- Has your national competition authority published guidelines on competition compliance programmes (“CCPs”)? If so, what are the key components of an effective CCP?
- Are there any recent cases in your jurisdiction where the NCA/competent courts have discussed the impact of CCPs?
- What arguments have been taken into account in relation to a CCP? Has the fact that a company has a CCP been assessed in terms of the effort made or the results achieved, i.e. the efficiency of the programme? Is the focus on future changes in CCPs or on existing programmes?
- Has the role of the management and/or employees of the company been assessed with respect to preventing, participating in, detecting and reporting violations, or remediating violations? Is there a link between the role of the company's management and/or employees and an effective CCP?
- Has the fact that an undertaking has a CCP been helpful in reducing a fine for an infringement of competition law? What facts, arguments or commitments were used to justify the reduction and what is the maximum reduction that can be granted? If a reduction is not granted, why not?
- Are CCPs (their adoption or updating) used as evidence for "self-cleaning" measures when an economic operator risks being excluded from a public procurement procedure for collusive behaviour?
- Please indicate any additional considerations / rules, trends that are important in your country in relation to CCPs.
- Are there legal developments on the horizon in relation to CCPs?
jurisdiction
1. Has your national competition authority published guidelines on competition compliance programmes (“CCPs”)? If so, what are the key components of an effective CCP?
The UK’s national competition authority (“UK NCA”) is the Competition and Markets Authority (“CMA”). The UK NCA is active in promoting competition compliance for businesses of all sizes across the UK. The UK NCA regularly issues online guidance on competition law issues. Relating to guidance on CCPs specifically, the UK NCA (including its predecessor, the Office for Fair Trading) has periodically issued guidance for businesses, including a ‘short guide’ last updated in 2020 (the “Guide”).
The Guide acknowledges that there are different ways in which a business can ensure compliance, but that, fundamentally, there must be a clear and unequivocal commitment to competition law compliance from the top down, demonstrated by senior management (particularly the board). For more detail on the importance of this top-down approach, see Question Four below.
The Guide strongly recommends a risk-based approach to CCP. This risk-based approach should be proactive and should be tailored to the specific challenges faced by the business, rather than simply a ‘tick box’ exercise. A four-step process for risk-based CCPs is detailed in the Guide. In broad outline, these steps are: risk identification; risk analysis to evaluate the seriousness of risks; setting up policies and procedures to mitigate the likelihood of an identified risk from occurring; and regular reviews of competition compliance.
The UK’s sector-specific regulators also generally hold concurrent powers to enforce competition laws in their relevant sectors and to increase awareness of competition law compliance.
The UK NCA has issued additional compliance guidance specifically tailored for small businesses.
2. Are there any recent cases in your jurisdiction where the NCA/competent courts have discussed the impact of CCPs?
Simply having a CCP in place is not considered sufficient to warrant a reduction in fines (for more detail see the response to Question Five below). This means that recent precedents do not address this point.
The UK NCA’s penalty guidelines were updated in December 2021 to remove references to fine reductions due to CCPs. Prior to this, an effective CCP could lead to a fine reduction. For example, in 2016 fine following an investigation into anti-competitive practices in the bathroom fittings sector was reduced by five per cent after the board adopted a CCP and agreed to supply annual compliance reports to the UK NCA for three years.
3. What arguments have been taken into account in relation to a CCP? Has the fact that a company has a CCP been assessed in terms of the effort made or the results achieved, i.e. the efficiency of the programme? Is the focus on future changes in CCPs or on existing programmes?
As discussed in response to Questions Two and Four, a CCP will no longer be assessed by the UK NCA when considering fine mitigation. Previously, both future commitments (as in the ‘bathroom fittings’ investigation mentioned above) and the existing programme would be evaluated.
4. Has the role of the management and/or employees of the company been assessed with respect to preventing, participating in, detecting and reporting violations, or remediating violations? Is there a link between the role of the company's management and/or employees and an effective CCP?
As highlighted above, the Guide is emphatic on the importance of senior management (particularly the board) taking responsibility to instil a culture of competition compliance throughout the business.
The UK NCA has also published guidance on ‘company directors and competition law’, which states that ‘a director with responsibility for compliance with competition law will be expected to have a sufficient grasp of the principles of competition law to identify and assess the types of risk to which the company is exposed’.
Importantly, directors can be held personally responsible for competition infringements and may be disqualified. The Guide states that ‘not knowing is no excuse… directors must be clear on the risks of breaking competition law and lead by example’.
5. Has the fact that an undertaking has a CCP been helpful in reducing a fine for an infringement of competition law? What facts, arguments or commitments were used to justify the reduction and what is the maximum reduction that can be granted? If a reduction is not granted, why not?
A fine for a competition infringement cannot be reduced by having a CCP in place. An effective CCP is not a mitigating factor that the UK NCA will consider when assessing a penalty. An undertaking will be expected to have an effective CCP in place as a minimum obligation and as such will not be specifically viewed more leniently for this.
Accordingly, the UK NCA’s updated penalty guidelines, published on 16 December 2021, removed any reference to fine reduction (which previously permitted a reduction of up to ten percent) based on CCPs. The UK NCA has noted that it received substantial pushback against this proposal during public consultation; however, in the UK NCA’s view the risk of being subject to an investigation for anti-competitive conduct, together with subsequent potential fines, reputational damage, disqualifications etc., should be a sufficient incentive for a business to adopt a CCP. The UK NCA stated clearly in its response to the consultations that ‘in the CMA’s view, incentivising senior executives, and businesses generally, to have and maintain proper compliance programmes is not something that should rest on the availability of a mitigating factor leading to a reduction in penalty for an infringement. It is a legal obligation of all businesses (even small ones) to respect competition rules’. In its response to the public consultations, the UK acknowledged that the European Commission does not factor CCPs when considering penalty reductions, even if many other jurisdictions do.
Exceptionally, the UK NCA may treat the existence of a CCP as an aggravating factor when considering fines, if the CCP was used to conceal an infringement or mislead the UK NCA.
6. Are CCPs (their adoption or updating) used as evidence for "self-cleaning" measures when an economic operator risks being excluded from a public procurement procedure for collusive behaviour?
The UK Procurement Act 2023 introduces a new debarment regime, strengthening the exclusion rules for suppliers to public sector customers. Those rules allow contracting authorities (procuring public sector customers) to exclude a supplier if it considers that an agreement or concerted practice to which the supplier or a connected person (i.e., part of the same business group or ‘undertaking’) is party has infringed either prohibitions under the Competition Act 1998 (covering bid-rigging and other anti-competitive agreements or concerted practices, or has abused a dominant market position), or any substantially similar prohibition applicable in a jurisdiction outside the UK. This exclusion ground does not apply where the supplier or connected person has sought leniency and has been given immunity from fines. There is also a similar exclusion ground in respect of suppliers or connected persons where the authority suspects a breach of the separate criminal cartel offence under the Enterprise Act 2002 has been committed (or any substantially similar offence under the law of a country or territory outside the UK)
While a CCP that has been ignored by senior management may be regarded as an aggravating factor by authorities, having a CCP can help address an authority’s concerns and may be evidenced as part of a self-cleaning process. Any evidence presented should display concrete technical, organisational and personnel measures that are appropriate to prevent further offences or misconduct. From a procurement perspective, this means any evidence offered as part of the self-cleaning process should directly link to the exclusion ground, clearly displaying that the company has since taken active measures to ‘cleanse’ themselves of the previous misconduct.
7. Please indicate any additional considerations / rules, trends that are important in your country in relation to CCPs.
Despite there being no possibility of fine reductions based on having an effective CCP in place, it remains critical to nonetheless have an effective, tailored CCP to avoid potential infringements in the first place. This is borne out in the consultation on penalty setting, in which the UK NCA stated clearly that ‘the CMA wishes to make it very clear that it supports and promotes competition law compliance in the UK and works to raise the profile of the need for competition law compliance with businesses’.
8. Are there legal developments on the horizon in relation to CCPs?
The UK NCA will continue to take CCPs very seriously. As discussed above, the UK NCA’s guidance has recently been updated to remove any reference to fine reductions based on an undertaking having a CCP in place.
As CCPs are expected to be tailored to the business, rather than a one-size-fits-all approach, legal and regulatory developments in different sectors will affect CCPs differently in each sector. For example, a notable development will be the implementation of the Digital Markets Competition and Consumers Act (“DMCC”) in late 2024, which will see firms designated as having ‘strategic market status’ being subject to bespoke conduct requirements which will require tailored compliance.
One potentially key development across sectors is the UK NCA’s growing interest in anti-competitive activity in labour markets. As such, businesses will need to ensure that CCPs address HR and recruitment questions.
