one visionone identity

one community

Competition Compliance Toolkitfor Businesses in ASEAN

Competition Compliance Toolkitfor Businesses in ASEAN

one visionone identity

one community

The ASEAN SecretariatJakarta

Competition Compliance Toolkitfor Businesses in ASEAN

ii

• WhatarethepurposesoftheToolkit?• WhoarethetargetedusersoftheToolkit?• HowtousetheToolkit?• HowdoestheToolkitinterlinkwithotherAEGCinitiatives?

1

• Howtoraiseawarenessandfosterasoundunderstandingofcompetitionrules?

• Howtoassessthelevelofunderstandingamongbusinesses?

• Howtosustainengagementwithbusinesses?

7

• Whatisarisk-basedapproach?• Whatiscorecommitment?• Whatarethestepsofarisk-basedapproach?

13

3 • Whycomplywithcompetitionlaws?• Whatarecommonanti-competitivepractices?• Whatistheroleofcompetitionauthorities?• Whatistheroleofbusinesses?

9 • HowcanCompetitionAuthoritiesmotivatebusinessestoadopt/implementCCPs?

• WhataretheminimumrequirementsforaneffectiveCCP?

INTRODUCTION

PART B: BUILDING AWARENESS & UNDERSTANDING AMONG THE BUSINESS COMMUNITY

PART D: IDENTIFYING, ASSESSING AND MANAGING RISKS

PART A: GENERAL RATIONALE

PART C: PROMOTING COMPETITION COMPLIANCE AMONG BUSINESSES

ANNEXES: SPECIFIC DOCUMENTS FOR BUSINESSES

This Part provides an introductory overviewofthepurposeoftheToolkitand how it is anchored in ASEAN’sregionalcompetitionagenda.

This Part discusses successful approaches for competition authorities and other relevant agencies topromote competition compliance amongbusinesses.

This Part presents a number of key practicalstepsforbusinessestofollowwhenimplementingaCCP.

This Part explains the rationale of competition compliance, its risks and benefits.

This Part describes the features and minimumrequirementsforaneffectiveCCP,aswellasmotivating factors forbusinesses.

Table of Contents

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WHAT ARE THE PURPOSES OF THIS TOOLKIT?

This toolkit aims to provide businesses with information on the basic principlesofcompetition law,benefitsof competitioncompliance,aswell asguidelinesonimplementinganinternalCompetitionComplianceProgramme(CCP)intheASEANcontext.TheToolkitwaswrittenforaninformationalpurposefortargeteduserstoidentifykeyconceptsofcompetitioncomplianceanddevelopcompliancestrategiesor measures that best suit their needs, in order to enhance competition compliance withinthecompanyaswellasbusinesspractices.

WHO ARE THE TARGETED USERS OF THE TOOLKIT?

Large,medium,andsmall-sizedcompaniesthatarebothprivatelyandstate-ownedarethemaintargetedusersofthisToolkitascompaniesneedtobeawareofthebenefitsofcompetitionandrisksofinfringingcompetitionrules.

CompetitionAuthoritiesinASEANmayalsorefertothisToolkitforguidanceonhowtoencouragegreaterbusinesscompliancewithcompetitionlaw.

HOW TO USE THE TOOLKIT?

This Toolkit consists of four sections that are dedicated to different users and marked accordingly:

Part Aexplainsthegeneralrationaleofcompetitioncompliance,alongwiththerolesandresponsibilitiesofcompetitionauthoritiesandbusinesses.

Part Bcontainsguidance,particularlyforyoungercompetitionauthorities,onhowtobuildawarenessandunderstandingamongbusinesses.

Part C shows thescopeof competitioncomplianceprogrammes,andhowcompetitionauthoritiescanmotivatebusinessestoadoptthem.

Part Dconcernsmanagingcompetitioncompliancerisks.

IntheAnnex,businessescanfindresourcestodevisetheirownCCPsinaccordancetotheirspecificneedsandcircumstances.

INTRODUCTION

2

HOW DOES THE TOOLKIT INTERLINK WITH OTHER AEGC INITIATIVES?

ThechartbelowpresentsthelinkagesbetweentheCompetitionComplianceToolkitandotherinitiativesoftheASEANExpertsGrouponCompetition(AEGC)undertheASEANCompetitionActionPlan(ACAP)2025.

StrategicGoal4:Promoting a competition-aware

region

Initiative4.5:Encourage competition compliance

among businesses

4.5.1:ASEANHandbook

on CompetitionPolicyandLawfor

Businesses

4.5.2:ASEAN Competition

BusinessPerception Index

4.5.3:AEGCWebPortal,

as an onlineinformation centre

for businesses

4.5.4:Toolkit/Checklist on

CompetitionCompliance for

Business

TheACAP2025containsfivestrategicgoals:

1) Effective competition regimes are established in all ASEANMember States(AMS).

2) The capacities of competition-related agencies inAMSare strengthened toeffectivelyimplementCPL.

3) RegionalcooperationarrangementsonCPLareinplace.4) Promotingacompetition-awareASEANregion.5) MovingtowardsgreaterharmonizationofcompetitionpolicyandlawinASEAN.

ThisToolkitfallsunderStrategicGoal4onpromotingacompetition-awareregion.

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WHY COMPLY WITH COMPETITION LAWS?

Businesses,irrespectiveoftheirsizeandform,arerequiredtoadheretothelawsofthejurisdictiontheyoperatein.Intheareaofcompetition,itmeansthatbusinessesareobligedtorespectrulesthatencourageandmaintainfaircompetitionamongbusinesses.Other than legalobligation,businessesalsobenefit fromcomplyingwithcompetitionlawthroughvariousways.Hence,it isimportanttoconsidertherisksofnon-compliancetogetherwiththebenefitsforbusinessesincomplyingwithcompetitionlaw.

Risks of non-compliance

Theconsequencesofinfringingcompetitionlawscanbecostlyforbusinessesasthismayentailsignificantfinancialpenaltiesaswellasotherpotentialnon-materialimpact, such as reputational loss, criminal convictions, and lawsuits from thirdparties.Acompetitioncompliancestrategyis,therefore,apreventivemeasurethatwillhelpbusinessestoavoidadversepotentialrisksresultingfromanti-competitivepractices.

Benefits of competition compliance

Competitioncompliancehasgreaterbenefitsbeyondlegalcompliance.Inabroadsense,competitionensuresthatconsumersarenotdisadvantagedandthatthereis no surplus at the cost of consumers. As such, competition helps to redressimbalancemarketpowerbetweenconsumersandcompanies,thuscontributingtoconsumerwelfare.

Withfairbusinesscompetition,productivityandinnovationwillincreaseasbusinessescompete to use and allocate economic resources,withtheaimofproducinggoodsand services in the most efficient way, atthelowestpossiblecosts.Competitionalsomeans that businesses will be stimulatedto increase theirmarket sharebycreatingnew products and services, therebyencouraging greater product variety andserviceinnovation.

By putting into place aCCP, businesses canminimize andmitigate the risks ofinfringing competition rules. The CCP can act as an early-warning system to identifyandremedypotentialanti-competitivepracticesinacompany.Althoughaninitial investmentisneededtodevelopaCCP,itsbenefitswillultimatelyoutweighitscost.

PART A: GENERALRATIONALE

Competition compliance is good for business!

BecomeSuccessfulwithcustomers and

businesspartners

Avoidinvestigationsand

sanctions bycompetitionauthorities

Drive economicgrowthandinnovation

Reducingthe risks of non-

compliance

Contributingisacom-petitionculture

Buildingareputationasa‘clean’company

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WHAT ARE COMMON ANTI-COMPETITIVE PRACTICES?

Toensurealevel-playingfield,competitionlawgenerallyprohibitsthreemaintypesofanti-competitivepractices,whichare:(i)anti-competitiveagreements,(ii)abuseofadominantposition,and(iii)anti-competitivemergersandacquisitions.

Anti-competitive agreements

Anti-competitiveagreementsare

agreementsbetweenbusiness players that harm competition by preventing,restricting,ordistortingcompetition.

Examples of such agreementsincludeprice-fixing,market-

sharingandbid-rigging.

Anti-competitive mergers &

acquisitions

Mergersandacquisitionsare only prohibited if they

lead to a restriction or substantiallesseningofcompetition.Accordingly,mergersandacquisitions

should be screened and approved by the Competition Authority or other competition

agency.

Abuse of dominant position

Abuse of dominant position is a practice in whichacompanyusesitssubstantialmarketpowertorestrictcompetition.

Such abusive behaviours may include exploitative abuse(e.g.,settingexcessive prices or unfairconditions)orexclusionary abuse

(e.g.,predatorypricing,exclusivedealings).

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Competition Authorities play

a critical role in proactively promotingandensuringbusinesscompliancewiththecompetitionlaw.

FAQs

Why is this a good idea? BusinessmanagersarelikelytoencounterquestionsoncompetitioncompliancewhentheyimplementaCCP.

How does it work? A starting pointmay be the publication of FAQs online andsubsequentdissemination throughother formsofmedia (e.g.,brochures/leaflets).In time, as businesses become more familiar with competition compliance, themessage may shift from explaining general benefits of competition complianceto more specific aspects of compliance, such as enforcement procedures (e.g.,leniency,whistleblowing).FAQsshouldbewritteninashortandconciseway,andinnon-technicallanguage.

When should this take place? ThedevelopmentofFAQs,shouldbeginassoonaspossible.Theyshouldbekeptup-to-dateandinlinewithanychangestocompetitionlawandmajorcompetitioncases.

WHAT IS THE ROLE OF COMPETITION AUTHORITIES ?

The following are the suggested ways for Competition Authorities to ensurecompetitioncomplianceamongbusinesses:

Setting priorities: Law enforcement vis-à-vis advocacyCompetitionAuthoritiesshouldbalanceenforcementwithadvocacy.Thelatterisnotalessimportantfunctionasit isessentialinpreventinganti-competitivepracticesfromoccurringinthefirstplace.

Setting priorities: Specific business sectors and actors It is also important for Competition Authorities to prioritise their efforts to reach out to specificbusinesssectorsand/oractors.Forexample,CompetitionAuthoritiesmayconsiderSmallandMediumEnterprises(SMEs)as themain target foradvocacymeasures,giventhelackofknowledgeandawarenessoncompetitioncomplianceamongSMEs.Afocuscanbeplacedonanti-competitiveagreements,giventhatSMEsaremorepronetoengageinsuchanti-competitiveconduct.Decidingwhichsectororactorstobeprioritized,however,dependsonthespecificcontextsandprioritiesofeachcountry.

Providing guidance To raise awareness of competition compliance among businesses, CompetitionAuthoritiescouldprovideguidingdocumentsaspartof theiradvocacyinitiatives.TheseincludeguidelinesorFrequentlyAskedQuestions(FAQs)basedongeneralprinciplesoreventailoredtothecountry-specificcontext.

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PolicyAnoverarchingpolicyprovides commitment, rules, and disciplinary measurestoguide

employeesinavoidinganti-competitive practices

PersonnelRegularlyconducting

competition compliance trainingsraises

employeeawarenessandunderstandingabout

competition rules

ProcedureAclearframeworkof

business procedures and division of responsibilities willenableemployees

to adhere to proper processes and

permitted conduct

WHAT IS THE ROLE OF BUSINESSES?

Thebusinesscommunityalsoneeds toplayanactive role inachievingeffectivecompetition compliance. The following practices are possible approaches thatbusinessescouldadopttoavoidinfringingcompetitionlaws.

Building a competition cultureA “competition culture“ entails a shared awareness about the benefits of faircompetition. It encourages businesses and other stakeholders to comply withcompetitionrules.

For businesses, having a competition culture can discourage anti-competitiveconduct.Thenotionofcompetitionculturemayseemabstract,butbusinesseshaveadoptedsomeofthefollowingstrategiestoapplyorfosteracompetitionculture.

Implementing competition compliance strategy There is no ‘one size fits all’ approach in developing a competition compliancestrategybecauseitisheavilyinfluencedbythecompany’sinternalenvironmentandculture,aswellasthenatureofpotentialrisksthatitmayencounter.Thefollowingarecommonaspectsofacompetitioncompliancestrategy thatbusinessesmayimplement:

Identifying Drivers Businesses should identify the drivers of compliance and non-compliancewithcompetitionlawinordertolearnhowtomotivateemployees to comply

‘Tone from the Top’Gettingtheleaderstosupport competition

compliance is not onlyaboutsecuringcommitment,

but for business leaders andmanagerstoconstantly

reinforce these values to employees

Recognizing RisksToefficientlyallocate

resources for competition compliance, businesses canimplementarisk-based approach by focusingonareaswithgreaterriskofnon-

compliance

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HOW TO RAISE AWARENESS AND FOSTER A SOUND UNDER-STANDING OF COMPETITION RULES?

An effective competition compliance strategy requires a high-level of awarenessandunderstanding.ItiscriticaltoensurethattheCompetitionAuthorities’advocacyactivitiesaretailoredtobusinessneeds.ACompetitionAuthorityshouldtakethefollowingintoaccount:

Outreach / dissemination

Competition Authorities can adopt various outreach methods to disseminateinformationtothebusinesscommunity.Besideorganisingseminars and/or workshops, Competition Authorities could considerusingsocialmediaplatforms(e.g.,Facebook,Twitter)orotherinnovativechannels(e.g.,video,TVcommercial/show)toachievewidecoverageamong their target audience while ensuring efficient use of theirresources.

Leverage through partnerships

CompetitionAuthoritiesmayconsider leveragingcooperationpartners,such as line ministries, business associations and chambers, provincial structureorlocalgovernments,aswellascompetitionpractitioners,suchas lawyers and other relevant and interested stakeholders, includingbusinesses themselves. A Training of Trainer (ToT) approach can beuseful in sustaining awareness levels, asbusinessesmay adopt suchtrainingmethodsinternally.

PART B: BUILDINGAWARENESSANDUNDERSTANDINGAMONGTHEBUSINESSCOMMUNITY

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HOW TO SUSTAIN ENGAGEMENT WITH BUSINESSES?

CompetitionAuthoritiesshouldapproachbusinessesatregularintervalsandnotonaone-offbasis.Thiscanbedonebyconductingmonthlyseminarsorworkshopsor formaland informalnetworkingsessions.Maintaininganonlinepresenceandpromotingcompetitioncomplianceviasocialmediaisalsoanefficientandeffectivewaytosustaintheengagementandexposurewiththebusinesscommunity.

Checklist (self-assessment)

Competition Authorities can promotetheuseofaself-assessmentmecha-

nism or checklist to assess the level of understandingaboutcompetitionrulesamongbusinesses.Thechecklistwouldmeasurethelevelofunder-standingandwhethercertain

mechanisms to achieve complianceareinplace.

Surveys (pre- and post-events)

Competition Authorities may conduct surveystogaugebusinesses

awarenessandunderstandingoncompetitionlaw.Thepre-andpost-

events approach can also be adopted whencarryingoutadvocacycampaignsorprogramstolearnwhethercertain

events or initiatives have been effective inincreasingunderstandingamong

businesses.

HOW TO ASSESS THE LEVEL OF UNDERSTANDING AMONG BUSINESSES?

Inordertodevelopaneffectiveadvocacystrategy,theCompetitionAuthoritiesmustfirsthaveaninsightintothelevelofunderstandingamongbusinesses.ThefollowingaresomeapproachesthatcanbeundertakenbyCompetitionAuthoritiesingaugingorassessingthelevelofunderstandingaboutcompetitionlawcomplianceamongbusinesses.

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COMPETITIONAUTHORITY

ENFORCEMENT

•Leniency•Award/RewardCCPs

[ ]BUSINESS

CompetitionComplianceProgramme

HOW CAN COMPETITION AUTHORITIES MOTIVATE BUSINESSES TO ADOPT/IMPLEMENT CCPs?

Broadly speaking, a Competition Compliance Programme (CCP) embodiesthecommitmentof a company tocomplywith theprovisionsof thecompetitionlegislation.Itprovidesaformalinternalframeworktoensurethatmanagementandemployeescomplywithcompetitionrules.

Fullcompliancewithcompetitionrulesstemsfromanattitudeandaculturewhichcan have a positive impact on a company’s business. Competition Authoritiesmightevenincentivisebusinessestobecompliantif theyhelpthemtoachieveacomplianceculture(e.g.,throughrewardschemes).

The chart below illustrates individual stepswhen implementing aCCP and howbusinessesandauthoritiescanbenefit.

PART C: PROMOTINGCOMPETITIONCOMPLIANCEAMONGBUSINESSES

Access to informationCompetition Authorities are a possible contact partner for businesses whereuncertaintyarisesinmattersofcompetitionandantitrustlaw.

IfCompetitionAuthoritiessupportbusinessesinthedevelopmentofaCCPthroughproviding greater access to information and guidance, businesses with limitedresourcesandexpertiseincompetitionlawmaybemoreincentivisedtointroduceaCCP.

What does this mean?

Why is this a good idea?

How does it work?

What does this mean?

Why is this a good idea?

COMPETITIONAUTHORITY

ADVOCACY

•AccesstoInformation•WorkwithChampions

[ ][ ]

R I S K

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TheroleofCompetitionAuthoritiescouldrangefromprovidingmaterialsexplaininghowtoapplythelaw(e.g.,brochuresandleaflets),tosharingindetailinformationaboutpastcases,andprovidingdirectadvicetobusinessesabouthowtodevelopaCCP.

Working with championsInencouragingtheimplementationofCCPs,CompetitionAuthoritiescouldconsiderworkingwith“champions”fromwithinthebusinesscommunity.These“champions”canactasrolemodelsforotherbusinesses,sharingtheirexperiencestoadvocateforbroadercompetitioncompliance.

AbusinessmightfeelincentivisedtoimplementaneffectiveCCPifitresultsinthebusinessstandingoutascompliantwithcompetitionlaw,progressiveandethical,whichwillenhanceitscorporateimage.Theimageabusinesstransmitsisalwaysanimportantconsideration,andapositiveimageinspirestrustfromitscustomersandconsumers.

LeniencyAnother incentive forbusinesses tocooperatewithCompetitionAuthorities isbyprovidingaleniencyprogramme.Thisofferscompaniesthatareinvolvedinacarteleithertotalimmunityfrompenaltiesorareductioninthesizeofpenaltieswhichtheauthoritiescouldotherwisehave imposedon them– if theyself-report (voluntarydisclosure)andhandoveranyrelevantevidence.

International experience has shown that leniency programmes are effective inincentivising businesses to report to Competition Authorities. By means of thisprogramme,CompetitionAuthoritieshave thepossibilityof receiving informationandinsiderevidenceaboutacartelwhichmaybeotherwisedifficulttoobtain.

To take full advantage of the leniency programme, businesses must voluntarilydiscloseinformationandceasetheirinfringingactivityimmediately.WithaneffectiveCCPinplace,companymanagementmaybeabletodetectunlawfulactivitiesatanearlystage,allowingthemtomakealeniencyapplicationrelativelyearlyon.

Why is this a good idea?

What does this mean?

Why is this a good idea?

How does it work?

What does this mean?

How does it work?

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What does this mean?

Why is this a good idea?

How does it work?

Award or reward CCPsRecognisingbusinesseffortstoputinplaceaCCPmaybeonewayofencouragingcompetitioncomplianceamongbusinesses.

This approach could send a signal to businesses about the importance that aCompetitionAuthorityattachestotheexistenceofaneffectiveCCP.

For example, Competition Authorities can acknowledge companies beinginvestigated for their efforts to be compliant with competition law, even if suchcompaniesareeventuallyfoundtohaveinfringedcompetitionrules.Thiscouldbeconsideredasamitigatingfactorindecidingtheamountoffinancialpenalties.Suchastancedemonstrates thatCompetitionAuthoritiesrecognisecomplianceeffortsbybusinesses.

WHAT ARE THE MINIMUM REQUIREMENTS FOR AN EFFECTIVE CCP?

1. Core commitment

This is absolutely vital! There must be a strong policy statement by seniormanagementthatcompetitioncomplianceisacorepartofthebusinessandthatallemployeesareexpectedtocomplywithcompetitionrules.Suchastatementmaybeintegratedintothestandardsofbusinessconductorcontainedwithinaspecialmanual. Corporate commitment is a fundamental precondition for successfullyinstillingaCCPculturewithinabusiness.

For SMEs: Thiscommitmentmaybereflectedininternalguidelines.

2. Documents

Abusiness,regardlessofitssize,mayhavepoliciesandproceduresthatgovernitsinternaloperations,includingchecklistsonkeyprocessestoensurethatrisksarereadilyidentified,prevented,remediedormitigated.Suchwrittenanddocumentedprocedures should be tailored to accommodate the demands of a robust compe-titioncomplianceprogramme.Useofthesedocumentsshouldhelpemployeestoknowwhattheyneedtodoorwhotheyhavetocontactintheeventofnon-compli-ance.

For SMEs: Insteadof documentedprocesses, introduce an employee’sdutyto seekpreliminary legal advice in caseswhereanydoubt arises concerningnon-compliance.

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3. Personnel

TheseniormanagementofacompanyisresponsiblefortheimplementationofaCCP.Amemberofstaffshouldbeappointedordesignatedtobethepersonmainlyresponsiblefortheprogramme.

For SMEs: Keep in touch with employees and ensure regular exchange ofinformationonrelevantcompetitionissues.

4. Processes

ThesuccessfulimplementationofaCCPrequiresknowledgeoftheprocessesandoperationsofabusiness.Inparticular,aCCPtakesintoaccounttheexpansionofbusinessactivitiesandentranceintonewmarkets,aswellastheenactmentofnewregulations,amongothers.Toenhancestaffcommitment,employeesshouldideallybe exposed to ageneral training session. This could takeplace aspart of theiremployeeinduction.Thelegalteamshouldalsoundergospecifictrainingtoallowittoprovidecounseltootheremployeesoncompetitionlawmatters.

For SMEs: Assigntheresponsibilitytothein-housecounseloroutsourcethisfunctiontoanexternallegaladviser.

5. Monitoring the existence and effectiveness of CCPs

MonitoringandimprovingtheeffectivenessofaCCPtakesplacethroughregularreview and audit of the CCP, confirmation of management commitment to theCCP, theaccuracyofdocumentationandguidelinesavailable, theassignmentofresponsibilitiestoemployees,andthegenerallevelofcompetitionlawawarenesswithinthecompany.Anotherimportantandusefulstepwhenitcomestomonitoringis to collect experiences that different business units have had and encouragecommentsontheeffectivenessoftheCCP.

For SMEs:ThefocusofeveryCCPshouldbetoidentifyhigh-riskareaswithinthebusiness.

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WHAT IS A RISK-BASED APPROACH?

Aspreviouslydescribed,aCompetitionComplianceProgramme(CCP)embodiesthe commitment of a company to comply with the provisions of competitionlegislation.WithaCCPinplace,aformalinternalframeworkisestablishedtoensurethatthemanagementandemployeesofacompanyfullycomplywithcompetitionlaw.

A CCP can be either a standalone programme or part of a broader regulatorycomplianceframework.Itcanbeimplementedthroughacompany’slocalofficeorthrough itsglobalheadquarters.BusinessesmayachieveaneffectiveCCPby1)identifying,2)analysing,3)managingand4)monitoringallcompetitionlawrisks,therebycreatingandmaintaininganeffectivecomplianceculturethatworksforthebusinessinquestion.

WHAT IS CORE COMMITMENT?

ThekeyelementofeveryCCPisforthemanagersandemployeesatalllevelsofthebusinesstodemonstrateastrongcommitmenttocompetitionlawcompliance.

A well-publicised statement may help reinforce the commitment to competitioncompliance.Thismaybeachievedbyoutliningaclearlydefinedsetofrules(e.g.,bymeansofaletterfromtheCEOcontainingtherules).Itisalsovitaltocommunicatethedefinedgoalsandruleswithinthebusinessandtoallemployees.

PART D: IDENTIFYING,ASSESSINGANDMANAGINGRISKS

What does this mean?

How does it work?

Identify the risks

Managetherisks

Analyse andevaluate the risksMonitorandreview4 2CORE

COMMITMENT

1

3

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WHAT ARE THE STEPS OF A RISK-BASED APPROACH?

Step 1: Identify the risks

Itisimportanttounderstandthespecificrisksabusinessfacesincompetitioncompliance.Thefirststepistolookcarefullyatthebusinessitselfandtoidentifyareaswheretheremightberisks.Achecklistisgivenonthenextpagetoassistbusinessesinidentifyingpotentialrisks.

Example: Possibility of collusion with competitorsor restrictive practices by the business possessingmarketdominance.

Step 2: Analyse the risks

Oncetheareasofriskhavebeenidentified,itisnecessarytoevaluatetheirimpact.Oneapproachistorateeachriskaslow,mediumorhigh.Atrafficlightsystemand/orariskmatrixcouldbeused(shownonthenextpage).

Example: Certain employees, processes or documents couldbeidentifiedashigh(red)riskareas.Thesemayincludeemployeeswhoarelikelytobeincontactwithcompetitors, and those who are involved in makingpricingdecisionsforproductsandservices.

Step 3: Manage the risks

Once the riskshavebeenevaluatedand rated, thenextstepistosetuppolicies,proceduresandtrainingsessionstomitigateandaddress therisks.Theexactactions thatneedtobetakenwilldependuponthespecificrisksiden-tified,theirimpact,andthelikelihoodoftheiroccurrence.

Example: Arrange for in-house presentations withQ&A or interactive sessions (workshops/role play)for employees who are likely to have contact withcompetitorsormakepricingdecisions.

Step4:Monitor the risks

Regularlyreviewsteps1to3toensurethataCCPremainscurrentandrelevant.Whetherthereviewshouldtakeplaceon an annual basis, or more or less often, depends on the specificcontextofthebusiness.

How can SMEs ensure competition compliance?

Small businesses do not need to worry about the risk of infringing the competition law – right? WRONG!

Competition laws generally applyto all industries and market players, irrespectiveofthesizeofthebusiness.However, SMEs may face differentrisks and challenges in complyingwithcompetitionlaws:

• In principle, the key elements discussed for a CCP above also apply to SMEs, but the costs ofimplementation must be kept in mind. For smaller businesses, aformal CCP may not be feasible due to resource constraints.However,employeesmuststillbeeducated about the importance of competition compliance and madeawareoftheimplicationsofinfringingthelaw.

• SMEs should take compliancemeasures that are proportionate to theirrisks.

• A CCP for SMEs might beless formalised and structured compared to those of a largerbusinessandcouldfocusonanti-competitiveagreements,asSMEsaremorepronetoengageinthese.

• Usingpubliclyavailableguidelinesdeveloped by Competition Authorities and/or commercial or international organisations couldbe a good solution to suit theneedsofasmallcompany(“CCPLite”).

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CHECKLIST TO IDENTIFY COMPLIANCE RISKS

Toensurethatabusinessiscompliantwithcompetitionrules,risksmustbeiden-tifiedat anearly stage.The followingchecklist summarizesa fewkeyquestionsaccordingtothreedistinctcategories.

Risks People Processes DocumentsGeneral Isthecompanyoperatingin

amarketwheremost,ifnotallcompetitorsareknown?

Arethereanypartnershipswithcompetitors, or is there any cooperationplanned?

Does the company have jointsellingandpurchasingagreementswithanycompetitors?

Horizontal restraints of trade among competitors

- Are the customers also thecompetitors?

- Is the sales staff in contact withcompetitors(e.g.,attrade events / association meetings)?

- Dostafffrequentlymovebetweenbusinesseswithinthesector?

- Are prices / production / output limitations or territories discussed withcompetitors?

- Is(sensitive)informationsharedwithcompetitors?

- Havetherebeenanycartelinvestigationsorlawsuitsallegingcartelsinthemarketwherethebusinessoperates?

- Arethereanyagreements(orally/inwriting)withcompetitors about prices / quantities/territories?

- Arethereanyagreementsregardingbidrigging(e.g.,notto/withdrawabid)?

- Arethereanyagreementsorcooperationagreements(expressorimplied)?

Vertical restraints of trade among

non-competitors

- Areproductssoldthroughindependentdealers?

- Are there any exclusive distributorships?

- Are there any customer andterritorialrestrictions?

- Arethereanysignificantdifferences in sales prices betweenonecountryandanother?

- Are there any private import / exportrestrictions?

- Arethereanyagreementsimposingresalerestrictions(e.g.,onpricesorterritories)onretailers?

- Are there any exclusive distributionagreements?

Abuse of market dominance

- Are customers treated unequally(e.g.,businessconditions)withoutreasonablejustification?

- Does the company refusetodealwithcertaincustomers(saleorpurchase)?

- Do certain customers profitfromloyaltyprogrammes?

- Are there discriminations againstcustomersiftheycontractwithanycompetitors?

- Does the company have per-sistentlylargemarketshares(e.g.,>40%)intherelevantmarket?

- Hasthecompanyrecentlybroadeneditsactivityrecently?

- Is an expansion of business activityinthepipeline?

- Does any refusal to deal exist (e.g.,refusaltosupplyortopurchasegoods)withoutobjectivejustification?

- Are different prices or terms offered to similar customers (withoutjustification)?

- Areany(non-costrelevant)discountsystemsinoperation?

- Dostrategiesexistthataredirectedagainstcompetitors(e.g.,refusaltodealwithsimilarcustomersortodealwiththemusingdifferentprices?

- Are there customer loyalty programmesinplace?

ANNEXES: SPECIFICDOCUMENTSFORBUSINESSES

16

CHECKLIST TO EVALUATE COMPLIANCE RISKS

Once risks have been identified, they should be classified andevaluatedintermsofhowserioustheyare.

Risk matrix/“traffic light system”: Thehorizontalandverticalaxesrefertothelikelihoodandimpactrespectively.Riskscores(likelihoodximpact)canbeusedtoevaluatewhetheranactivitypresentsalow(green),medium(yellow)orhigh(red)risk.

Example: If employees meeting competitors at conferencesis considered a high-risk activity, training sessions could beorganisedtomakesurethatteamsknowwhattheyareallowedtocommunicatetocompetitorsandwhatnot.

However,ifacooperationwithcompetitorshasbeenfoundtobeonlyamediumrisk,legaladvicecouldbesought.

CHECKLIST TO MANAGE COMPLIANCE RISKS

Onceriskareashavebeenidentified,itisnecessarytosetuppolicies,proceduresor trainingsessions to reduce the likelihoodof the risk.Whatneeds tobedonedependsupon the risks identified and the likelihoodof the risk occurring in thecontextofthebusinessinquestion.

Thefollowingchecklistmightbehelpful:

Possible Measures

People • Implementasystemwherebyallcontactwithcompetitorsislogged• Trainemployeesincompetitionlaw;theymustbemadeawareofhowimportantcompetition

compliance is• Establishasystemwhichprovidesthemwithadvicebeforetheytakeaction(e.g.,legaladviceonacontract)

• Makesurethatemployeesreport to thebusiness if theyare joininga tradeassociationorplanningtoattendeventswheretheymightbemeetingupwithcompetitors

Processes • Establishaframeworkforwhistleblowingorreportingofsuspectedactivitiesrelatedtoanti-competitivepracticeswithinthecompany

• Implementasystemwherebyallpartnershipsanddealingswithcompetitorsarelogged• Establishawarningsystemforrisksbasedonmarketentriesorexits• If there is a probable infringement of competition rules, legal advice should be sought

immediately

Documents • Setupacodeofconduct,competitionlawguidelinesand/orawrittenmanual• Implement a system which ensures that all information-sharing with competitors is

documented• If there is a probable infringement of competition rules (e.g., resale restriction, strategiesagainstcompetitors),legaladviceshouldbesought

4 8 12 16

3 6 9 12

2 4 6 8

1 2 3 4

Likelihood

Impa

ct

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CHECKLIST TO MONITOR AND REVIEW COMPLIANCE RISKS

Lastbutnotleast,thepreviousstepsneedtobereviewedregularlyalongwiththebusinesses’commitmenttocompliance.Thisstephastwogoals:

• TO AVOIDpotentialrisksofinfringingcompetitionrules.• TO PREVENTnewrisksfromemerging.

Thiscancompriseofthefollowingmeasures:

Possible Measures

People • Regulartestingofcompetitionlawawareness• Onlinecompliancetoolsforemployees

Processes • Reviewofhigh-riskdealingswithlegalcounsel(identifiedbyriskmatrix)• Internal/externalombudsman

Documents • Letter-boxforanonymousreportingofinappropriateconduct/agreements• Obligationforgroupleaderstoissuecompetitionlawreports(e.g.,onannualbasis)

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DOs AND DON’Ts FOR BUSINESSES

DOObject to any unacceptable behaviour.Objecttoanydiscussions,activitiesorconductthatmayviolatecompetitionrules.Considertoothatotherbusinesspartnersmaynotbefamiliarwiththeserules.

DO

Behave prudently toward industry contacts.Leaveindustrymeetingsimmediatelyifcompetitionsensitivesubjectsarise(e.g.,pricefixing).Feelfreetoalsointerruptanymeetingwherethemattersdiscussedmayraisecompetitionlawconcernsandrequestthatyourobjectionberecordedintheminutes.

DO Implement a CCP.Introduceasetofcompliancemeasures(seeaforementionedchecklist).

DO Identify business risks. Performariskanalysistoidentifythoseareasinwhichthecompanyispotentiallyatrisk.

DO Evaluate business risks. Classifyidentifiedrisksandevaluateastohowserioustheyare.

DO Monitor business activities.Periodicallyreviewbusinessactivities,inparticularfocusingonhighriskareas(seeaforementionedchecklist).

DO Ensure constant awareness.Beawareoftheguidelines24/7andmakesurethatyourstaffhasfullyunderstoodtheguidelines,agreedtocomplywiththem,andisalsoimplementingthem.

DO Train staff regularly. Educate employees about the importance of competition compliance and makethemawareofthesanctionsforinfringingcompetitionrules.

DO Self-monitoring. DomonitorandreviewyourCCPregularlytoensureitsrelevanceandeffectiveness.

DO Internal system or mechanism. Have an internal structure and process in place for reportingpossibleinfringementsofcompetitionrules.

DON’T Make agreements with competitors.Donotagree,eveninformally,withcompetitorsaboutpricing,production/outputlimitation,customersormarkets,withouthavingalawfulreason.

DON’TConduct discussions with competitors.Donotdiscusswithcompetitorsabout:-Whichsuppliers,customersorcontractorsyourbusinessdealswith/orshalldealwith,-Whichmarketsyourbusinessintendstosellintooraboutthetermsuponwhichyouwilldeal.

DON’TRestrict the freedom of your business partners.Donotenterintoagreementsthatrestrictanypartyintheirfreedomtosetprices,choosetradingpartners,decideonproductrangesorotherwisemanagetheirtermsofsale.

DON’TBoycott suppliers or customers.Donot,eitherfactuallyorinappearance,reachunderstandingsoragreementsorevenholddiscussionsthatmightleadtotheboycottofasupplieroracustomerortoexcludingcompetitors.

DON’T Discriminate against customers.Donotprevent customers fromcontractingwithcompetitorsanddonotabuseyourdominantpositionbyanyothermeans.

DON’T Keep quiet; report unacceptable behaviour. Do not remain silent when issues that raisecompetitionlawconcernsarediscussed.

DON’T Violate leniency requirements. If you submit a leniency application to the authority, immediately ceasefromanyfurtherparticipationinthecartel.

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