The practice of the Serbian Commission for Protection of Competition (“Commission“) shows that competition law infringements are often not intentional but a consequence of a lack of understanding of one’s obligation under the law. Aiming to increase the awareness among market participants of practical implications of abstract competition law norms and promote the adoption of compliance programs, the Commission has published on 24 December 2021 its Guidelines on Competition Compliance Programs (“Guidelines“).
The Guidelines offer a primer on competition law and certain useful tips on how to develop a tailor-made internal compliance program.
Purpose of compliance program
Compliance program is an internal act of a company designed to ensure its compliance with competition law or at least reduce the room for inadvertent non-compliance. It represents an expression of the will of the management to implement the rules on protection of competition at all organizational levels of the company and by all employees. As part of the company’s internal regulatory framework, a competition law compliance program should also impose certain work obligations on managers and employees.
The Guidelines advise that the process of designing and adopting a tailored program for compliance of the business with competition rules should begin with the so-called “zero step”, marked by defining clear business goals of the company which will serve as a baseline for risk-based approach. The program should be further developed through the following steps:
- Step 1 – Sell-assessment of the company
- Step 2 – Defining clear and explicit managerial responsibilities
- Step 3 – Creating a clear organizational structure for reporting the issues
- Step 4 – Development of the internal mechanism on cooperation with the Commission
- Step 5 – Training of employees
- Step 6 – Monitoring and evaluation of program results
A good compliance program should ensure that:
- all potential risks of violating the rules on protection of competition are taken into account when drafting the compliance program and implementing it via employee training programs;
- all employees are informed as to who is responsible for the implementation of the compliance program in the company;
- all employees have direct access to the compliance program;
- all employees are informed about the contents of the compliance program and their obligations and responsibilities under the program;
- adequate legal support is obtained whenever there is a suspicion of a competition law violation;
the company develops the culture that will result in any violation or suspicion of a competition law violation being immediately reported to the person(s) responsible for the implementation of the program within the organization.
Compliance program framework
Which compliance documentation a company will develop depends on a number of factors, including its size and type of business. Competition Compliance Policy is usually a baseline document that expresses commitment of the company to the compliance with the regulatory framework and explains basic competition law concepts (restrictive agreements, dominant position and its abuse, and unreported concentrations).
The Code of Conduct defines the standards of communication with competitors, vendors and suppliers and identifies reporting mechanism in case of suspicion that a particular business relationship or practice may be contrary to the principles set out in the Competition Compliance Policy.
Training plans and programs should be targeted and practical, addressing specific aspects of the company’s business and specific risks associated with it.
Having in mind that regulation gives extensive powers to the Commission in the process of investigating competition violations, it is useful to separate manuals on the employee conduct and cooperation with the Commission in case of inspection, such as dawn raid manual.
Benefits of compliance program
An obvious benefit of a properly implemented competition law compliance program is that it reduces the risk of infringement taking place.
Furthermore, if the infringement does occur despite the proper compliance mechanisms having been put in place, the existence of a compliance program and evidence of its implementation, including in the manner of cooperation with the Commission, can be, as a matter of principle, taken by the authority as a mitigating circumstance when assessing the actual amount of the fine within the permitted range (which range ends as high as 10% of the infringer’s income generated in Serbia in the year preceding the investigation).
Finally, compliance program is often an element of the commitments offered to the Commission in the course of investigation of a conduct that borders with competition law violation.
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