1. Competition and Antitrust Compliance Programs for Business
VI Competition Forum of Ukraine
Kyiv, 2-3 March 2017
RENATO FERRANDI
INTERNATIONAL AFFAIRS

2. PILLARS OF COMPETITION COMPLIANCE AND DETERRENCE

3. Knowledge

4. Knowledge

5. LOW COMPETITION AWARENESS BY SMES
Knowledge
LOW COMPETITION AWARENESS BY SMES
Competition awareness among businesses
Source: ICN AWG Competition Culture Project (2015)

6. AWARENESS OF COMPETITION BENEFITS
Knowledge
AWARENESS OF COMPETITION BENEFITS
Sound competition promotes a level playing field and increased innovation and efficiency
Sound competition protects businesses from artificial barriers to entry, creating opportunities to enter markets and grow
Competition improves resource allocation and efficiency, and increases the ability to compete internationally
Businesses have the opportunity to inform competition policy and support competition law enforcement
Source: ICN AWG “Explaining the Benefits of Competition to Business” Project (2016)

7. WHAT COMPETITION AGENCIES CAN DO
Knowledge
WHAT COMPETITION AGENCIES CAN DO
Source: ICN AWG “Explaining the Benefits of Competition to Business” Project (2016)

8. Sanctions and enforcement

9. INCENTIVES FOR COMPLIANCE
Enforcement
INCENTIVES FOR COMPLIANCE
Stronger sanctions increase the cost to a business if non-compliance is found
More enforcement increases the probability that non-compliant behaviour is detected and penalised

10. EXPECTED EXTRA PROFITS FROM VIOLATION
Enforcement
EXPECTED EXTRA PROFITS FROM VIOLATION
OPPORTUNITY
COST OF NON
COMPLIANCE
PROBABILITY
TO BE DETECTED
RISK
Deterrence if
RISK
OPPORTUNITY
Example: €100,000 x 0,25 = €25,000 > €20,000

11. Voluntary compliance measures

12. COMPLIANCE PROGRAMS HELP COMPETITION
Antitrust compliance programs may strengthen the development of a common antitrust culture
Increase legal certainty for undertakings (better assess both internal behaviors and the activities of their competitors)
Increase the cases of infringement spontaneously reported by undertakings

13. Wide range of different approaches
Compliance
HOW FAR SHOULD COMPETITION AGENCIES GO?
Wide range of different approaches
Guidance on how to design an effective compliance programs
Assessment of compliance programs
Recognition of compliance programs as a mitigating factor for fines

14. THE ITALIAN EXPERIENCE
Compliance
THE ITALIAN EXPERIENCE
Guidelines on fines (October 2014)
Possibility for a reduction up to 15% of the fine in case of “adoption and observance of a specific compliance program, in line with European and international best practices”

15. … in light of the specific characteristics of the Italian economy
Compliance
… in light of the specific characteristics of the Italian economy
Micro-enterprises (9 employees or less): 4,2 million, 95%
Very few big companies (>250 employees): 0,15%
Average size: 3,9 workers (European average: 6,8 workers)
47% of employees work in micro-enterprises (European average: 29%), 19% work in big companies
Source: Annual Report on the Italian economy, ISTAT 2015 .

16. Decision taken after internal and external discussion…
Compliance
Decision taken after internal and external discussion…
Internal: need for an enrichment of the “toolbox” of competition policy (fines, leniency, private enforcement, competition advocacy and social disapproval)
External: pros and cons of a discount on fine (market consultation)

17. … aware of the possible downsides
Compliance
… aware of the possible downsides
Main issue: how to distinguish a real from a “cosmetic” compliance program
Guidelines: “Actual and concrete commitment to respect what envisaged in the program”
full involvement of the management
appointment of responsible officers
risk assessment
training courses
rewards and penalties
monitoring and auditing

18. FIRST RESULTS OF THE ITALIAN EXPERIENCE
Compliance
FIRST RESULTS OF THE ITALIAN EXPERIENCE
Adoption of 32 new compliance programs
Mostly in regional or local markets
By SMEs
In markets prone to endemic collusion
(14 cases in the cement/concrete sector)
In one case, the trade association included compliance programs as a requisite for members

19. Compliance
In April 2016 the main Italian association of businesses Confindustria adopted Compliance Guidelines Include indications on how to draft and put in place an effective compliance program Guidelines disseminated among members

20. HOW FAR SHOULD COMPETITION AGENCIES GO?
Compliance
HOW FAR SHOULD COMPETITION AGENCIES GO?
No “one size fits all”
Factors: particular characteristics of each country and industry, market dynamics and national or sector-specific regulation
Need to work in parallel on: reputation of the authority, transparency and credibility in setting fines, advocacy and social disapproval