Competition law compliance programme: mitigating factor or wasted expenditure?

The recent amendments to South African competition legislation lead to a sharp increase in the number of organisations requesting training for their employees on competition law. We are often asked if the investment in a competition law compliance programme is worth the time and money spent.

Sadly, in our experience, most organisations implement a competition law compliance programme for one of two reasons: 1) they have committed to doing so as part of a consent order signed with the authorities after contravening the law; and/or 2) they operate in a sector that has been identified by the authorities as one to “monitor” and their lawyers have recommended that they take precautionary steps. Few organisations seem to view the pro-active implementation of a competition law compliance programme as a non-negotiable part of good governance.

This trend is disturbing, particularly if the organisation operates in an industry where there is the potential for frequent interaction with competitors or if it could be regarded as “dominant”.

In our experience, many organisations view the cost (and time involved) of implementing such a programme – especially an effective one – as not worthy of the investment. But is this true?

Last year, the Antitrust Division of the United States Department of Justice (DOJ) indicated that, in determining criminal charges and penalties, it would give consideration to whether a company has an effective competition law compliance programme in place. This about turn in the approach of the DOJ has been widely welcomed and should provide an incentive for organisations to implement a compliance programme before a violation of the law occurs. A similar approach has been followed in other jurisdictions and it would be strange if the South African authorities do not follow suit.

The table below highlights the importance of having an effective competition law compliance programme in place across various jurisdictions.

JurisdictionDoes having a compliance programme count?Are there guidelines in place?
United StatesImplementing a compliance progamme may count.The Antitrust Division has issued detailed guidelines on compliance programmes.
AustraliaThe Australian Competition and Consumer Commission (ACCC) encourages proactive compliance. A compliance programme is a feature of settlement agreements and court orders sought by the ACCC.The ACCC has produced a series of templates, taking into account organisational size, that can used to develop a suitable programme.
CanadaThe Canadian authorities provide guidance on the measures that organisations should consider in order to prevent or minimise their risk of contravening competition law rules. This would imply that having an effective compliance programme in place would count as a mitigating factor.Certain elements of what constitutes an effective compliance programme are highlighted.
United KingdomThe Competition and Market Authority (CMA) may take into account the existence of a compliance programme when granting a reduction in fines (possibly up to 10%) and in deciding whether a director could be disqualified.In order to assist organisations, the CMA has set out in a comprehensive guidance document how to achieve competition law compliance.
EuropeThe European Commission (EC) promotes proactive compliance. The EC provides guidance on how a company can ensure compliance.
ItalyThe Italian Competition Authorities will consider whether an organsiation’s competition law programme can lead to the mitigation of the fine.The Italian Competition Authorities have provided guidance on a compliance programme’s content as well as the method and criteria to assess whether the programme could count as a mitigating factor when determining a penalty.
South AfricaIt is likely that a competition compliance programme will be viewed as a mitigating factor in the consideration of penalties.
Note: Implementing a compliance programme is a standard feature of consent orders.
No formal guidelines have been issued, however the authorities seem to follow international best practice.

It is clear that, in many jurisdictions, implementing an effective compliance programme counts if such a programme is implemented before an investigation is launched into anti-competitive behaviour.  In South Africa, given the drive for higher penalties (through the recent amendments to the Competition Act), and criminal sanctions for cartel conduct, most companies should be proactive in ensuring that they have an effective competition compliance programme in place that specifically targets high risk employees. 

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