Introduction
This checklist will assist in-house counsel and private practice lawyers with the drafting of a competition law compliance policy for an organisation that may be subject to UK competition laws. This guide sets out steps for drafting and adopting a competition law compliance policy and incorporates practical tips in addition to sample language that could be used to form the basis of a policy.
There is no single set format for competition law compliance policies and accordingly, there is a great deal of scope to tailor a competition law compliance policy to suit the needs of your organisation. Some organisations will have a standalone competition law compliance policy whereas others will integrate it within a wider staff handbook or regulatory compliance policy, and some companies will express their expectations of their staff within a code of conduct and this will be backed up by policies or manuals, etc.
This checklist is designed to assist in the creation of a competition law compliance policy that is largely standalone (with references out to other policies of more general application, such as a whistleblowing policy) and which covers the two main UK competition law prohibitions – anticompetitive agreements and abuse of a dominant position. It is not intended to address compliance insofar as it relates to other aspects of competition regulation, such as state subsidies or merger control.
Although much of the guidance within this checklist will be of general application and could be appropriately modified, this checklist has not been designed to specifically address the policy needs of trade associations.
This checklist addresses the following steps:
- Consider introductory matters
- Set out the scope of the policy
- Provide general guidance
- Provide details on how to report concerns and seek guidance
- Finalise and implement the roll-out of the policy
This checklist can be used in conjunction with the following How-to guides: Understanding the Competition Act 1998 prohibitions, How to implement a culture of compliance with competition law in your organisation and How to design a competition law compliance programme and Checklist: Competition law compliance.
Step 1 – Consider introductory matters
| No. | Requirement |
| 1.1 | Detail version control information |
| 1.2 | Detail any other relevant policy documents |
| 1.3 | Note how often the policy will be subject to review |
Step 2 – Set out the scope of the policy
| No. | Requirement |
| 2.1 | Include an introductory statement |
| 2.2 | Set out to whom the policy applies |
| 2.3 | Briefly explain what competition law is |
| 2.4 | Explain why compliance with competition law is important |
Step 3 – Provide general guidance
| No. | Requirement |
| 3.1 | Set out information on the types of conduct prohibited by competition law |
| 3.2 | Consider whether to provide dos and don’ts |
| 3.3 | Consider whether to provide guidance on the use of language |
| 3.4 | Consider whether to provide guidance on document creation |
Step 4 – Provide details on how to report concerns and seek guidance
| No. | Requirement |
| 4.1 | Provide information on how to seek advice |
| 4.2 | Provide information on reporting concerns |
| 4.3 | Provide information on how to try and maintain privilege over communications |
Step 5 – Finalise and implement the roll-out of the policy
| No. | Requirement |
| 5.1 | Obtain approval from specialist counsel |
| 5.2 | Obtain sign-off |
| 5.3 | Consider how the policy will be communicated |
| 5.4 | Consider where the policy will be housed internally |
| 5.5 | Consider whether the policy should be published on your organisation’s website |
Explanatory notes
General notes
A competition law compliance policy will form an integral part of a company’s compliance programme and framework of internal systems and controls to ensure that the company complies with the law.
A competition law compliance policy will set out to your employees and others, in writing, what your organisation’s expectations are around compliance, it will be an important point of reference if anyone is in any doubt as to what to do and it demonstrates to wider stakeholders a commitment to compliance.
A competition law compliance policy should be embedded within your organisation and complemented by staff training that is tailored to the risks within your organisation and the roles of individuals. The benefit of a clear, established and well-understood compliance programme that is advocated from the ‘top down’ across the entirety of your organisation is that it may help to mitigate the risk of breaching competition law and therefore suffering the associated consequences.
Legal framework
Depending on the scope of its activities, a company may find itself subject to the competition laws of a number of different jurisdictions. It should not be assumed that because a company does not have a physical presence in a particular jurisdiction, that its activities will not be subject to competition laws there. Many countries’ competition laws have extraterritorial application where there is an impact on commerce in those countries.
This checklist provides example wording that could form the starting point for drafting a competition law compliance policy. It is prepared with a focus on UK competition law. If your company operates in multiple jurisdictions, seek legal advice prior to implementation of a policy.
This checklist provides a general framework and guidance for drafting a competition law compliance policy. To be effective, a competition law compliance policy should be tailored to the competition risks that your business faces. The competition risks that your business faces will be determined by its activities, industry and markets in which it operates. Due to this and the complexities of competition law, you should consult with specialist competition law counsel prior to finalisation of your competition law compliance policy.
Step 1 – Consider introductory matters
As a matter of good practice, it is sensible to include information in your competition law compliance policy that relates to document management, including version control and revision history, links to other relevant documents and information on the regularity of reviews. This will help to provide an audit trail, avoid issues over which version of the document is the most recent, and help to place the policy within its wider context.
1.1 Detail version control information
As a matter of best practice, include version control information for the competition law compliance policy. At a minimum, this should include version numbering, the date of issue and details of any revisions made. Previous versions of the policy should be retained in the event that they are required for the purposes of any investigation or to demonstrate that there is a continued commitment to reviewing and revising the policy and publicising competition compliance within your organisation.
Example
[COMPANY] Competition Law Compliance Policy
Document reference: [INSERT INTERNAL REFERENCE]
Version number: [INSERT]
Date: [INSERT]
Issued to: [INSERT]
Approved by: [INSERT]
Date of next review: [INSERT]
| Version | Date | Revision details |
1.2 Detail any other relevant policy documents
Where there are other relevant policies or documents that should be read in conjunction with the competition law compliance policy, reference what these are and where they might be found internally (ideally links should be provided for ease of accessibility). Other relevant policies or documents might include company codes of conduct, document retention policies or IT policies, policies for conducting meetings with competitors, whistleblowing policies, gatekeeper approval policies (for example, policies that set out the internal approval processes for entering into new agreements), and dawn raid policies and procedures.
In this section, it may be helpful to refer to any training that your company provides and whether there are more comprehensive competition law compliance resources available internally (such as on-demand training or a competition compliance manual which provides more detail on competition law and what it prohibits). It may also be helpful to direct readers to where these can be found.
Example
Other relevant documents
This Competition Law Compliance Policy (“Competition Policy”) [should be read in conjunction with/is supplemented by] the following policies and documents:
- [TITLES OF AND LINKS TO RELEVANT DOCUMENTS].
[COMPANY] provides training on competition law as part of its induction process for all new employees [and contractors] [in relevant roles] and all existing employees [and contractors] [in relevant roles] are required to undergo regular refresher training on compliance with competition law. In addition, [COMPANY] provides further information on competition law compliance:
- [TITLES OF AND LINKS TO RELEVANT DOCUMENTS].
1.3 Note how often the policy will be subject to review
Compliance policies should be subject to regular review to ensure that they accurately reflect the law, best practice and internal business operations. There is no set interval at which such reviews should take place and so it will be for each business to decide on the review period. Many businesses conduct such reviews annually. Ad hoc out-of-cycle reviews may be merited in certain circumstances – for example, in the event of a business reorganisation or merger, when anticompetitive behaviour has been discovered in the same industry or where changes in the law or best practice suggest that clarifications or improvements are desirable.
In setting out the period for review, it may also be helpful to set out who is responsible for that process.
Example
Review
[COMPANY] will review this Competition Policy on an annual basis or more frequently as required (for example, to reflect changes in legislation).
[PERSON OR BUSINESS FUNCTION (SUCH AS LEGAL DEPARTMENT] is responsible for ensuring that this policy is maintained and reviewed, and any queries on its interpretation.
Step 2 – Set out the scope of the policy
Your competition law compliance policy should be scoped to ensure that it is clear to whom it applies, the type of conduct that it covers and the reasons why compliance is so important. Being clear on the scope of the policy will help to do several things:
- make clear to readers what their obligations are;
- mitigate the risk that anticompetitive behaviour takes place by clearly explaining what the policy covers and what types of behaviour may be problematic; and
- support other related processes, such as HR disciplinary processes.
Clearly setting out the scope of the policy and ensuring that it is appropriately communicated (see Step 5) ensures that there can be no suggestion that individuals were ignorant of the standards of conduct required of them.
2.1 Include an introductory statement
An organisation’s culture is embedded through ‘tone at the top’. This means that managers at all levels in your organisation, from the top down, need to demonstrate a commitment to complying with the law and bringing about any necessary compliance culture change. Those reading the competition law compliance policy should be convinced of your organisation’s commitment to your competition law compliance programme and its enforcement. This is important because without a commitment to embedding compliance, any competition law compliance efforts are unlikely to be successful. To reinforce your company’s commitment to competition compliance, it may be helpful to include an introductory statement that makes that commitment clear and unambiguous. This could potentially take the form of a signed statement from the CEO.
Example
Introduction
This Competition Policy addresses compliance with competition law.
The purpose of competition law is to ensure that there is free and unimpeded competition on markets, that companies act independently of each other and that the economic interests of consumers are protected.
[COMPANY (define as necessary to include relevant corporate entities)] is committed to the highest standards of ethical behaviour, to dealing with its stakeholders with integrity and conducting its operations in accordance with all applicable legal requirements, including those relating to competition law. Breach of competition law may lead to serious consequences for [COMPANY].
[COMPANY] has a zero-tolerance approach to anticompetitive conduct.
This Competition Policy explains [COMPANY’S] approach to compliance with competition law and sets out the expectations that [COMPANY] places upon those who work for and with [COMPANY]. This Competition Policy forms part of [COMPANY’S] regulatory compliance framework.
This Competition Policy is not intended to cover every situation that might raise competition law concerns. Rather, it is intended to act as guidance in understanding what competition law is and the types of conduct that might be problematic. Uncertainties, questions or concerns about competition law and/or the legality of particular conduct, should be raised by following the processes set out in this Competition Policy. It is important that concerns are raised and [COMPANY] encourages you to do so, without fear of retaliation.
2.2 Set out to whom the policy applies
Set out clearly the scope of people to whom the competition law compliance policy applies. This should encompass at least directors, employees and any contractors at all levels of the company. It is important to be clear on who is within scope so that expectations are clearly communicated to individuals.
In setting out those to whom the policy applies, it may be helpful to refer to expectations in relation to this policy and, where applicable, it may also be useful to refer to obligations imposed by either employment contracts and/or other standards of conduct such as those set out in a Code of Conduct.
Example
Who this policy applies to
This Competition Policy applies to all individuals employed by or working for [COMPANY] in any capacity, including directors, managers, employees (whether permanent, fixed term or temporary) and contractors providing services to [COMPANY], wheresoever located.
All individuals working for and with [COMPANY] are expected to read and understand this policy and are expected to act in accordance with the principles set out in it.
Appropriate measures may be taken against those who do not meet [COMPANY’s] expectations of acting in accordance with this policy.
2.3 Briefly explain what competition law is
Provide a brief explanation of what competition law is and its aims before going on to explain why compliance with competition law is important (see below section 2.4). This will help to set the scene for readers and provide context for the further detail that will be contained in the main body of the policy.
Example
What is competition law?
Competition law is the body of law that aims to ensure that markets work on the basis of free competition, and for the benefit of consumers in the form of lower prices, greater innovation, an increase in quality and a range of products being available. Competition law aims to achieve these objectives by prohibiting conduct that distorts competition, whether that is through restrictive agreements, practices or decisions or through the excessive use of market power.
2.4 Explain why compliance with competition law is important
Within the competition law compliance policy, include an explanation of why compliance with competition law is important. This will help those reading it to understand why they should comply with the policy. This context should cover both the impact on markets of maintaining effective competition and also the potential impact on your company of breach of competition law.
Example
Why is compliance with competition law important?
[COMPANY] conducts itself and its operations in accordance with the principles of free competition and is committed to competing fairly. [COMPANY] respects and complies with competition laws that aim to ensure the proper functioning of markets and prevent the misuse of power.
In addition to serious harm to the free and proper functioning of markets that can result from breaches of competition law, a breach of competition law could lead to serious consequences for [COMPANY]. The consequences of breach of competition law may include:
- financial penalties of up to 10% of worldwide turnover;
- unenforceability of restrictions in agreements;
- decisions requiring agreements or conduct to be modified or brought to an end;
- exclusion from tender processes;
- private damages claims;
- director disqualification;
- criminal liability for individuals; and
- other business implications.
It is therefore important that all those to whom this Competition Policy apply are familiar with and understand the types of conduct that are prohibited by competition law and understand what to do in the event that they know or suspect that there has been a breach of competition law.
Step 3 – Provide general guidance
A competition law compliance policy should contain an explanation of competition law and the type of conduct that is problematic.
3.1 Set out information on the types of conduct prohibited by competition law
To assist in understanding the main types of problematic conduct, set out the main competition prohibitions and the types of behaviour that constitute infringements. At a minimum, general guidance should be provided on the main two competition prohibitions – the prohibitions on anticompetitive agreements and abuse of dominance.
It may be helpful in particular to break down the application of competition law to the types of relationships or situations common in the organisation (ie, relationships with suppliers or customers, contacts with competitors, bidding for tenders, etc). In addition, you could detail the types of behaviour that would or would not be illegal under competition law and the types of behaviour on which advice should be sought prior to engaging in a particular course of conduct (this could be done by way of a red, amber or green categorisation or high, medium or low risk allocation).
The sample wording below offers a general overview of the main prohibitions and types of conduct that breach competition law, but it is not exhaustive. Tailor the information that you provide on the conduct that is prohibited by competition law to the activities of your business and its areas of risk. For example, an organisation that is active in an area characterised by tenders and bidding, will need to focus more on the risks of bid-rigging than an organisation that does not operate within such an environment. Likewise, a company that works with distributors or agents (or both) will need to address the competition law considerations involved in working with distributors or agents (or both) involved with that, whereas a company that does not, will not have to address this.
The sample wording below presupposes that there are no potential issues of your organisation being in a dominant position. If there are any markets in which your organisation may be particularly strong then a careful analysis should be conducted by specialist counsel.
Example
What types of conduct constitute a breach of competition law?
Competition law is a complicated and nuanced area of law. Set out below is a brief introduction to the main types of conduct that could constitute breaches of competition law. This is intended to give you an idea of the main areas of potential competition law exposure for [COMPANY]. This explanation is not exhaustive or prescriptive. Advice should be sought from [LEGAL COUNSEL] should you have any questions about the legality of any particular action or proposed course of conduct.
Anticompetitive agreements
Competition laws prohibit agreements or practices between two or more economic entities that restrict or distort competition.
The term ‘agreement’ has a wide meaning and covers written or oral agreements whether legally enforceable or not. It also includes so-called gentlemen’s agreements (ie, informal and unwritten agreements). There does not have to be a physical meeting of the parties for an agreement to be reached (eg, an exchange of letters or telephone calls may suffice).
Conduct that falls short of an agreement may still be contrary to competition law where it amounts to a ‘concerted practice’ (ie, a form of practical cooperation, knowingly entered into between competitors which is intended to amount to a substitution for competition in the market). Concerted practices may take many forms, one example being information exchanged between parties that reduces competitive uncertainty.
Relationships with competitors
Agreements may be entered into between undertakings operating at the same level of the supply chain – for example, competitors. These are referred to as ‘horizontal agreements’.
The most common types of anticompetitive agreements/concerted practices take the form of:
- price fixing;
- market sharing;
- limiting or controlling production; and
- information exchanges.
Further information on each is provided below.
1. Price fixing
Agreements to fix selling prices, purchase prices or other trading conditions are one of the most serious types of competition law infringements. Price-fixing agreements can take various forms, including (but not limited to) agreeing the price at which goods or services are sold or provided to customers, agreeing the price at which goods or services will be purchased from (a) supplier(s), agreeing a range of pricing, limiting the granting of discounts, fixing the amount of increases, and fixing a component of the price.
[COMPANY] makes all decisions on all aspects of pricing independently and will not discuss or agree details of pricing or other parameters of competition with its competitors.
2. Market sharing
Market sharing is another serious form of competition law infringement. Market sharing occurs where parties to an agreement agree to either not go after each other’s customers or to agree which geographic area each party will target (forgoing the other party’s area(s)).
You should not enter into discussions or agree with a competitor to divide markets or customers.
[COMPANY] makes decisions independently as to which customers and markets it targets or pursues. These decisions are not influenced by discussions or agreements with its competitors.
3. Limiting or controlling production
Agreements between competitors to limit or control production or sales or allocate production or sales quotas are another serious form of competition law infringement.
You should not enter into discussions with competitors on such matters or on topics such as how to deal with any overcapacity within a market.
[COMPANY] decides on its output and production independently and does not discuss or agree on output, restrictions on production or quotas with its competitors.
4. Information exchange
Competition law does not prevent competing businesses from adapting intelligently to the conduct of their competitors. Nor does it prevent competitors from meeting for legitimate reasons. However, competition law does preclude the direct or indirect exchange of competitively sensitive information between competitors.
The type of information that may be considered to be competitively sensitive, and which should not be exchanged with competitors, includes (but is not limited to):
- information on pricing and elements of pricing, including:
- factors relevant for setting future prices;
- price trends;
- indications of quotation prices;
- statistical pricing information; and
- future pricing strategy (in general) – for example, an intention not to offer below a certain price point.
- information on non-pricing parameters of competition, including:
- information on costs, capacity, production or quantities;
- market shares;
- customers;
- plans to enter or exit markets; and
- plans concerning other important elements of strategy that companies active in a competitive market would not have an incentive to reveal to each other.
Relationships with [suppliers/retailers/distributors]
Agreements may be entered into between undertakings operating at different levels of the supply chain – for example, a supplier and buyer or manufacturer and distributor (vertical agreements).
Vertical agreements are generally less harmful to competition than horizontal agreements between competitors but this does not mean that they are without risk. The inclusion of certain provisions within agreements with customers may constitute an infringement of competition law. Restrictions that are likely to be prohibited include (but are not limited to):
- restricting a buyer party’s ability to determine its re-sale price;
- preventing of the effective use of the internet by a buyer or its customers to sell the contract goods or services; and
- restricting of the territory into which, or of the customers to whom, a buyer may actively or passively sell the contract goods or services (although this is subject to certain exceptions).
Advice and sign-off should be sought from [the Legal Department/OTHER DESCRIPTION OF APPROPRIATE FUNCTION] prior to entering into such agreements.
Abuse of a dominant position
Competition law also prohibits any conduct on the part of one or more undertakings that amounts to an abuse of a dominant position in a market if it may affect trade within the UK.
It is clear from the prohibition that possessing a dominant position is not in and of itself a problem, but a company with a dominant position has a special responsibility not to allow its conduct to impair competition.
A company that has a dominant position is one that enjoys a position of economic strength that enables it to prevent effective competition from being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers. The key is whether the undertaking is able to act independently on the market (ie, it has ‘substantial market power’).
While market shares are not a test of dominance, in general a market share of 40% or more is an indicator that a company may be at risk of being considered dominant by a competition authority (although dominance has been established where market shares were below 40%). Where a company is in a dominant position, conduct by that company that may be considered to be abusive includes (but is not limited to):
- obligations on customers to purchase exclusively or to a large extent from a dominant company;
- loyalty rebates and discounts;
- tying or bundling products together;
- predatory pricing;
- price discrimination (ie, imposing different terms for similar transactions with different customers); and
- refusal to supply.
[COMPANY] does not consider itself to be dominant in any market. If you consider that you work in an area where [COMPANY] may have a significant market share, contact [LEGAL COUNSEL] for guidance.
3.2 Consider whether to provide dos and don’ts
Consider whether to provide some general behavioural guidance in the form of dos and don’ts. This is a common feature of many compliance policies as a way of highlighting in an accessible way the key points that should be kept in mind.
Example
General competition law compliance dos and don’ts
DO
- Conduct business ethically and legally and in accordance with all [COMPANY] policies.
- Make sure that all decisions on pricing and other commercially sensitive matters are taken independently by [COMPANY] and ensure that this stance is conveyed to competitors should there be any doubt about this.
- Participate in meetings with competitors where sanctioned by [LEGAL COUNSEL] and in accordance with this Competition Policy.
- Request an agenda be set for any meetings with competitors, have this reviewed by [LEGAL COUNSEL] in advance and stick to the agenda.
- React promptly if you are part of a discussion that has strayed into topics it should not or if a competitor discloses information to you that contains information you should not receive. Make clear to them that you do not wish to discuss such matters or receive such information; leave the meeting or conversation and report the matter to [LEGAL COUNSEL].
- Take clear notes of any meetings with competitors.
- Inform [LEGAL COUNSEL] if you receive any complaints of potentially anticompetitive behaviour from any internal or third party or if you receive any contact from a regulatory authority.
- Seek advice from [LEGAL COUNSEL] if you are in any doubt as to what to do or the legality of an action or proposed course of conduct.
DO NOT
- Do not discuss prices, components of pricing or any other parameters of competition with competitors.
- Do not discuss future strategic plans with competitors, including information on production, plans to enter or exit markets, etc.
- Do not agree with competitors to allocate territories, supplier or customers (or agree to refrain from bidding or supplying a particular territory or customer).
- Do not assume that informal discussions are ‘off the record’ or outside the scope of competition law.
In addition, you could choose to add real-life examples of conduct that has been found to be in breach of competition law. Drawing such examples from companies within your company’s industry is a good way of illustrating the real-life implications of breach and will help to reinforce the message of compliance to readers of the compliance policy.
3.3 Consider whether to provide guidance on the use of language
There are a number of situations in which a competition authority may obtain, request or require production of internal company documents. These range from an unannounced dawn raid into a suspected breach of competition law to the submission of a merger filing with a competition authority. In such a scenario, internal documents will be carefully considered and may form a critical part of a competition authority’s decision-making.
It is important that documents are carefully drafted to ensure that they present a true picture that does not give a misleading impression – words on a page can be very easily taken out of context. For example, ‘banter’ via instant messages about dominating the market and eliminating competition very easily loses its joking tone when looked at a part of a chat log within the context of an investigation into a suspected breach of competition law.
As part of your competition law compliance policy, decide whether you want to provide general guidance on the use of language.
Example
General guidance regarding the use of language
All those working for [COMPANY] should ensure that care is taken in their use of language to ensure that it is an accurate reflection of the underlying situation and does not give a misleading impression.
When conducting investigations, competition authorities will routinely request (or in the case of a dawn raid, seize) large quantities of documents and records, which may include reports, business plans, presentations, internal analyses, research, emails, notebooks, chat logs, etc. The type of information requested may be stored electronically or in hard copy and may be internal only (such as minutes of internal meetings) or external (such as emails to third parties) in nature.
Those documents and records are closely examined by regulatory authorities as contemporaneous evidence and such information is routinely used during competition authority investigations as evidence of misconduct.
In the event that [COMPANY] were ever to be subject to an investigation by a regulatory agency, it is important that our documents and records are an accurate reflection of our business practices and do not risk giving a misleading impression or allowing for an incorrect inference to be drawn.
In general:
- do not assume that any form of record or communication is outside the scope of discoverability by a competition authority. Treat every form of communication with the same level of care and attention – a chat log is just as likely to be scrutinised as the formal memo of a meeting;
- take clear minutes of meetings and avoid ambiguous or vague language that could be in danger of being misinterpreted at a later date by an outside reader;
- avoid evocative and hyperbolic language – for example, ‘we will dominate the competition’ or ‘we will eliminate them from the market’;
- if you have information on a competitor’s pricing, record where such information came from. For example, rather than ‘we know that X’s price is Y’, be clear on the source of information, such as ‘we were told in negotiations with a customer that X had quoted them Y’; and
- consider how your words could be taken if read out of context by a regulatory authority.
Nothing in the foregoing should be taken to suggest that damaging information should be destroyed.
3.4 Consider whether to provide guidance on document retention
Competition law investigations rely upon documents, in both hard copy and electronic form. It is important for companies that documents are not destroyed, other than in accordance with usual document destruction processes and procedures.
Having internal documents available will be important should a company decide to apply for immunity or leniency. In addition, severe penalties can be imposed for destroying relevant documents where a person knows or suspects that an investigation under the Competition Act 1998 is being, or is likely to be, carried out.
Providing clear guidance on document retention and destruction will help to clarify your organisation’s expectations.
Example
Document retention and destruction
Documents should not be destroyed, other than in accordance with [COMPANY’s] usual document destruction processes and procedures.
It may be necessary, in certain situations, including in the case of a competition law investigation, for [COMPANY’s] usual document destruction processes to be suspended in order to ensure that documents are preserved and available. In such a case, [COMPANY] may issue a document preservation notice which will detail the nature of documents that are or may be affected. The obstruction of a competition law investigation through the destruction of documents can lead to serious consequences for [COMPANY] and, in some jurisdictions for individuals.
If at any point, you know or suspect that an investigation into a potential breach of competition law is being, or is likely to be carried out, or if a document preservation notice is issued by [COMPANY] instructing that documents of a certain type should not be destroyed as part of business as usual processes and should be maintained, it is important that you do not destroy or dispose of relevant documents. There may be consequences for [COMPANY] and in some cases, for individuals, should documents be destroyed. In the event of any doubt over the actions that should or should not be taken, please contact [LEGAL COUNSEL].
Step 4 – Provide details on how to report concerns and seek guidance
In addition to providing information on what competition law is and some guidance on the types of conduct that may raise concerns, you should include information on how to seek further guidance and report concerns. This is a fundamental part of a competition law compliance policy. This should encourage people to come forward and either mitigate the risk of breaches occurring by seeking guidance before proceeding with a course of action, or report suspicions of misconduct, which will allow your company to be on the front foot in addressing them.
4.1 Provide information on how to seek advice
Your competition law compliance policy should clearly explain how anyone with questions or concerns about the policy can raise these and obtain advice. It is important to encourage people to raise questions and request guidance on the application of competition law as this will help to mitigate the risk that breaches of competition law occur.
Example
Seeking advice
The purpose of this Competition Policy is to provide a basic level of explanation of the key provisions of competition law. This is a complicated area of law with many areas of nuance, and this Competition Policy cannot anticipate all of the circumstances that may give rise to potential issues. Accordingly, [COMPANY] encourages anyone to raise questions on the following:
- the scope of this policy;
- the contents and/or interpretation of this policy; or
- the legality or otherwise of any particular conduct or course of action.
Such questions should be addressed to: [NAME OF GENERAL COUNSEL OR OTHER APPROPRIATE LEGAL CONTACT, AND POSITION WITHIN THE COMPANY] on [EMAIL ADDRESS] or [PHONE NUMBER].
When seeking advice, follow the guidance below on labelling correspondence as being subject to legal privilege [CROSS-REFER AS APPROPRIATE].
4.2 Provide information on reporting concerns
One of the most important sections of a competition law compliance policy is the section on how to report concerns. Internal reporting mechanisms are a highly effective tool in identifying and combatting suspected competition law infringement. Internal reports can:
- prompt a timely internal investigation;
- assist in rooting out competition law infringements within your organisation; and
- allow your organisation to seek timely specialist legal advice on self-disclosing the infringement to competition law regulators.
There are tangible benefits to organisations of self-reporting suspected misconduct to a competition authority. In the UK there is a leniency programme in place that allows companies who report their participation in cartels and vertical price-fixing, to benefit from either full immunity from fines or a reduction in penalties. Due to these incentives for self-reporting, there has long been an impetus for companies to set up mechanisms for the internal reporting of suspected anticompetitive behaviour. By detecting and proactively self-reporting infringements, significant fines can be avoided.
It is in your organisation’s best interests to encourage internal whistleblowing so that any allegations can be investigated internally and possibly self-reported. Where a competition authority learns of suspected wrongdoing from a direct report from an individual informant, an organisation may lose some of the potential benefits of a leniency programme (immunity being available to the first to submit evidence that either enables a targeted inspection to be carried out, or is sufficient for the finding of an infringement and where a competition authority did not yet have sufficient evidence to find such an infringement). For more information, see How-to guide: How to identify and remediate competition law infringements.
4.2.1 Explain your company’s expectations around reporting and participation in investigations
In order to impress upon readers the importance of reporting concerns, it might be helpful to set out your organisation’s expectations of them insofar as it concerns making reports of suspicions and participation in any investigations. Being clear on expectations in this regard may also help in the event of any subsequent related disciplinary matters.
Example
Reporting concerns
Where anyone to whom this policy applies, knows or suspects that a breach of competition law has been or is being committed, [COMPANY] expects that they will speak up and will report the conduct in accordance with the process below.
Those who report wrongdoing are often concerned about the risk of possible repercussions. [COMPANY] does not tolerate any form of retaliation against any individuals who have made a good faith report of any violation or suspected violation of competition law, even if that report turns out to be mistaken or is not subsequently substantiated. Should you believe that this is not the case and you consider that you have suffered repercussions as a result of a report that has been made under this policy, contact [INSERT AN APPROPRIATE CONTACT AND THEIR DETAILS].
[COMPANY] also expects that anyone who is involved in an investigation into a suspected breach of competition law, whether external or internal, will cooperate with the investigation and provide truthful and accurate information. Failure to do so by an employee will lead to disciplinary action.
4.2.2 Mechanisms for reporting
For individuals to be able to report concerns, the mechanisms for reporting should be clearly set out in the competition law compliance policy.
For many companies, there will likely be various compliance areas where internal reporting channels should be established (eg, for reports of bribery or fraud), which make it desirable to have a separate whistleblowing policy that contains details of the reporting mechanisms and the processes that will be followed. Accordingly, the sample wording below provides wording for inclusion where the company has a separate whistleblowing policy to which cross-reference is made.
Example
Mechanisms for reporting concerns
Anyone to whom this policy applies, who knows or suspects that a breach of competition law has been or is being committed, should report it to:
[LEGAL COUNSEL]
[Alternatively, report it via [COMPANY’s] Whistleblowing Policy, which can be found [CROSS-REFER TO WHERE THIS IS LOCATED].]
4.3 Provide information on how to try and maintain privilege over communications
In the event of either an investigation or litigation, it is important that your company can rely upon legal privilege to prevent legal advice or communications relating to actual or potential litigation from being disclosed. Therefore, as part of your competition law compliance policy and ancillary to encouraging individuals to come forward and report concerns or to raise queries with legal counsel, consider providing some basic information about legal privilege.
The steps that should be taken to preserve legal privilege over advice will depend very much on your company’s internal set-up, the situation, nature of the advice sought, the impact of the advice, etc. Legal counsel can provide specific advice on the steps that should be taken in any particular scenario. However, there are some basic steps that can be highlighted to readers that will help to ensure that legally privileged documents can be identified in the event that either a dawn raid is ever carried out on your company, or alternatively, in the event that a document review exercise needs to be carried out (in order to self-report suspected misconduct, in response to a request for information from a regulatory authority, or in litigation).
Example
General guidance when seeking legal advice
In the event of any investigation or litigation, either regulatory authorities or claimants may wish to obtain a large number of internal documents from [COMPANY]. In certain circumstances, [COMPANY] will be permitted to not disclose documents and communications on the basis that they are protected by legal professional privilege.
Legal professional privilege is a concept that refers to the protection of confidentiality of communications between lawyers and their clients either where:
- the communications are for the dominant purpose of seeking and receiving legal advice; or
- where communications are for the sole or dominant purpose of obtaining information or advice in connection with litigation (pending or in contemplation).
Communications include documents that were created for one of the above purposes. Legal professional privilege is a complex matter and whether or not a communication is subject to protection from disclosure on the grounds of legal professional privilege will depend on an analysis of that document.
Legal counsel will be able to advise on steps to take to try to preserve privilege, but there are some basic steps that you can take to help [COMPANY] identify documents over which such a claim may be made and try to preserve such privilege, including:
- when seeking advice from legal counsel, mark communications clearly with CONFIDENTIAL AND LEGALLY PRIVILEGED in the subject line of any emails or on the top of any documents;
- keep any requests for legal advice separate from any other communications on business as usual matters;
- do not circulate legal advice or requests for legal advice any more widely than is strictly necessary; and
- if you have been involved in correspondence subject to legal professional privilege, it would be helpful if this correspondence was stored in a separate, easily identifiable (and clearly labelled) location. In the event of an unannounced inspection by a regulatory authority, it is important for [COMPANY] to be able to identify correspondence that should not be viewed by an authority.
Step 5 – Finalise and implement the roll-out of the policy
Once you have put together your competition law compliance policy, you will need to take appropriate steps to finalise the policy, including seeking necessary approvals and sign-offs, and to communicate the policy to all of those who will be subject to it.
5.1 Obtain approval from specialist counsel
Once a draft has been put together, and before it is signed off by the necessary business stakeholders, it would be prudent to seek external counsel approval of the contents of your draft competition law compliance policy. Competition law is a complicated area and different businesses will have different concerns and areas of particular risk. Depending on the nature of your business and its activities, there may be sections of the policy that need further emphasis or development.
5.2 Obtain sign-off
Once finalised, obtain sign-off from all relevant stakeholders, following established internal approval processes and procedures.
5.3 Consider how the policy will be communicated
Once the competition law compliance policy has been finalised and has gone through the appropriate channels for sign-off, it will need to be communicated to staff and others to whom it will apply. How the policy is communicated will be a matter for the business. To be effective, the means of communication should ensure that all those who will be within its scope should be made aware of it and where to find it for future reference. As part of your organisation’s compliance programme, consider augmenting the roll-out of the new policy with other refresher training on competition law or a requirement for those subject to the policy to confirm that they have read and will abide by the policy (or both).
5.4 Consider where the policy will be housed internally
In order to be an effective point of reference for those who have questions about competition law, your compliance policies should not only be communicated effectively, but they should also be saved somewhere internally where they can be easily accessed – for example, on a company intranet. Make clear in your communications where the competition law compliance policy can be found.
5.5 Consider whether the policy should be published on your organisation’s website
Publishing your competition law compliance policy on your external-facing website is something that your business should consider. The benefit of doing so is it makes clear to all of your stakeholders that your company is committed to acting in accordance with the law and places strict obligations on its staff to comply with competition law.
Should you decide to publish the policy on an external website, you should consider whether any redactions should be applied to any of the information contained in the policy before it is published publicly. For example, to remove the personal data of individuals (such as legal counsel or other compliance personnel) mentioned in the policy.
Additional resources
Related Lexology Pro content
How-to guides:
Understanding the Competition Act 1998 prohibitions
How to identify and prioritise competition law risk in your organisation
How to design a competition law compliance programme
How to assess competition law risks in an agency agreement
How to identify and remediate competition law infringements
Checklists:
Competition law compliance
Meeting with a competitor
Conducting a competition compliance audit
Managing a dawn raid
Responding to an information request from the Competition and Markets Authority
Quick view:
Director disqualification for breach of competition law
Penalties for failure to comply with the CMA’s Competition Act 1998 investigatory powers
Penalties for failure to comply with the CMA’s markets investigatory powers
Penalties for failure to comply with the CMA’s mergers investigatory powers
Penalties for failure to comply with the CMA’s mergers interim measures powers
Competition law and land agreements
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