A renewed approach to competition law Guido Lobrano is BusinessEurope Deputy Director, Legal Affairs and Internal Market Developing and sustaining a competitive commercial environment in the EU is at the core of business interests. Competition provides the best incentive for business efficiency, encourages innovation and guarantees consumers the best choice. Antitrust law is crucial in this context and its enforcement is fundamental to creating and sustaining a competitive economy. Why is competition law such a critical topic? First of all, it affects many business and strategic decisions. Respecting competition rules is fundamental to healthy, well-functioning markets. And finally, violations of competition law are very heavily sanctioned. BusinessEurope, the biggest organisation representing European companies of all sizes and all sectors, wants to promote competition compliance by identifying general principles and supporting companies in their actions in this area. Full compliance with antitrust rules is not only a legal obligation, but is also an attitude and a culture that can positively impact a company’s business. Remaining compliant with rules and maintaining a strong reputation are fundamental matters for every enterprise. We believe that a lot can be done in this area through encouraging business to develop and apply competition compliance in their daily activity, providing them with general guidance to do so, and awakening antitrust authorities to the importance of supporting and encouraging companies’ compliance efforts. This should also be complemented by an efficient redress system for consumers. Effective and easy access to justice for those harmed by breaches of EU rules is paramount. This is key to boost consumer confidence in the Single Market. It is in the interest of companies that adequate redress mechanisms exist and function well. This does not mean that policy-makers should actively seek to increase court proceedings. This is probably not the best way forward and such an approach would run counter to the public policy of many EU member states, which are currently trying to minimise litigation. Effective redress for those concerned by breaches of EU law does not necessarily have to be achieved through courts only. Other, non-judicial redress mechanisms are available and should be taken into consideration very seriously. BusinessEurope competition package On 24 April 2017, BusinessEurope launched a new competition package for companies. It is composed of the guide Making Sense of Competition Law Compliance and the blueprint Alternative Dispute Resolution for Antitrust Damages. The Compliance Guide is designed for companies, especially SMEs, and aims to avoid competition breaches in the first place. It can be described as a ‘first aid kit’ providing elementary guidance to businesses on competition law compliance; its main objective is to encourage basic actions to improve compliance. The Blueprint Alternative Dispute Resolution for antitrust damages cases aims to provide, whenever possible, a way to address antitrust damages cases without going to court. The availability of a non-judicial route is particularly important for businesses as well as consumers. In addition, private actions for damages are likely to be more frequent than it has been the case until today, due to ongoing legislative developments. The objective of the BusinessEurope package is two-fold. Firstly, to demonstrate the business community’s commitment to compliance with competition rules, encourage entrepreneurs to take concrete compliance steps and provide a practical tool to achieve that. Secondly, we would like to address those situations when violations still take place and provide a pragmatic avenue for companies and consumers to deal with compensation. The key drivers of competition compliance We believe that to achieve effective results, it is important to understand the motivation for competition law compliance within businesses. The basic legal responsibilities of a company’s management include supervising and ensuring compliance with the law, including antitrust rules. Company leaders should make sure that any breaches of the law are prevented or discovered and remedied early enough, so that the company can avoid administrative and civil liability, protracted proceedings and high legal costs. Improving awareness and knowledge of basic competition law principles will help prevent or tackle at an earlier stage any issues that might arise within the company. This can substantially diminish the risk of liability that might have otherwise derived from misconduct. It can also avoid or decrease costs related to external legal advice. Not the least important, ensuring observance of antitrust law enables the company to prevent reputational and/or financial damage. With compliance being a manifest requirement of doing business with suppliers and customers in many countries, it makes good business sense for companies to take action to meet legal requirements. The immediate consequences of non-compliance are severe - heavy penalties, reputational damage and loss of customers. The image of the company is a key factor. A business actively engaged in compliance will project the image of an ethical business, which will add substantially to its corporate image. Active engagement in antitrust compliance will also inspire trust from customers and consumers at large. It should not be forgotten that an antitrust infringement – especially in cartel cases – involves questions about the ethics and business model of the company. The potential economic impact deriving from reputational damage can be even greater than the risk of a penalty as it can lead to customer and financial loss. Since failure to comply will result in strict sanctions and fines, along with possible media and public scrutiny, companies recognise compliance as one of their priorities. Bad press can cost a company much more than taking a few steps to improve its compliance and limit the risk of violations. Thus, the next question is: how does competition law compliance work? How should a compliance programme look like to achieve prevention and elimination to a satisfactory extent? What are its main components, and the main practical aspects that need to be taken into consideration when preparing and implementing competition law compliance programmes? Are expert lawyers indispensable? The guide suggests answers to these and many other questions. It helps understand the importance of competition law compliance in general and helps executives and company officers – in particular those of SMEs which often do not have in-house legal advisers – determine the best ways to cope with their duty to prevent, identify and stop potential competition law violations within their organisations. Our guide is a toolbox that provides fundamental considerations and suggestions regarding any corporate competition law compliance programme. Alternative dispute resolution for antitrust damages Litigation is in most cases very costly, long and time-consuming, and damaging to a company’s image. When breaches of competition law occur, alternative dispute resolution (ADR) can provide a cheaper, shorter and less confrontational avenue to address disputes related to damages claims from those harmed by the violation (for example, consumers or clients and business partners). BusinessEurope’s package outlines the possible application of ADR to antitrust damages cases and how an ADR scheme could work in practice in this field. This is especially relevant in the context of the new EU rules on antitrust damages actions that also aim to facilitate consensual dispute resolution, for example by suspending limitation periods for damages action for up to two years when the parties are involved in consensual dispute resolution. Competition authorities may also take into account the result of an ADR when setting fines. This could be justified by a public interest in facilitating compensation through incentivising ADR. ADR should be specifically targeted at proposing a just, equitable and effective outcome, acceptable to all parties, and providing a speedy resolution of claims at low procedural cost. Especially when a company has already been found responsible for a breach of competition law, it would have a business interest in drawing a line under the affair and restore its reputation by making direct redress to its affected customers. It would at the same time avoid lengthy litigation and drastically limit legal fees. The blueprint is aimed at describing the main concepts of how an antitrust damages claim could be addressed by an out-of-court system. It is by no means the only possible way but it is aimed at providing inspiration and encouragement to companies and authorities involved in antitrust damages claims. Final remarks Companies and circumstances are different and so are the solutions that suit them best. There may be other, different ways to deal with both the compliance activities and possible out-of-court schemes. It is up to companies and their legal advisers to pick the right tools and use them correctly in order to craft the optimum solution and implement it successfully. BusinessEurope competition package is a tool that does not replace expert knowledge and legal assistance where appropriate. At the same time, it will help companies identify those situations where legal assistance may be the best option. Companies are invited to find and use free of charge BusinessEurope package here.
Improving awareness and knowledge of basic competition law principles will help prevent or tackle at an earlier stage any issues that might arise within the company