Professor Barry J Rodger, University of Strathclyde Glasgow ACLE- To Enforce and Comply: Incentives Inside Corporations and Agencies, March 5-6, 2009

 Tackles a range of key issues in the debate on compliance and incentives  Corporate Governance  Internal Managerial incentives  Corporate and individual Crime  Whistleblowing, compliance and Law Enforcement  3 issues- Leslie and ‘faithless agents’; the Australian compliance study and my UK follow-up study

 ‘Cartels, Agency Costs and Finding Virtue in Faithless Agents’ C R Leslie [2008] William and Mary Law Review Vol  Fascinating- Christie’s and Sotheby’s- Christopher Davidge, CEO of former- (see the Art of the Steal)  Lysine- Mark Whitacre, division manager of ADM (see the Informant, and forthcoming film- Matt Damon!)

 Leslie- destabilise cartels from within…  Encourage faithless agents, by decoupling the interests of principal and agent by:-  Increasing severity of individual punishment for price-fixing;  Reward individuals for exposing cartel activity- immunity and bounties; and  Structure law so employees will not trust employers to protect them should the cartel be exposed

 The Australian compliance study- work of Parker and Nielsen  “Do Businesses Take Compliance Systems Seriously?: An Empirical Study of the Implementation of Trade Practices Compliance Systems in Australia”, Melbourne University Law Review, Volume 30, 2006 p 441;  ‘How Much Does it Hurt? How Australian Businesses Think about the Costs and Gains of Compliance with the Trade Practices Act’ (2008) Melbourne Uni Law Review perceptual deterrence

 Nielsen/Parker- To what extent do Third parties Influence Business Compliance? (2008) Law and Society  3 rd party pressure/influence on compliance management- plural compliance motivations?  Considerable worry but little evidence of impact in driving business compliance behaviour, except for risks of complaints  But suggests enforcement agencies can facilitate role of third parties..

Earlier empirical work re compliance (2000 CLLR, 2005 World Competition) (forthcoming European Competition Journal) Study following Australian study-Database of all OFT infringement decisions from March to end 2005  Questionnaires to all organisations which infringed either Competition Act prohibition  Your organisation, the Competition Act 1998 and the OFT; Your knowledge of the 1998 Act; The impact of the Act on your Organisation; Costs and Benefits of Complying with the Act  20 questionnaires returned (33%)- all Chap 1 prohibitions

 33% response rate satisfactory, but limited number- 20 in total  Disappointing levels of compliance implementation- note focus of study  Communication and training weak  OFT education strategy post enhanced carrot and stick approach  Further resources dedicated to information and education re compliance

 Business perceptions re compliance important- pluralistic motivations  Support for three key theories- deterrence, moral citizenship, managerial (in)competence  Increase sanctions> greater concern but clearly insufficient  Greater task for OFT including promotion of compliance professionalism  Future research re top 100 UK companies..??