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1. Pan European Compliance within the Competition Arena
Cross-Border for cutting edge Competitive Advantage
Antitrust &
Competition Law
Presented by Arun K Mishra, Tilda-India
November 6-7th 2008 Brussels, Belgium

2. Definition of competition
Competition: the process by which economic agents acting
independently in a market, limit each other’s ability to control the
conditions prevailing in that market.
“A dynamic and competitive environment, underpinned by sound
competition law and policy, is an essential characteristic of a
successful market economy”
[A Framework for the Design and Implementation of Competition Law and Policy, The World Bank and OECD]
November 6-7th 2008
Pan European Conferences Brussels, Belgium

3. Effective compliance
An effective programme that embeds a culture of compliance
throughout the organization can be a business enhancer offering
positive benefits to business.
Superior knowledge of the regulatory risks faced by the
organistion – and of measures to guard against those risks – could
provide an enterprise with a competitive advantage.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

4. Practical considerations for compliance
All businesses have a duty to act lawfully, but there are also more
practical reasons as well:
The main aim of competition law is to ensure that UK and EC
markets remain competitive.
Compliance ensures that this aim is achieved to the benefit of both
business and consumers.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

5. Potential consequences of non-compliance
For a business, the consequences of non-compliance could include:
Investigation by the Office of Fair Trading (OFT), the sector regulator or the
European Commission.
A financial penalty of up to 10% of worldwide turnover.
Agreements being void and unenforceable.
Adverse publicity.
Possibility of being sued for damages by those harmed by the unlawful
behavior.
A business that has taken adequate steps to achieve compliance, but has
nonetheless committed an infringement, may receive a reduction in financial
penalties imposed.
What constitutes adequate steps will vary from business to business.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

6. Need for compliance with Competition Law
The basic purpose of the Competition Act in any country, is to
ensure that markets remain competitive, to the benefit of both
business and consumers.
Compliance by the market participants of competition law – and of
the rules and directions issued by competition authorities (in India,
it is the Competition Commission of India) – is a precondition in
achieving the purpose of law.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

7. Compliance of Competition Law
Compliance is more than just corporate governance because:
It reduces the risk of the company being subjected to an
investigation by the competition authorities.
This could involve senior management time and independent legal
advice.
In the event of an infringement of the law, the business can face:
significant financial penalties
third party actions
loss of reputation and goodwill
November 6-7th 2008
Pan European Conferences Brussels, Belgium

8. Consequences of non-compliance
For companies, the consequences of non-compliance could be
serious:
Investigation by Competition Authorities.
Financial penalties.
Agreements being unenforceable and void.
Adverse publicity.
Damages.
Possibility of being sued by those harmed by unlawful behaviour.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

9. Framework for a Compliance Programme
A Compliance Programme helps ensure that the business – both
management and employees – complies with the competition law.
It may include training to raise awareness of the law.
The use of checklists to ensure compliance by individual staff with
company policies.
Recording systems to document permitted contacts that employees
have with competitors.
Independent reviews of agreements, behaviour and staff to monitor
ongoing compliances.
Help identify actual or potential infringements at an early stage,
enabling the company to take appropriate remedial action.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

10. Advantages of a Compliance Programme
A Compliance Programme helps the business assess the impact and
risk of committing an infringement.
An understanding of competition law helps employees to:
recognise situations when the business could face a threat of anti-
competitive agreements or conduct.
protect the business’ interests by making a reasoned complaint to
the Competition Commission/Authority.
A Compliance Programme facilitates three major purposes of
competition law:
preventing violation of law
promoting a culture of compliance
encouraging good corporate citizenship.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

11. Compliance by management
By being aware of the requirements of competition laws and
competition policy, corporate officers and employees can:
Maintain legal transparency.
Have advance perception concerning the activity of employees that
might violate competition laws.
Avoid liabilities resulting from violation of competition law.
Mitigate the costs of:
Legal counseling and litigation.
Penalties arising from prosecution.
Negative publicity.
Disruptions in normal corporate operation.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

12. Benefits of compliance by management
A company can obtain value from:
good governance and compliance.
develop a better culture.
prolong its life and maintain its reputation.
The presence of a Compliance Programme and culture can – in the
event of a proceeding – be scrutinized the Competition Authorities/
Courts, when the quantum of penalty is determined.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

13. Advisory
A Compliance Programme must be capable of meeting the
changing requirements of business.
and
There needs be effort, as part of the regular evaluation process, to
ensure that the Compliance Programme continues to be relevant.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

14. Compliance in the UK
The OFT responsible for enforcing the Competition Act in the UK
has designed several quick guides informing businesses on how it
applies competition law.
Some guidelines provide an overview of the law, while others
cover specific areas.
The OFT guide titled “How your business can achieve compliance”
relates to achieving compliance with competition law.
A CD-ROM by the OFT titled “Compliance Matters!” explains the
importance of compliance.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

15. Compliance in the US
The Antitrust Division of the US Department of Justice shares
responsibility with the Federal Trade Commission (FTC) for
enforcement of Antitrust laws in the US.
The Antitrust Division and the FTC have published extensive
guidelines relating to specific areas of Antitrust Law, to ensure
compliance of federal antitrust laws.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

16. Compliance in the EU
The European Commission (under Article 85) has been entrusted
with the task of tracking down enterprises which are in breach of
competition law.
Primary competence for applying EU Competition Law rests with
the European Commission and its Directorate General for
Competition.
A decentralized regime for antitrust came into force to increase the
application of EU competition law by National Competition
Authorities and National Courts.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

17. Compliance under the (Indian) Competition
Act, 2002
Genuine business competitiveness is demonstrated through fierce
competition in individual markets, and only competitiveness that
survives market competition can sustain itself in the long term.
The Indian business community should note that voluntary
observance of the rules of competition benefits both the
corporation itself, as well as the economy, by enhancing external
credit worthiness.
Competition authorities help businesses to understand the benefits
and responsibilities associated with the competition law.
Businesses are encouraged to think of compliance as a
management tool that can lead to success and profitability.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

18. If the Programme fails to prevent an infringement
Compliance as a mitigating factor.
Careful consideration to the precise circumstances of the
infringement.
Take in to account of the seniority of the person (s) involved in the
infringement.
View very seriously the involvement of Directors/ senior
management in any infringement, and may treat such involvement
as an aggravating factor.
Setting the level of financial penalty.
For example, the mitigation in having a Compliance Programme in place
may be offset where it was blatantly ignored at a very senior level.
November 6-7th 2008
Pan European Conferences Brussels, Belgium

19. Thank you
Any questions?