compettonrules? Precisely because the compettve process must be protected. If norules existed, the uncontrolled play of the market could eventually result inthe distorton or even eliminaton of competton. A set of laws preventngcollusion between companies or excessive use of market power are therefore

necessary and they need to be respected for the benefi

t of consumers.The EU and its Member States have such rules. They apply to large and smallcompanies alike that sell to consumers or to intermediate (business) custom-ers. They also apply to buyers, for instance when they collude to exploit their

joint market power.

Time is money you may well be thinking and it surely is. But just ask yourselfthe following questons:

Am I managing a company that is doing business in the EU?

Am I working in a company that does business in the EU?

If your answer to either of these questons is yes, this brochure is directly rel-evant to your day-to-day work.


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Although there are many obstacles on the path towards undistorted compet-ton in the EU, companies (or undertakings in the legal jargon) are key playersin the drive to achieve genuine effectve competton throughout the EU. Thisgoes for larger companies operatng on a European or worldwide scale, as wellas for small and medium-sized companies operatng in fewer Member Statesor within natonal boundaries.

This brochure focuses on helping companies to stay out of trouble and to en-sure compliance with EU competton rules: it summarises the key rules com-

panies need to respect, including the dangers involved in ignoring the law, andsets out practcal steps that can be taken to ensure compliance with theserules. I hope this brochure will assist all companies, and in partcular small andmedium-sized companies, to understand beer what the stakes are and howthey can prevent their stafffrom crossing the line.

Look at this brochure as a road safety brochure ahead of the holiday period.You know that traffic rules are in your own best interest, you are well awareof the risk to which you expose yourself and others if you drive too fast or

through a red light. Nevertheless the temptat

on is always there to ignore thespeed limits or other traffic signs. This concise brochure is a sort of compet-ton highway code which will help you comply with the applicable rules.

I wish you every success in your business endeavours. Drive safely!


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Contents

1. Complying with competton rules in Europe:

a companys responsibility 6

1.1 General obligation to comply 6

1.2 Benefits of compliance 6

1.3 Effectiveness: the sole benchmark of success 7

2. The costs of non-compliance for a company 8

2.1 Fines on companies 8

2.2 Sanctions on individuals 92.3 Illegal agreements are void and may attract damages 9

2.4 Bad press for law-breakers and other collateral

consequences 10

3. Compliance with EU competton rules

Are you certain you have covered the risk? 11

3.1 EU competition rules are directly applicable to your

company 11

3.2 Activities by public authorities 13


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4. How can your company ensure compliance? 15

4.1 A clear strategy 15

4.2 Formal acts of acknowledgement by staff and

consideration of compliance efforts in staff evaluation 16

4.3 Constant update, contact points for advice

and training 17

4.4 Monitoring / Auditing 18

4.5 The strategy has failed to ensure full compliance?

It may still serve to limit exposure! 18

4.6 The Commission welcomes compliance efforts bycompanies 19

5. Where to find further relevant informaton 21


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ComplianceMaters

6

EU competton rules concern every-

one who does business in the EU, asthey apply directly to all undertak-ings which are actve within the EU.This means not only managers, whohave choices to make in the interestof their companies, but also employ-ees, who require guidance on how toimplement these choices. Companies

whose market behaviour fails to com-ply with EU competton rules run therisk of incurring high fines and facingother negatve consequences.

Although under EU competton rulesindividuals are not penalised, theircareers and jobs can be negatvelyaffected by the wrong choices andeven a companys existence may be

threatened. In some Member Statesant-compettve conduct may resultin the individuals involved being pe-nalised (including possible imprison-ment), possibly in parallel to fines be-ing imposed on companies.

1.1 General obligaton to

complyThe prime responsibility for comply-ing with the law, as in any other field,lies with those who are subject to it.EU competton rules applying to un-dertakings are a fact of daily businesslife that has to be reckoned with, be-cause ignorance of the law will notshield undertakings from the conse-

quences of breaking it.

While it is clear that companies are

under an obligaton to comply withthe rules, they are largely free to de-cide how to go about it. This is onlynatural, given that the size of com-panies, their resources for seekingadvice, their field of actvity and theirexposure to the risk of becoming in-volved in infringements of EU compe-tt

on rules vary considerably. It goeswithout saying that awareness of therules is always a preconditon for ef-fectve adherence to them.

1.2 Benefits of complianceOne important reason why a companyshould comply with competton rules,apart from being seen as doing busi-

ness ethically, is the potentally highcost of non-compliance. But compli-ance can also and indeed should be approached positvely.

An actve and supportve strategy ofcompliance with the law and businessethics can certainly enhance a com-panys reputaton and aractveness

for promotonal and recruitment pur-poses, in much the same way as an ex-plicit environmental or family-friendlyagenda would do. It can help to raise

job satsfacton of staffand contributeto a constructve sense of belonging,even pride, within the company. Staffwho are aware of what consttutes il-legal behaviour will also be more alert

to wrongdoing by compettors or oth-er commercial partners.

1. Complying with competton rules in Europe:a companys responsibility


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Your company can do more to help

ensure that a level playing field ismaintained by bringing potentalmalpractce to the aenton of thecompetton authorites. First, it mayinform the Commission1or a natonalcompetton authority2 of any sus-pected infringement which comesto its aenton. Second, it may apply

for immunity from and/or reduct

onof fines if it has been involved in aninfringement. Finally, it may lodge acomplaint if it is the victm of an in-fringement by other companies3.

1.3 Effectveness: the solebenchmark of success

Any effort by a company to ensurecompliance with EU compettonrules is laudable. But what maers ul-tmately is that the rules are actuallycomplied with. When it comes to tak-ing practcal steps to ensure compli-ance, companies should keep in mindthat their efforts will be assessed onthe basis of results, in other words

they will be judged by their successin avoiding infringements. Merelypaying lip-service to an abstract orformalistc commitment to complywill get them nowhere. Any crediblecompliance programme must be builton a firm foundaton of managementcommitment and supported by a top-down compliance culture.


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ComplianceMaters

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2.1 Fines on companiesThe fines which the European Com-mission imposes on companies thatinfringe EU competton rules can bevery substantal, even as high as 10

%of a companys annual worldwideturnover. It should be noted that finesmay be imposed even where the il-legal purpose of an infringement wasnot actually achieved.

For example, members of a cartel thatare found to have fixed prices will facehigh fines irrespectve of whether ornot the price levels rose as intended.

Several years ago the Commission setout its fining policy in writng4, so asto make companies fully aware of thefinancial risk which they run if they

do not comply with EU compettonrules.

The risk of engaging in ant-compet-tve behaviour is thus considerable fora company, as evidenced partcularlyby the number of ant-cartel decisionsin recent years, causing substantalfines to be imposed.

Cartels

Despite the Commissions and na-tonal competton authoritesdetermined fight against them,cartels stll appear in many sec-tors, from basic industries to ser-vice markets, and companies ofall sizes are involved in these in-

fringements, from big multna-tonal groups to small businesses.

In most of the cases investgated, un-lawful behaviour had been encour-aged and ofen directly perpetratedat the highest levels of responsibil-ity. This shows that in certain cir-cles, infringing the most essentalrules of a market economy is stllconsidered a ratonal way of doingbusiness and maximising revenue.

In recent years, and in partcularsince 2001, the Commission hasincreased the frequency of its deci-sions prohibitng and fining cartels,imposing several billions of eurosin fines overall. Most of these deci-sions have been upheld on appeal.

The internat

onal removalscartelIn 2008, the Commissionfined inter-natonal removal companies a totalof more than 31 million for havingpartcipated in a cartel in Belgium.

Between 1984 and 2003 the com-panies fixed prices, shared themarket and manipulated the pro-

cedures for submission of ten-ders, in partcular by issuing falsequotes (cover quotes) to cus-tomers and through a compensa-ton system for rejected offers.

The Commission started the in-vestgaton on its own inita-tve with surprise inspectons

which proved part

cularly suc-cessful and abundant evidenceof cartel actvites was obtained.

2. The costs of non-compliance for a company


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One company received a reduc-

ton of 50 % of its fine under theCommissions Leniency Notce forproviding the Commission with evi-dence of significant added value.

The industrial sewing threadcartel

In 2005, the Commission finedthread producers from Germany,Belgium, the Netherlands, France,Switzerland and the United King-dom over 43 million for theirpartcipaton in different cartels.

Industrial thread is used in a va-riety of industries to sew or em-broider various products suchas clothes, home furnishings,motor vehicle seats and seat-belts, leather products, mat-tresses, footwear and ropes.

Between 1990 and 2001, thesecompanies took part in regularmeetngs and had bilateral con-tacts to agree on price increasesand/or target prices, to exchangesensitve informaton on price listsor prices charged to various con-sumers, to avoid undercung theincumbent suppliers prices, andto arrange customer allocaton.

Natonal competton authorites havealso targeted similar types of car-tel behaviour in such sectors as cof-

fee roasters, bath and personal careproducts, contact lenses, and flour.

Abusive behaviour by dominant com-

panies is also of great and indeedgrowing concern for the Commis-sion. This has led to a number of de-cisions imposing fines in the last fewyears relatng to the ICT sector and torecently liberalised or partally liber-alised markets, such as the energy,telecommunicaton and postal sec-tors. However, other sectors are notdevoid of abusive practces by domi-nant companies.

2.2 Sanctons on individualsIn additon to imposing fines on un-dertakings, a number of MemberStates provide for sanctons on indi-viduals (e.g. fines, director disquali-

ficaton). The laws of some countrieseven allow custodial sanctons forindividuals involved in general com-petton law infringements and/or incertain pre-defined types of infringe-ments (e.g. bid-rigging). Such sanc-tons can be separate or cumulatvelyapplied on top of pecuniary sanctons.Company managers who behave in an

unlawful way therefore run the risk ofjail in certain Member States.

2.3 Illegal agreements arevoid and may aractdamages

Restrictve agreements which are in-compatble with EU competton rules

are automatcally void and thereforecannot be enforced in court by thepartes involved.


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ComplianceMaters

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This means that a party cannot beobliged to honour an agreementwhich is illegal. Negatve consequenc-es for business can be considerable.

If an infringement of EU competton

rules causes or has caused harm toa third party, the victm may bring aclaim for damages before a natonalcourt against the perpetrator. For ex-ample, in the airfreight cartel case5,damages claims were filed even be-fore the Commission had fined 11 aircargo carriers for fixing prices.

2.4 Bad press for law-breakers and othercollateral consequences

The Commission issues a press re-lease whenever it has made a findingof illegal conduct and has fined thecompanies involved.

The resultng media coverage, bothgeneral and specialised, could have adetrimental impact on the reputatonof those companies. Moreover, theymay face hostlity from clients andconsumers who feel cheated.

Investgatons by competton au-thorites can be tme-consuming and

costly for companies. Managers maybecome embroiled in lengthy legaldiscussions, thereby distractng aen-ton from the core business actvity.


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Two main provisions of the Treaty

on the Funct

oning of the EuropeanUnion (TFEU) deal with the marketbehaviour of companies. Artcle 101prohibits agreements between com-panies which restrict competton, un-less they produce substantal benefitsto customers and consumers, whileArtcle 102outlaws abuses by domi-nant companies.

These fundamental rules and prohibi-tons are further clarified by legal textsadopted by the Council or the Europe-an Commission, as the case may be,spelling out how the basic principlesare applied to partcular sectors orto partcular types of agreements orbehaviour by companies. Note that

at nat

onal level behaviour purely af-fectng competton within a MemberState is similarly prohibited.

3.1 EU competton rules aredirectly applicable toyour company

EU rules are about the compettvebehaviour of companies and they ap-ply directly in all EU Member States.No transpositon into natonal law isrequired. This makes it all the moreimportant for companies to be awareof them, as they are directly enforcea-ble by both the European Commissionand natonal competton authoritesand courts.

It is worth notng that EU compet-ton rules apply to undertakings,a term which encompasses any en-

tty engaged in an economic actvity.

Groupings of undertakings, such astrade associatons and other industrygroupings, while generally pursuinglegitmate purposes and operatng asa useful business forum, also have anobligaton to comply with EU compe-tton rules.

As indicated above, there are two ba-sic types of behaviour in which com-panies may feel tempted to engage inthe marketplace, but which are pro-hibited by EU competton law:

Illegal contacts and agreements

between companies

Ant-compettve contacts betweencompanies which, irrespectve of their

form, may distort the normal play ofcompettve forces are prohibited.Such contacts can take many formsand do not require the formal ac-ceptance by the companies involvedthrough an agreement. Even informalarrangements among business repre-sentatves can be considered illegal.

The most striking examples of ant-compettve contacts between com-panies include price fixing, sharingmarkets or customer allocaton, pro-ducton or output limitaton, whetherthrough bid rigging or otherwise. Suchpractces are ofen kept secret andgenerally referred to as cartels. Theyare qualified as hardcore restrictons

of competton in legal jargon as theyare by their very nature most likely torestrict competton. These hardcore

3. Compliance with EU competton rules Are youcertain you have covered the risk?


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ComplianceMaters

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DONTfix purchase or selling prices orother trading conditons;

DONT limit producton, markets,technical development or investment;

DONT share markets or sources ofsupply;

DONT exchange individualised infor-maton on intended future prices orquanttes or other strategic informa-ton.

It is important to keep in mind thatagreements between compettors

and companies at different levels ofthe supply chain can also have ant-compettve effects even if they do notcontain any of the above-mentonedhardcore restrictons.

For example, the agreement mighthave a negatve impact on one of theparameters of competton, namely

price, output, innovat

on, or the qual-ity or variety of goods and services.

Such restrictve effects also need tobe assessed by companies. A detailedframework for analysing the compet-tve impact of such agreements is pro-vided by the Commission in specificguidelines.

Abuse of a dominant positonIf companies have a large proportonof the business in a partcular market,they are likely to hold a dominant po-siton in that market. Such companieshave a special responsibility not toengage in behaviour which is consid-ered abusive. They should not act ina way that prevents compettors fromcompetng effectvely or drives themout of the market.

infringements are vigorously pursuedby the Commission and can result incompanies being heavily fined.

Private exchanges between compet-ing companies of individualised in-

formaton concerning their intendedfuture prices or quanttes can alsoamount to a hardcore infringement.More generally all exchanges of con-fidental, strategic informaton be-tween compettors can give rise tocompetton concerns.

This concerns all types of informaton

that reduces strategic uncertaintyin the market, for example relatngto producton costs, customer lists,turnover, sales, capacites, qualites,marketng plans, etc.

Furthermore, even the unilateral dis-closure of strategic informaton byone company via mail, email, phonecalls or meetngs to its compettor(s)can be considered problematc.

Agreements between companies atdifferent levels of the supply chain,typically distributon agreements be-tween suppliers and re-sellers, whichaim at fixing prices or artficially par-ttoning the internal market, are alsoillegal.

For instance, a supplier may notoblige its distributors to refuse to sellgoods to customers residing outsideof a given territory. In additon, it maynot impose on its distributors a resaleprice for a given product.

In short, the following basic DONTsshould always be kept in mind bymanagers and employees of compa-nies when they deal with compet-tors:


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Examples of abusive conduct on thepart of dominant companies are:charging unreasonably high priceswhich may exploit customers; charg-ing unrealistcally low prices which

may be used to drive compet

tors outof the market; unjustfied discrimina-ton between customers; and forcingunjustfied trading conditons on trad-ing partners.

What about Small & Medium

Enterprises?

All companies are subject to compe-

tton rules, with no differentatonaccording to their size. Being small isno excuse for not complying with theapplicable EU or natonal compettonrules.

3.2 Actvites by publicauthorites

It falls to both European and natonalcompetton authorites and courts toensure that EU competton rules arecomplied with.

Enforcement against illegal

practces

The European Commission ensureseffectve applicaton of these rules

throughout the EU. It investgates sus-pected infringements and addressesbinding decisions to companies inorder to bring established infringe-ments to an end. The Commissionalso has the power to impose fines oncompanies which have been found toinfringe EU competton law.

The enforcement actvity by natonalcompetton authorites, which areequally empowered to apply EU

competton rules, needs to be addedto that of the Commission.

Natonal courts also play an importantrole. They may declare an agreementvoid if it is in breach of EU competton

rules. They may also hear claims fordamages resultng from a companysinfringement of EU competton rulesand award compensaton to plaintffs.

Further explaining the rules

The Commission endeavours to makeit easier for companies to acquaintthemselves with and know the rules

which they must respect.

Certain types of agreements are ex-empted from general prohibiton iftheir restrictve nature can be justfiedby benefits for consumers and theeconomy as a whole. The hardcorepractces mentoned above are veryunlikely to bring such benefits.

Companies have to assess for them-selves whether their behaviour com-plies with competton rules and indoing so they might consider seekinglegal advice.

General guidance as to whether anagreement is deemed exempted ornot is provided by the Commission in

partcular by way of so-called BlockExempton Regulatons. Mostly, suchRegulatons exempt restrictons incertain categories of agreements (e.g.Research & Development, Specialisa-ton or Distributon agreements) upto a certain level of market power,defined in terms of market share, pro-viding there are no hardcore restric-tons and certain conditons are met.


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ComplianceMaters

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Outside the safe harbour of theblock exempton, guidelines suchas those on horizontal cooperatonagreements6or on vertcal restraints7also set out the Commissions policy

and decision-making pract

ce on a va-riety of competton issues.

As regards abusive behaviour, theCommission has published guidanceon its enforcement priorites in apply-ing Artcle 102 TFEU8.

Furthermore, formal Commission de-cisions9and Court judgments are pub-

licly available, and the Commissionpublishes the formal opening andclosing of proceedings on its websiteand/or by issuing a press release10.

Finally, the Commission also publish-es an annual report on compettonpolicy and a number of informatvebrochures11.


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4.1 A clear strategy

In order to ensure eff

ect

ve compli-ance with EU competton rules, com-panies should think ahead, developan approach tailor-made for theirpartcular situaton and set it out inwritng, rather than react to problemsonly when they occur.

The ultmate goal of such a strategy isto raise awareness of potental con-

flicts with EU competton law anddisseminate adequate knowledge ofhow to avoid them at all levels of thecompany, from employees to middleand top management.

Identfying the overall risk and

individual exposure

A successful companys compliancestrategy would be based on a compre-hensive analysis of the areas in whichit is most likely to run a risk of infring-ing EU competton rules.

These areas will depend on factorssuch as:

the sector of actvity; for exam-

ple a history of previous infringe-ments in the sector indicates aneed for partcular aenton.

(frequency/level of) the com-panys interacton with compet-tors; for example in the courseof industry meetngs or withintrade associatons, but also in

day-to-day commercial dealings. the characteristcs of the market:

positon of the company and itscompettors, barriers to entry Ifa company holds a dominant po-siton in a market, the preventvemeasures to be taken will differfrom those where the risk factor ismore in the nature of cartelisaton.

But the exposure to that risk may varygreatly according to the positon heldby each member of staff. Employeeswhose specific areas of responsibil-ity cause them to be partcularly ex-posed (for example, employees whofrequently interact with compettorsas part of their job or through tradeassociatons) would be made aware ofwhat is at stake and of the basic prin-

ciples to keep in mind.Making the strategy explicit

In the interest of genuine complianceit is also important to disseminatethe companys compliance strategythroughout its entre organisatonalstructure. For the sake of internal clar-ity the strategy would preferably be

laid down in writng, plainly wordedand in all the working languages ofthe company, so that it is understoodby everyone. It could for example takethe form of a manual.

Such internal guidance would ideallycontain a general descripton of EUcompetton law and its purpose, ex-

plain the way it is enforced and high-light the potental costs of non-com-pliance for the company. In this way,

4. How can your company ensure compliance?


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ComplianceMaters

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employees will beer understand thereason behind the compliance strat-egy and its importance.

In additon, guidance in partcularrisk areas would be provided. For in-

stance, a company which mainly dealsin homogeneous products or hasmanagement or employee level con-tacts with compettors on a regularbasis could stress the ban on cartels.

A practcal set of DONTs and REDFLAGS can be a useful tool:

A list of DONTs could includeclearly illegal conduct such asprice-fixing agreements, the ex-change of future pricing intentons,allocaton of producton quotasand the fixing of market shares;

RED FLAGs are warning signswhich serve to identfy situa-tons in which infringements of

competton rules can be sus-pected. They would encouragemanagers and employees to ex-ercise partcular cauton in seek-ing to avoid any infringement onthe part of their own company.

Visible and lastng commitment

to the compliance strategy by

senior management

Apart from choosing the right strate-gy and making it accessible to all staff,unequivocal senior management sup-port is vital. The message that com-pliance with the law is a fundamen-tal policy of a company needs to beclearly endorsed. This is an essental

element of creatng a culture of re-spect for the law within the company.

Designatng an individual memberof the senior management to takeoverall responsibility for complianceis considered advisable to ensure last-ing commitment to and visibility for

this object

ve.Small and medium-sized companieshave the advantage that the tonefrom the top can more easily be dis-seminated to the employees, who arefewer in number.

Whilst the Commission does not wishto be prescriptve, a company should

devote suffi cient resources appro-priate to its size and the risks it fac-es to ensure it has a credible pro-gramme.

4.2 Formal acts of acknow-ledgement by staffand consideraton of

compliance efforts instaffevaluatonBackup measures taken by companiesas regards adherence of their staffto the adopted compliance strategymight include:

asking staff for wrien acknowl-edgement of receipt of relevant

informaton on compliance withEU competton law, for exam-ple when providing them with amanual or afer dedicated train-ing sessions. This form of ex-plicit recogniton helps to makeindividual staff members moreaware that compliance concernseach and every one of them;

pung in place positve incentvesfor employees to consider this ob-


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jectve with utmost seriousness.Compliance dutes could for in-stance be part of job descriptons.A partcularly vigilant a tude inthat respect may also form part

of the staff

evaluat

on criteria. penaltes for breach of the in-

ternal compliance rules. Suchpenaltes would however haveto be consistent with natonalemployment law and double-checked with legal advisers first.

Proper internal reportng

mechanismsA further essental feature of a suc-cessful compliance strategy is theinclusion of clear reportng mecha-nisms. Staffmust not only be aware ofpotental conflicts with EU compet-ton law, but also need to know whomto contact and in what form whenconcrete situatons of conflict arise.

A company may for example considerappointng a compliance officer whodirectly reports to the companysmanagement. The communicatonchannels should in any event allowmanagement to take swif acton.Time is usually of the essence, irre-spectve of whether or not compet-

ton authorites are already aware ofthe partcular problem.

If an employee or manager discoversor even suspects an infringement, thecompliance strategy should provideher/him with concrete guidance onhow to proceed.

An environment that encourages em-ployees to speak up when they areconfronted with questonable situa-tons can be decisive for the effectve-ness of the compliance strategy.

4.3 Constant update,contact points for adviceand training

Obviously it is not enough just to putdown a strategy on paper. Where amanual is made available to staff, itshould be reviewed regularly. Thereshould also be a clearly identfied con-tact point where advice can be soughtby staff in case of doubts about thecompatbility of certain types of be-haviour or agreements with EU com-petton law.

Training on applicable EU compettonrules also plays an important role.Many companies already offer theirstaff, in partcular newcomers, an am-bitous training programme. In suchcases the development of a moduleon compettve behaviour would beadvisable. Where a companys analy-sis has indicated partcular risk areas,training should be provided to thosestaff members who are most likelyto be confronted with situatons thatcould lead to the company becominginvolved in infringements, for examplesales personnel and sales managersas regards price agreements betweencompettors and anyone aending

trade associat

ons or industry events.The specific details will vary from onebusiness to another, depending onavailable resources and expertse. Inany case, a compliance strategy willbe more effectve if it incorporatesa clear mechanism for ensuring thatupdates of the wrien policy can beobtained by staffat any tme and thatall employees and managers are keptinformed about new developments.


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4.4 Monitoring / AuditngMonitoring and auditng can serve aseffectve tools to prevent and detectant-compettve behaviour inside thecompany. Monitoring, for instance

by verifying the companys own be-haviour in the compettve process inbidding markets, would mean a morepreventve approach.

Auditng would tend to discover ant-compettve behaviour only afer ithad already occurred.

Both mechanisms can also be com-

bined. The appropriate procedure de-pends on the specific needs of the un-dertaking, but some form of controlis surely important to underpin theinternal credibility of a compliancestrategy.

4.5 The strategy has

failed to ensure fullcompliance? It may stllserve to limit exposure!

An effectve compliance strategy willbe expected to simply prevent anyinfringement from happening. Yet itmay prove insufficient to ensure com-pliance, and there may nevertheless

be instances of wrongdoing.Stopping the infringement at the

earliest possible stage

In such a case, the existence of a com-pliance strategy on conditon thatit incorporates appropriate reportngmechanisms will allow mishaps tobe nipped in the bud.

It will enable the company to takeappropriate measures without delay,

so that any potental infringement isswifly brought to an end. This willcontribute to limitng damage to com-petton and minimising the compa-

nys exposure.

Cooperatng under the leniency

programme and the selement

procedure: limitng the damage

of cartel behaviour

The detecton mechanisms providedby an effectve compliance strategy

can also help to get the best out of theCommissions leniency programme.Aimed at enabling the detecton ofsecret agreements between compet-tors some of the most egregiousinfringements of competton law itoffers a unique opportunity, for com-panies willing to cooperate with theCommission (or with the natonal

competton authorites), to receiveimmunity from fines or to get a finereduced.

Full immunity can be granted to thecompany that is the first to denouncea secret cartel to the Commission orto provide the Commission with suffi-cient corroboratve evidence. Compa-

nies which, despite their willingnessto cooperate, file their leniency appli-caton afer another compettor hasqualified for immunity, can only hopeto obtain a reducton of up to 50% ofany fine imposed on them.

However, remember that compet-ton authorites are also on constantlookout for markets showing signs ofdistorted competton. When suchsigns appear, they may launch inves-tgatons themselves.


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The exact conditons under which im-munity from or reducton of fines incartel cases is granted are explainedin the corresponding Commission No-tce12.

Therefore, if you believe your compa-ny is or has been involved in a cartel,you might consider filing an applica-ton under the Commissions leniencyprogramme and seeking legal advicein that respect.

Inital contact with the Commis-sion should be made through the

following dedicated fax number:

+ 32 2 299 45 85

Or through the following dedicatedtelephone numbers:

+ 32 2 298 41 90

+32 2 298 41 91

Further informaton on the Commis-sions leniency programme is avail-able on the Internet at

http://ec.europa.eu/

competition/cartels/

leniency/leniency.html13

Finally, if companies are prepared toacknowledge their partcipaton ina cartel, the Commission may invitethem to partcipate in a swifer con-clusion of the procedure. The compa-nies cooperaton in this selementprocedure is rewarded with a 10% re-ducton of the fine in additon to anyreductons for leniency.

4.6 The Commissionwelcomes complianceefforts by companies

The Commission welcomes and sup-ports all compliance efforts by com-panies as they contribute to the firmrootng of a truly compettve culturein all sectors of the European econo-my.

Companies, supported by the legalprofession, have already contemplat-ed and indeed implemented schemesto ensure compliance with EU compe-

tton law. These schemes are usuallyreferred to as business complianceprogrammes or just compliance pro-grammes.

In practce, they are ofen developedin reacton to past infringements oreven afer fines have been imposed.Increasingly such programmes are

seen as an essental element of goodcorporate governance.

The Commission would advocate amore proactve approach that avoidsinfringements of EU compettonrules from the outset. It cannot beoveremphasised that a complianceprogramme worthy of the name must

ensure that companies do not in-fringe competton law.

As has already been pointed out, it isnot so much the effort made, but theresult achieved, which counts oncecompetton authorites become in-volved and launch an investgaton.The quality of a compliance pro-gramme stands or falls by its effec-tveness.


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The Commissions atude towardscompliance programmes can, there-fore, be summarised as follows:

Compliance programmes need tobe tailor-made to the company

concerned. The range of situatonsthat a compliance programmemay need to address is wide.Equally the type, size and resourc-es of companies which may findit useful to adopt a complianceprogramme vary considerably.

Consequently, there is no one size

fits all model: an exhaustve all-encompassing model would notbe adequate. It is for each compa-ny to reflect on its needs to ensurecompliance and develop its ownstrategy. Further legal advice canbe sought if considered appropri-ate.

Access to useful informat

on canbe provided by the Commissionbut there will be no endorsementof any individual compliance pro-gramme. While the Commissionconstantly seeks to improve theaccessibility of relevant legislatonand informaton on EU compet-ton rules, it considers it not to be

the task of competton authoritesto formally advise on or approve in-dividual compliance programmes.

Indeed, companies know bestwhat is required for their owncompliance strategy. This brochureprovides companies with food forthought about the nature of their

own compliance strategy. This in-cludes for example creatng thenecessary positve and negatve

incentves to ensure compliance.

Although all compliance effortsare welcomed, the mere existenceof a compliance programme is notenough to counter the finding of

an infringement of compettonrules14 companies and theiremployees must, in fact, com-ply. If a company which has put acompliance programme in placeis nevertheless found to havecommied an infringement of EUcompetton rules, the questonof whether there is any positveimpact on the level of fines fre-quently arises. The answer is: No

Compliance programmes shouldnot be perceived by companies asan abstract and formalistc tool forsupportng the argument that anyfine to be imposed should be re-duced if the company is caught.

The purpose of a compliance pro-gramme should be to avoid an in-fringement in the first place.

For the purpose of seng thelevel of fines, the specific situatonof a company is duly taken intoaccount. But the mere existenceof a compliance programme will

not be considered as an aenu-atng circumstance15. Nor will theseng-up of a compliance pro-gramme be considered as a validargument justfying a reducton ofthe fine in the wake of investga-ton of an infringement. It wouldnevertheless be encouraged bycompetton authorites as a pre-

ventve means to avoid the occur-rence and possible repetton ofillegal behaviour in the first place.


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5. Where to find further relevant informaton

It goes without saying that theexistence of a compliance pro-gramme will not be consideredan aggravatng circumstanceif aninfringement is found by the en-

forcement authorit

es: if the pro-gramme has failed to deliver re-sults, the sancton will come in theform of the fine imposed. In otherwords: a credible compettoncompliance programme can onlydeliver benefits to a company.

Competton website on Europa, theInternet site of the European Com-mission :


competition

On this site, easy access to relevantlegislatve texts, Commissiondecisions, Press Releases, AnnualReports, sector-specific and otherbackground informaton is provided.Links to other important sourcesof informaton, like the website ofthe Court of Justce of the EuropeanUnion and the General Court, areequally available.

Publicatons on competton maerspublished by the European Commis-sion:


competition/publications/

Contact details of European Compet-ton Authorites/members of the Eu-ropean Competton Network, avail-able via:

http://ec.europa.

eu/competition/ecn/

competition_authorities.html


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Endnotes

1 Concerns can by reported to the

Commission by email to comp-

[email protected].

Please indicate your name and address,

identfy the companies and productsconcerned and describe the practce

you have observed. This will help

the European Commission to detect

problems in the market and can be the

startng point for an investgaton.

2 The link to contact details of the

natonal competton authorites of

the EU Member States, members of

the European Competton Network, is

provided at the end of this brochure.

3 Citzens and/or companies may want

to lodge a formal complaint if they are

directly affected by a practce which they

suspect restricts competton and are able

to provide specific informaton. Certain

requirements which must be fulfilled are

explained in detail in the Commission

Notce on the handling of complaints

(OJ C101/65 of 27.04.2004), a summaryof which can be found at hp://europa.

eu/legislaton_summaries/competton/

companies/l26111_en.htm. You can

also send an email to comp-market-

[email protected] if you want

more informaton on how to lodge a

formal complaint.

4 Guidelines on the method of seng

fines imposed pursuant to Artcle 23(2)

(a) of Regulaton No 1/2003, published

in the Offi cial Journal of the EU under

number OJ C 210 of 1.9.2006, p. 2.

5 See also Commission Press Release

IP/10/1487 of 9.11.2010.

6 Commission Guidelines on the

applicability of Artcle 101 of the Treaty

on the Functoning of the EuropeanUnion to horizontal cooperaton

agreements, OJ C11 of 14.1.2011, p.1.

7 Commission Guidelines on vertcal

restraints, OJ C 130 of 19.5.2010, p.1.

8 Communicaton from the Commission,

OJ C 45 of 24.2.2009, p. 7.

9 Artcle 30 of Council Regulaton 1/2003.

10 The same applies in cases whereproceedings have not been formally

opened but DG Competton has already

made public the fact that it is investgatng

a case (e.g. by having publicly confirmed

certain inspectons). See Commission

Notce on Best Practces for the conduct

of proceedings concerning Artcles 101

and 102 TFEU, OJ C 308 of 20.10.2011, p.

6.

11 See last secton of this brochure Whereto find further relevant informaton .

12 OJ C 45 of 19.2.2002.

13 See also Commission Press Release

IP/06/1705 and Memo MEMO/06/469

of 7.12.2006.

14 See, for example, Case C-189/02 P Dansk

Rrindustri, paragraph 373.

15 See, for example, Joined Cases T-101/05

and T-111/05, BASF and UCB, paragraph

52, and Case T-138/07, Schindler

Holding, paragraph 282.

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