Why introduce a competition compliance program?
A comprehensive and effectively implemented compliance program reduces the risk of the company breaching competition rules due to individual or systemic failures, thereby minimizing the risk of an investigation and the imposition of severe fines by ÚOHS or the European Commission. Therefore, it is recommended that every company implement an effective competition compliance program, regardless of whether it is in regular or irregular contact only with its distributors, customers and/or suppliers, or also with its competitors.
A compliance program that has already been adopted and implemented before the commencement of an investigation by ÚOHS, and that ÚOHS considers sufficiently effective, may additionally lead to a reduction of the basic amount of the fine by up to 10%.
If the company only commits to implementing a new effective compliance program during an ongoing investigation, ÚOHS will consider reducing the basic amount of the fine by up to 5%.
When will the compliance program be considered in the reduction of the penalty?
ÚOHS will only recognize the compliance program as a mitigating circumstance when imposing a fine if all of the following three conditions are met:
- The company will succeed in obtaining a reduction of the fine in the administrative proceedings based on a leniency application and/or a settlement
- The company will implement or strengthen a compliance program that is effective considering the company's size, market power and the type of market on which it operates
- If a compliance program has already been implemented, there was no anticompetitive conduct with the knowledge of the statutory body or senior management of the respective undertaking
This means that ÚOHS now offers, beyond the reduction of the fine based on a leniency application (up to 50%) and settlement (up to 20%), the possibility of a further reduction of the fine to undertakings that accept ÚOHS' conclusions on the infringement of competition law and/or provide evidence of such infringement and, at the same time, prove that the infringement of competition law occurred despite their serious efforts to prevent it.
What should an effective compliance program look like?
A compliance program is a set of internal preventive and control measures designed primarily to prevent violations of legal regulations or ethical standards by employees and management in the performance of business activities. As such, a competition compliance program may either be developed independently or form part of a broader compliance program of the company.
The compliance program should be prepared in written form (e.g., in the form of a manual) and should include key principles of competition law, an explanation of how competition law is enforced, and the possible consequences of breaching these rules. The company's management should make a clear and public statement both internally and externally, emphasizing that compliance with competition law is not merely a legal obligation but a central component of the company's culture.
ÚOHS will consider a compliance program effective if it meets the following basic requirements:
- Risk assessment: The compliance program should identify and assess the risks to which the company is exposed and should include measures to reduce or eliminate and prevent those risks, including sanctions for violations of competition law.
- Regular training of employees: Both the company's management and its employees should receive regular competition training at least once a year. Employees who are particularly exposed to the risk of potential anticompetitive behavior in their job (especially employees in frequent contact with competitors, suppliers and customers) should be particularly well-informed about the competition rules and the compliance program.
- Monitoring compliance with the program: It is advisable to establish internal information channels so that employees know whom to contact and how, if they suspect possible anticompetitive conduct (the compliance program may be linked to the internal whistleblowing system required for larger employers by the new Whistleblower Protection Act). The compliance program should also include specific measures to ensure monitoring of compliance by individual employees, as well as disciplinary measures to be applied in the event of a breach.
ÚOHS will not consider compliance programs that are only formally adopted but not actually implemented, that exist only "on paper" and are not complied with. Therefore, in the event of an ongoing investigation, the undertaking will also need to present ÚOHS with supporting documents demonstrating actual active implementation of the program (such as a list of employee trainings or records of compliance checks).
What can you do?
Do you need help with preparing or revising a compliance program or training your employees? Or would you like to get advice on what a compliance program can do for you and what it should be like? Do not hesitate to contact Baker McKenzie's team of competition law experts.
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