Competition Law Compliance: Role Of Directors, Summer 2011

Author:Ms Fiona McKeever
Profession:Arthur Cox

The detection and prosecution of cartel offences is one of the Irish Competition Authority's main priorities. Companies which engage in cartel behaviour, such as price-fixing, bid-rigging or market sharing can be investigated by the Competition Authority and prosecuted by the Director of Public Prosecutions. The penalties are significant. Irish criminal courts can impose fines of up to 10% of worldwide turnover or €4 million on companies and individuals. Executive and non-executive directors can face up to five years in prison as well as fines set at the same level as corporate fines. Directors who are convicted of cartel offences can also face disqualification from acting as a director.

The UK's Office of Fair Trading has recently (June 2011) published guidance of how directors can minimise the risk of disqualification in the UK, the imposition of fines, and to promote competition law compliance within business.

Directors, irrespective of whether they are executive or non-executive, or have a responsibility for compliance, should take note. Publication of the guidance is a timely reminder of the importance of developing a compliance culture within an organisation. Compliance with competition law can be positioned and addressed within a broader compliance agenda which would include anti-bribery and corruption, and internal anti-fraud controls.

The OFT publications contain guidance which is also useful in an Irish context.

Compliance Culture

Directors are encouraged to cultivate a competition law compliance culture within business as this will help reduce the risk of fines being imposed, of prison terms being imposed or disqualification orders being made on directors. The fact that one director has a compliance function does not absolve other directors from their overall responsibilities for compliance with competition law.

A compliance culture may be promoted by following the OFT's four-step risk based process, at the centre of which is a clear and unambiguous commitment to competition law compliance. Within this framework, it is up to each individual business to consider its competition law exposure and how best to mitigate any risks identified. Large or small, however, the OFT expects directors and senior management of all businesses to demonstrate commitment to competition law compliance and to communicate that to all levels within an organisation.

The first step advocated by the OFT is to identify risk. The precise risks that a business...

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