Find out the severity of the risks you identify. The classification can be quantitative, i.e. expressed monetarily, or qualitatively such as “high/medium/low”. EU and UK competition law prohibits anti-competitive agreements and abuses of dominance by dominant companies. It also makes it possible to review certain mergers, joint ventures and acquisitions to ensure that they are not anti-competitive or harmful to consumers. This article is based on the latest guidelines of the Competition and Markets Authority (CMA) published on 10 September 2020. It outlines the main issues and risks to consider as a director, owner or officer of a corporation to ensure that you and your business stay on the right side of the law. Industry Associations/Industry Meetings: Most companies that participate in association activities or industry meetings recognize the risk of contact between competitors. As a result, companies typically have procedures and policies designed to educate attendees about antitrust risks and report on their contacts at these conferences. Industry meetings create opportunities for business salespeople and others to interact and discuss anti-competitive opportunities. Companies must ensure that, to the extent that these meetings take place and that company employees participate in them, rigorous controls are in place to prevent and monitor such interactions. It`s a tricky dance because there are many legitimate reasons to connect with others in the industry (e.g., political activities, lobbying on issues of common interest, standardization). Not knowing is not an excuse.
Directors should be aware of the risks of competition law violations and lead by example. A number of updates to the Competition Law Risk Guide have been published. In the event of a violation of competition law, organizations can face fines, prisons and fines, disqualification of directors and serious reputational damage. As a result of recent changes to the enforcement system and the structure of the regulator, the likelihood of detection and prosecution is higher than ever, so we thought it would be helpful to create a guide to help organizations deal with this risk with confidence. Disqualification of directors is a growing risk, as the CMA is now considering continuing the disqualification of the director in all cases where competition law has been violated. If an undertaking has only two competitors in a given market, the risk of horizontal anti-competitive agreements (e.g. prices, allocation of customers or territories or supply agreements) increases due to the incentive to enter into illegal agreements with competitors. The simple rule is that the more competitors there are, the harder it is to manage an antitrust system.
To assess this factor, a compliance officer must understand the company`s competitive landscape and the degree of market concentration. The starting point for any company wishing to ensure that it has adequate procedures in place to comply with competition law is to carry out an objective and comprehensive risk assessment in order to identify and quantify competitive risks. This risk assessment should not be considered a one-time measure and should be repeated at regular intervals, even if significant new cases are conducted that could change the overall risk profile of the organization. Companies need to review and improve their antitrust compliance programs, especially companies with tangible antitrust risks. Companies should consider assessing which employees are in high-risk areas. This may include employees who may have contact with competitors and employees in sales and marketing positions. This step involves establishing policies, procedures, and training to reduce the likelihood of the risks you identify and reduce the resulting impact on your business. What you do depends on the risks identified and the likelihood that the risk will occur in your particular context. Infringements of competition law can have serious consequences for the company concerned, including fines, damages for agents, personal liability and/or challenge of directors and inapplicability of contracts. In 2019, the AMC fined three construction companies more than £36 million for breaching competition law in the supply of certain concrete drainage products for construction projects. Two directors have been disqualified for six and a half and seven and a half years, and other cases of disqualification are pending before the courts.
Do your employees lack awareness and knowledge about competition law, associated behaviours and associated risks? This short guide has been published in collaboration with the Institute of Risk Management to help companies comply with competition law.