How-to guide: How to implement a culture of compliance with competition law in your organisation (EU)

Introduction

This guide suggests appropriate steps you can take to promote, build and embed a culture of competition law compliant behaviour within your organisation. It incorporates practical tips, examples and guidance, to aid your compliance with EU competition law.

This guide is aimed at in-house lawyers and compliance professionals in organisations of all sizes and all sectors who may be subject to EU competition law.

It covers the following sections:

Compliance with competition law and why it matters
Preparing your competition law compliance policy and programme
Educating employees on the benefits of competition law compliance
Methods that prevent and detect potentially anti-competitive behaviour
Embedding a culture of competition law compliance
Championing a ‘speak-up’ culture

This How-to guide can be used in conjunction with How-to guides: Understanding the competition law prohibitions in Article 101 and 102 TFEU, How to design a competition law compliance programme and How to identify and prioritise competition law risk in your organisation and Checklists: Competition law compliance and Conducting a competition compliance audit.

Section 1 – Compliance with competition law and why it matters

Your first step is to understand why conducting business in a manner that is compliant with competition law matters to your organisation. You will need to demonstrate to your organisation why a compliant culture is fundamental to running an orderly business. This will assist you in laying the cornerstone for a strong culture of competition law compliance within your organisation. A compliant culture matters because:

The provisions of the EU competition law rules were drafted to ensure organisations compete on a level playing field. EU competition law rules make sure businesses are competing with one another and are protected from others acting unethically. This is important because competition benefits consumers and hence the wider public interest;
It may help to avoid the adverse potential consequences of an infringement which could include:
- Financial penalties of up to 10% of worldwide group turnover;
- Decisions requiring the cessation of conduct;
- Reputational damage;
- Unenforceability of restrictions in agreements;
- Opportunity cost; and
- Private damages claims.

The identification of misconduct allows for the possibility of self-reporting potential competition law infringements, which in turn may mitigate financial penalties and enforcement action.

Ultimately having a compliant culture will lead to benefits for your organisation and its customers.

For more information on the EU competition law prohibitions and potential consequences of breach of competition law, see How-to guide: Understanding the competition law prohibitions in Article 101 and 102 TFEU.

Section 2 – Preparing your competition law compliance policy and programme

Once you understand why a compliant culture is important and are able to communicate the benefits within your organisation, your next step is to prepare a competition law policy for your organisation. This document will give both context and effect to the ethical and accepted norms of compliant competition law behaviours.

Your organisation’s competition law policy will be fundamental to the establishment of a compliant culture of ethical and legal competition law. It should be part of a suite of compliance documents that includes the following:

risk assessment;
risk management procedures (including due diligence controls);
related policies;
internal communications;
knowhow; and
educational training materials.

Collectively these documents will be referred to as your competition law compliance programme. They are key in your mission to build a compliant culture of legal competition law behaviour in your organisation.

Your competition law compliance policy should provide clear and unambiguous information to staff on your organisation’s expectations of ethical and legal conduct. It should also include practical examples of the types of conduct that will not be tolerated (eg, employees must not agree with a competitor to fix prices or to limit or control production). It is good practice to tailor the policy to the specific risks your organisation is exposed to in your competition law policy document, to set the expected standards of conduct required by staff.

To be effective, your competition law policy will also need to refer to other policies and procedures important to the functional operation of your organisation. For instance, your organisation’s competition law policy might refer to:

confidentiality and control of information protocols (including document retention policies);
employees’ contracts of employment (highlighting disciplinary procedures, the management of misconduct and resulting consequences);
where to find procedures (for instance, if staff wish to register to attend or join a trade association); and
who to speak to or escalate legal matters to in the event staff need to seek further information, advice or clarification on relevant competition law procedures.

See How-to guides: How to design a competition law compliance programme and How to identify and prioritise competition law risk in your organisation.

Section 3 – Educating employees on the benefits of competition law compliance

The embedding of appropriately tailored communications and training is a critical step towards ensuring a compliant culture of ethical and legal competition law behaviour.

Your organisation’s policies and procedures on competition law should be disseminated to, and understood by, all employees. To best ensure information is understood you will need to relay messages in a manner tailored to the audience’s size, sophistication, or subject matter expertise. This can be most effectively achieved by, for instance:

giving employees practical advice or case studies to address real-life scenarios; and
providing guidance on how to obtain advice on a case-by-case basis as the need arises.

Tailored training is generally provided by using a risk-based approach. This will determine who should be trained and on what subjects. Ultimately, this will result in different or supplementary training for employees in relevant supervisory and control functions, as well as high-risk employees.

Relevant considerations in relation to internal communications and training include:

offering training in the form and language appropriate for the audience;
providing training online or in person (or both) with a process by which employees can ask questions arising out of the training;
addressing lessons learned from competition law compliance incidents (either at your organisation or in the same sector or industry);
processes for your organisation to measure the effectiveness of the training;
testing employees on what they have learned (with a questionnaire or a quiz). This will include information on how your organisation has addressed employees who fail all or a portion of the testing;
evaluating the extent to which the communications and training have impacted employee behaviour or operations;
the resources that have been made available to employees to provide guidance relating to competition law policies and procedures; and
how your organisation has assessed whether its employees know when to seek advice and whether they would be willing to do so.

Your organisation will need to record and assess the steps taken to ensure that competition law policies and procedures have been communicated and integrated. Training attendance and completion records for all directors, officers, relevant employees and, where appropriate, agents or contractors should be maintained.

See How-to guides: How to identify and prioritise competition law risk in your organisation and How to design a competition law compliance programme.

Section 4 – Methods that prevent and detect potentially anti-competitive behaviour

Your next step is to ensure your organisation has methods in place that seek to prevent and identify anti-competitive behaviour.

If your competition law risk assessment exercise has been carried out methodically and scoped correctly, your organisation will be able to devise appropriate procedures using the data and metrics gathered. Most of these methods will be due diligence procedural controls. For example, a requirement to complete a relevant competition law compliance questionnaire during negotiations on a distribution agreement with a supplier or to seek approval before meeting with a competitor. These types of controls will assist in fostering and embedding an operational culture of compliant conduct by directing staff to business gatekeepers.

Through the introduction of preventative and detection controls, your organisation will be able to build a culture of competition law compliance. These controls will result in employees being better informed and prepared to prevent and detect future contraventions by:

knowing how to stay compliant (ie by following prescriptive rules);
knowing what to do in a situation where a competitor discloses information about their future intentions;
questioning non-compliance; or
escalating suspected misconduct

This is necessary to protect not only your organisation's reputation, but also to safeguard the interests of individual employees.

See How-to guide: How to design a competition law compliance programme.

Section 5 – Embedding a culture of competition law compliance

5.1 Tone from the top and in the middle

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. Employees 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.

At the top level this commitment can be demonstrated by introducing measures such as:

ensuring there is sufficient budget for the competition law compliance programme to function adequately and efficiently;
ensuring the competition law compliance programme is reviewed at least annually;
requesting reporting on matters pertinent to competition law (eg, internal reports, complaints, incidents, audit reports and training attendance);
initiating and endorsing internal communications to staff; and
attending training sessions given to staff and demonstrating their engagement by asking pertinent questions on competition law compliance.

Tone at the top alone is not sufficient. A culture of competition compliance needs to be fostered at all levels of your organisation. You will need to demonstrate and document how middle management as well as senior management have reinforced a compliant culture of ethical and legal competition law behaviour. This could be approached, for example, by discussing and embedding your organisation’s commitment to competition law compliance during team meetings or through questionnaires circulated to middle management. The resulting data should then be able to help your organisation establish whether further action is required such as more competition law training, a different focus for educational training or further messaging from the top.

5.2 Resourcing

Key to embedding a culture of competition law compliance is having sufficient competition law resourcing. After you have assessed the risk of competition law infringement within your organisation, you will need to determine the resources needed to ensure any measures introduced to build a culture of compliant competition law behaviour are effectively implemented.

Those individuals with operational responsibility for the competition law compliance programme must have sufficient autonomy, authority and seniority within your organisation’s governance structure, as well as adequate resources for training, monitoring, auditing and periodic evaluation of the programme. What you do will depend on the risks identified and the likelihood of the risk occurring. See How-to guide: How to design a competition law compliance programme.

5.3 Periodic reviews

A critical part of embedding an effective culture of competition law compliance is ensuring the sufficiency of your competition law compliance programme.

Review your risk assessment steps and your commitment to compliance regularly, to ensure that your organisation has an effective compliance culture. Some organisations review their compliance efforts on an annual basis, others review less frequently. The frequency of review will be determined by the risks identified in your competition law risk assessment (which itself should be regularly reviewed). Ideally, it should be based upon continuous access to operational data and information across functions in your organisation. This data and information from reviews and audits etc should result in updates to policies, procedures and controls. Updates should also consider any relevant internal reports (such as whistleblower reports and complaints) as well as risks discovered through misconduct or other problems identified with your organisation’s competition law compliance programme.

See How-to guide: How to identify and prioritise competition law risk in your organisation.

Over time and when circumstances change (eg if the organisation merges with another, expands into new business activities or if a competition law investigation is instigated against the organisation), your risk assessment should be amended to continue to address your organisation’s risks of competition law infringement and ensure a compliant culture.

5.4 Compliance incentives and discipline

Systems of incentives and discipline ensure the competition law compliance programme is well-integrated into your organisation’s operations and workforce.

Some organisations have found that publicising disciplinary actions internally, where appropriate and possible, can act as a deterrent. Your organisation may also wish to review its disciplinary procedures to ensure employees who breach internal policies and procedures face consequences. Any deterrent measures should be balanced with the creation of a ‘speak up’ culture (see below).

At the same time, some organisations have also found that providing positive incentives have driven competition law compliance, such as:

personnel promotions;
rewards and bonuses for:
- improving and developing a compliance programme; or
- demonstrating ethical leadership;
making compliance a significant metric for management bonuses; and/or
making working on compliance a means of career advancement.

Section 6 – Championing a ‘speak-up’ culture

To build a compliant culture of competition law behaviour in your organisation, you will need to make staff feel confident that they are able to (and know how to) escalate concerns in the event they witness unlawful conduct or suspected competition law infringement activities. This could help your organisation identify misconduct and self-report potential competition law infringements, which in turn may mitigate financial penalties and enforcement action.

To help achieve employee trust, you might include educational methods for ensuring your staff know your organisation is fully committed to a ’speak up culture’ in your project plans. A speak up culture refers to a healthy, supportive environment, where employees feel free to share their ideas, opinions and concerns.

Along with a speak up culture, your organisation will need to have a robust and functioning internal reporting process and a designation procedure to follow for any subsequent investigation. See How-to guide: How to identify and address competition law infringements.

Additional resources

Compliance matters – What companies can do better to respect EU competition rules

How-to guide: How to implement a culture of compliance with competition law in your organisation (EU)

Introduction

Section 1 – Compliance with competition law and why it matters

Section 2 – Preparing your competition law compliance policy and programme

Section 3 – Educating employees on the benefits of competition law compliance

Section 4 – Methods that prevent and detect potentially anti-competitive behaviour

Section 5 – Embedding a culture of competition law compliance

5.1 Tone from the top and in the middle

5.2 Resourcing

5.3 Periodic reviews

5.4 Compliance incentives and discipline

Section 6 – Championing a ‘speak-up’ culture

Additional resources

Related Lexology PRO content

How-to guides:

Checklists:

Filed under

Topics

Laws

Regulatory compliance

Culture and ethics

European Union

Compliance Management

Competition & Antitrust