2013 Practical antitrust tools for SMEs and larger companies ICC Antitrust Compliance Toolkit THE ICC ANTITRUST COMPLIANCE TOOLKIT Practical antitrust compliance tools for SMEs and larger companies Copyright © 2013 International Chamber of Commerce (ICC) ICC holds all copyright and other intellectual property rights in this collective work, subject to pre- existing rights in extracts from third party texts such as case studies or best practices which shall remain vested in the copyright holder of those texts. ICC encourages the reproduction and dissemination of this work subject to the following: - ICC must be cited as the source and copyright holder mentioning the title of the document, © International Chamber of Commerce (ICC), and the publication year if available. - Express written permission must be obtained for any modification, adaptation or translation, for any commercial use, and for use in any manner that implies that another organization or person is the source of, or is associated with, the work. - The work may not be reproduced or made available on websites except through a link to the relevant ICC web page (not to the document itself). Permission can be requested from ICC through [email protected]. Practical antitrust tools for SMEs and larger companies 2013 Preface This ICC Antitrust Compliance Toolkit (the Toolkit) comes at a critical time. Over the past years, legal and compliance requirements affecting companies (both small and large) have shown a steep increase across the globe. This phenomenon reflects the rapid development of the normative values underlying the regulation and governance of business conduct, and the increasing ethical expectations of society at large. This has become apparent in a wide variety of areas: from anti-bribery and corruption, to environmental, health and safety, to data privacy and competition (in this Toolkit referred to as “antitrust”) law. Managing the steady growth of these legal compliance requirements creates increasing challenges to business. By promoting open international trade and investment across frontiers and helping all businesses (whether small or larger) meet the demands and opportunities of globalisation, the International Chamber of Commerce (ICC) seeks to play a key role in assisting a growing understanding between business and antitrust agencies in relation to antitrust compliance, and is uniquely positioned to do so. Compliance with the law has become particularly important in the field of antitrust law, where the proliferation of laws across the globe has been unprecedented. Existing antitrust laws are constantly evolving and new laws are being adopted. Sanctions for antitrust violations are often substantial and reputational damage to companies as a result of an adverse antitrust finding is massive. The issue of antitrust compliance is particularly fraught at the moment, since (to date) there is no international consensus among antitrust enforcement agencies on how best to support (or even encourage) business in their genuine antitrust compliance efforts. Moreover, while many companies already have antitrust compliance programmes in place to help protect themselves (and their shareholders) by reducing the scope for future infringements through suitable training and uncovering potential infringements early, ICC feels strongly that it is now appropriate to develop practical tips, guidance and advice to assist companies in building and reinforcing credible antitrust compliance programmes, taking into account both the risks these companies face and the resources available to them. This is precisely what the ICC Antitrust Compliance Toolkit does. The strongest driver for compliance with antitrust law is the desire to conduct business ethically and to be recognized as doing so. While the penalties for non-compliance can be very significant, a company’s reputation is seriously damaged by the adverse publicity attracted by a decision that it has violated the law. Therefore, the point of any antitrust compliance programme is (ultimately) to reduce the risk of an antitrust violation occurring at all. However, as a fear of violating the law (particularly where individual criminal penalties are in play) can frighten employees and sometimes unwittingly chill perfectly legitimate competition, a well-designed programme will empower employees to act confidently within the scope of the law. The elements in the ICC Antitrust Compliance Toolkit are not intended to represent a comprehensive or prescriptive list of what an antitrust compliance programme must include, but seek to reflect what is commonly regarded as good practice in the field. Indeed, antitrust agencies themselves recognize that there can be no “one-size-fits-all” approach, and that each compliance programme has to be designed to meet the specific antitrust risks faced by the company in question. Given that antitrust compliance is relevant to all players on the market, small and large, the ICC Antitrust Compliance Toolkit endeavours in particular to recognize the challenges and resource constraints felt by small and medium-sized enterprises (SMEs), and gives practical tips throughout on ICC Antitrust Compliance Toolkit 2013 Preface how SMEs can have an antitrust compliance “programme” within their organizations. One key feature of this Toolkit is that it is designed by business for business. It draws on considerable expertise from in-house antitrust lawyers in larger companies, and from the expertise of the private Bar experienced in advising both SMEs and larger companies. ICC recognizes the work done by the ICC Commission on Competition and, in particular, the ICC Task Force on Antitrust Compliance and Advocacy, chaired by Anne Riley of Royal Dutch Shell plc, and co-chaired by Anny Tubbs of Unilever and Boris Kasten of Schindler. Particular thanks go to the diligence of the ICC Secretariat, especially Caroline Inthavisay, Zoé Smoke and Claire Labergerie. Further thanks and acknowledgements go to all members of the working group, as listed at the end of the Toolkit. Jean-Guy Carrier Paul Lugard Secretary General Chair ICC ICC Commission on Competition ICC Antitrust Compliance Toolkit Practical antitrust tools for SMEs and larger companies 2013 Table of Contents Preface Table of Contents Introduction .............................................................................................................................................. 1 Starter Kit ................................................................................................................................................. 3 1. Compliance embedded as company culture and policy .................................................... 4 a. Recognizing antitrust as a risk that your company needs to address ......................... 5 b. Obtaining management commitment .......................................................................... 5 c. Code of Conduct and/or Statement of Business Principles ........................................ 6 d. Integrate into other programmes and controls ............................................................ 7 e. Ongoing and sustained senior management commitment .......................................... 8 2. Compliance organization and resources ............................................................................. 10 a. Compliance leadership and organization ...................................................................... 10 b. Regular reporting to senior management ..................................................................... 13 c. Adequate resourcing ..................................................................................................... 14 3. Risk identification and assessment ...................................................................................... 16 a. Understanding the company’s overall approach to risk management .......................... 17 b. Applying the same methodology to antitrust ................................................................. 19 c. Introducing or improving control points ......................................................................... 23 d. Effectiveness of control points ...................................................................................... 24 4. Antitrust compliance know-how .......................................................................................... 25 a. Antitrust know-how: manuals, handbooks, guides ........................................................ 26 b. Antitrust training ............................................................................................................ 28 c. Find ways to stimulate positive employee engagement ................................................ 30 d. Information about antitrust investigations ..................................................................... 31 5. Antitrust concerns-handling systems .................................................................................. 32 a. Recognition of the value of antitrust concerns-handling systems ................................. 32 b. Different kinds of internal reporting systems ................................................................. 33 c. Whistleblowing .............................................................................................................. 34 d. Communicate, educate and create a culture of speaking up ........................................ 37 ICC Antitrust Compliance Toolkit 2013 Table of contents e. Non-retaliation and confidentiality ................................................................................. 37 f. The company’s prompt and fair response to a concern ................................................ 38 g. Measuring effectiveness ............................................................................................... 38 6. Handling of internal investigations ....................................................................................... 40 a. Types of internal investigations ..................................................................................... 40 b. Things to consider/practical tools and tips .................................................................... 41 7. Disciplinary action .................................................................................................................. 44 a. General requirements for disciplinary proceedings ....................................................... 45 b. Potential aggravating and mitigating factors ................................................................. 47 c. Specific considerations in antitrust cases ..................................................................... 48 8. Antitrust due diligence ........................................................................................................... 50 a. Due diligence in hiring new employees ......................................................................... 50 b. Due diligence in assessing substantive compliance ..................................................... 51 c. Antitrust assessments (audits) or selective deep dives ................................................ 52 d. Due diligence in relation to trade associations .............................................................. 52 e. Due diligence in M&A situations .................................................................................... 54 f. Practical tips for due diligence ...................................................................................... 56 9. Antitrust compliance certification ........................................................................................ 58 a. Individual certification of compliance ............................................................................. 58 b. Certification by a third party NGO ................................................................................. 60 c. Governmental certification of compliance programmes ................................................ 61 10. Compliance incentives ........................................................................................................... 62 a. Why have compliance incentives? ................................................................................ 62 b. Types of incentives ........................................................................................................ 63 11. Monitoring and continuous improvement ........................................................................... 65 a. Monitoring and assessing processes and controls ....................................................... 65 b. Measuring effectiveness of processes and controls ..................................................... 66 c. Auditing and benchmarking ........................................................................................... 67 d. Monitoring and assessing substantive compliance ....................................................... 68 e. Compliance programme improvement plan .................................................................. 69 ICC Antitrust Compliance Toolkit Practical antitrust tools for SMEs and larger companies 2013 Annex 1: Compliance Blue Print ............................................................................................................ 71 Annex 2: Examples of risk registers ..................................................................................................... 77 Annex 3: Example of a company’s compliance investigation principles .......................................... 78 Annex 4: Trade association due diligence ............................................................................................ 79 Links ......................................................................................................................................................... 80 Acknowledgements ................................................................................................................................. 82 Notes International Chamber of Commerce ICC Antitrust Compliance Toolkit 2013 Introduction Introduction The ICC Antitrust1 Compliance Toolkit is intended to provide practical tools for companies2 wishing to build a robust antitrust compliance programme. It seeks to complement materials produced by antitrust agencies and other sources of guidance, by focusing on practical steps companies can take internally to embed a successful compliance culture. This Toolkit reflects contributions from antitrust specialists closely associated with in-house compliance efforts in both small and larger companies around the world. The Toolkit does not delve into the complexity of the laws in each jurisdiction, but sets out a proposed approach to antitrust compliance that you can use globally in any country, whether that jurisdiction has sophisticated or less sophisticated antitrust laws. It is hoped that it will assist your company whatever sector you are in and whatever the size of your company, whether you are in a small or medium-sized enterprise (SME) or in a larger company, to establish an antitrust compliance programme suited to your company’s needs, risk profile and resources. The topics covered in its eleven chapters follow the approach of the Blue Print developed by ICC and the Chief Legal Officers (CLO) compliance working group, a document which was prepared in 2011 to provide a comparative analysis of agency statements on antitrust compliance programmes and map key components of corporate compliance programmes (see Annex 1). Each Toolkit chapter begins with a Quick Summary. This is intended to provide a synopsis of steps covered: you can refer to these summaries to get an overview of issues before you set out on your compliance journey, to decide what you wish to focus on, especially if time and resources are limited. In addition, the illustrative Starter Kit at the end of this Introduction aims to provide a recap (tailored for SME readers) on the overall approach to clarify which chapters may be of most immediate interest. Each chapter sets out general considerations that may be relevant to the particular compliance component it covers. There follows an outline of practical steps to be tackled, with examples and insights into different possible approaches. Since there is no one-size-fits-all approach to compliance, the Toolkit is not intended to be prescriptive; rather, it offers you a modular “menu” of options from which to draw inspiration. This should allow use by SMEs and large corporate groups alike, whether you wish to introduce a compliance programme or are considering how to refine your approach. There are many possible triggers for your decision to develop an antitrust compliance programme:  At one end of the spectrum, unexpected antitrust investigations by antitrust agencies may spur your company into rolling out a dedicated new programme as a matter of urgency, perhaps in tandem with assurance work to clarify outstanding exposure, while tackling ongoing proceedings;  At the other end of the spectrum, your business leaders may operate successfully based on strong awareness that all relevant corporate risks must be assessed and managed effectively - and actively sponsor a coherent ongoing strategy to develop risk management capability; 1 In this document, the term “antitrust” is used for the laws (in all jurisdictions) relating to the control of anticompetitive agreements and practices, whether these are known in some countries as “competition” laws or as “trade practices” law. Where relevant this term also includes the antitrust compliance elements relating to M&A transactions. 2 The term “company” is used in this document to mean any entity engaged in any commercial activity - ranging from multinational companies through to small and medium-sized enterprises (SMEs). The use of the word “company” does not suggest any particular corporate structure, and this document is intended for all types of entity, whether incorporated, unincorporated, partnership or consortium. ICC Antitrust Compliance Toolkit 1 Practical antitrust tools for SMEs and larger companies 2013  In other situations your antitrust compliance focus may be driven by informed parts of the company, such as your Legal, Audit, or Finance teams, or by new recruits with higher awareness of antitrust compliance considerations. A fresh approach may be needed in countries where antitrust laws or regulators have evolved in ways your business needs to acknowledge and act upon. At the end of the day, processes and systems alone will not manage risks, individuals will. Employees can have very different personal tolerance to risk (and differing personal motivations), hence the need for structured antitrust compliance processes to give your business the skills it needs to develop a common position and secure consistent ongoing commitment from employees and management. The Toolkit therefore begins by addressing (in Chapter 1: “Compliance embedded as company culture and policy”) what lies at the heart of a company’s culture to support antitrust compliance, before looking at organizational and resourcing issues (Chapter 2: “Compliance organization and resources”). It then outlines different ways you can seek to identify relevant operational risks and control points that address them (Chapter 3: “Risk identification and assessment”). Although you can always start with generic antitrust compliance training to raise awareness of applicable laws, undertaking a comprehensive antitrust risk assessment can help clarify what sort of substantive know-how needs to be disseminated internally and how best to present it (Chapter 4: “Antitrust compliance know-how”) to make the most efficient use of your resources. Beyond prevention, but still as a means of proactively tackling suspected or actual concerns, your company may be keen to equip itself with antitrust concerns-handling systems (Chapter 5: “Antitrust concerns-handling systems”), the means to investigate issues internally (Chapter 6: “Handling of internal investigations”) and, where necessary, take disciplinary action and impose sanctions on individuals who fail to live up to corporate expectations (Chapter 7: “Disciplinary action”). The issue is important in a number of ways to your company’s ongoing business, including day-to-day due diligence and compliance assurance, due diligence in respect of trade associations, and due diligence in an M&A context (Chapter 8: “Antitrust due diligence”). In more developed and mature antitrust compliance programmes, the enduring nature of a compliance culture may also depend on the extent to which a company builds assurance mechanisms, such as certification (Chapters 9: “Antitrust compliance certification”) and incentives (Chapter 10: “Compliance incentives”), into its model. Finally, a commitment to ongoing monitoring and continuous improvement is an essential feature of any good antitrust compliance programme (Chapter 11: “Monitoring and continuous improvement”). 2 ICC Antitrust Compliance Toolkit