Client Alerts
The Romanian competition council releases its compliance guide
SUBSTANCE OVER FORM
The RCC uses the CG to signal a departure from a formalistic approach towards a substance based approach insofar as compliance programs are concerned. To date, competition compliance programs have typically been the focus of larger international companies; however, they are now expressly identified within the CG as essential for all companies, irrespective of their size or activity sector.
Furthermore, the CG stresses the fact that the effectiveness of a compliance programme is directly correlated to the decision-making level at which it is assumed, as well as the credibility and decisional autonomy of the representative in charge of monitoring the compliance.
Finally, the RCC recognises the need for personalized, tailor-made compliance programs, the content of which may well differ significantly in relation to a particular company. In addition, it recommends that a risk analysis be carried out, aimed at identifying the particular competition risks applicable to the respective company and the manner in which those risks can be addressed through a compliance program.
COMPONENTS OF COMPLIANCE PROGRAMS
While the RCC recognizes that there is no one-size-fits-all compliance program, the CG does identify a number of elements which should form part of each compliance program, as follows:
The compliance manual
The compliance manual, to be drafted and readily available in all the working languages of the company, contains a brief, but clear and exhaustive, outline of the main competition provisions, the main competition risks deriving from the activity of the company, and the recommended course of conduct in sensitive situations in relation to both management and operational decisions. Furthermore, the compliance manual must include monitoring procedures aimed at ensuring that the company’s activities are competition compliant, as well as disciplinary measures against employees found in breach of these rules.
Implementation measures
Underlying the entirety of the compliance strategy is a 4-step process: risk identification, risk assessment, risk evaluation and risk management. Notably, the RCC points to potential means of identifying risks by relying on elements such as the size of the company, its geographical presence, its object of activity, its level in the commercial chain, third-party relations and others. Such a risk analysis should be performed at both an internal and an external audit, taking into account the changes in the activity of the company.
DISSEMINATION OF THE COMPLIANCE PROGRAM
The CG emphasizes the fact that a compliance program which is not disseminated both internally and, to some extent, externally, does not accomplish its purpose. Since the conduct of any employee may well implicate the liability of the company, the RCC expects each compliance program to include mandatory compliance training (either by direct interaction or on-line). Its recommendation in this respect, is to have specialized, independent assistance – the CG identifies trade associations as having an important role in the promotion of competition compliance, insofar as smaller companies are concerned.
COMPETITION DUE DILIGENCE
The CG also provides an outline of the assessment which must be done in relation to third parties, focusing particularly on M&A transactions. As such, commercial agreements should contain clauses whereby the parties undertake to implement an effective competition compliance program.
M&A transactions, on the other hand, should involve a competition due diligence aimed at identifying the existence of a competition compliance program implemented by the target company, as well as of any competition risks arising from its activity. Furthermore, the use of ‘clean teams’ is highly recommended.
RELEVANCE OF THE COMPLIANCE GUIDE
It is important to keep in mind that the purpose of a compliance strategy is not only risk minimization, but also the reduction of or exoneration from costs resulting from anti-competitive behaviour. The existence of an effective compliance programme allows the company to file for a leniency application, and is a particular advantage in case of settlements.
The RCC can apply fines of up to 10% of the global turnover in the financial year preceding the RCC’s decision. Additionally, corrective measures (e.g. termination of exclusive distribution contracts) or structural measures (e.g. transfer of IP rights) may be applied, as well as deeming anti-competitive agreements as null.
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The RCC uses the CG to signal a departure from a formalistic approach towards a substance based approach insofar as compliance programs are concerned. To date, competition compliance programs have typically been the focus of larger international companies; however, they are now expressly identified within the CG as essential for all companies, irrespective of their size or activity sector.
Furthermore, the CG stresses the fact that the effectiveness of a compliance programme is directly correlated to the decision-making level at which it is assumed, as well as the credibility and decisional autonomy of the representative in charge of monitoring the compliance.
Finally, the RCC recognises the need for personalized, tailor-made compliance programs, the content of which may well differ significantly in relation to a particular company. In addition, it recommends that a risk analysis be carried out, aimed at identifying the particular competition risks applicable to the respective company and the manner in which those risks can be addressed through a compliance program.
COMPONENTS OF COMPLIANCE PROGRAMS
While the RCC recognizes that there is no one-size-fits-all compliance program, the CG does identify a number of elements which should form part of each compliance program, as follows:
The compliance manual
The compliance manual, to be drafted and readily available in all the working languages of the company, contains a brief, but clear and exhaustive, outline of the main competition provisions, the main competition risks deriving from the activity of the company, and the recommended course of conduct in sensitive situations in relation to both management and operational decisions. Furthermore, the compliance manual must include monitoring procedures aimed at ensuring that the company’s activities are competition compliant, as well as disciplinary measures against employees found in breach of these rules.
Implementation measures
Underlying the entirety of the compliance strategy is a 4-step process: risk identification, risk assessment, risk evaluation and risk management. Notably, the RCC points to potential means of identifying risks by relying on elements such as the size of the company, its geographical presence, its object of activity, its level in the commercial chain, third-party relations and others. Such a risk analysis should be performed at both an internal and an external audit, taking into account the changes in the activity of the company.
DISSEMINATION OF THE COMPLIANCE PROGRAM
The CG emphasizes the fact that a compliance program which is not disseminated both internally and, to some extent, externally, does not accomplish its purpose. Since the conduct of any employee may well implicate the liability of the company, the RCC expects each compliance program to include mandatory compliance training (either by direct interaction or on-line). Its recommendation in this respect, is to have specialized, independent assistance – the CG identifies trade associations as having an important role in the promotion of competition compliance, insofar as smaller companies are concerned.
COMPETITION DUE DILIGENCE
The CG also provides an outline of the assessment which must be done in relation to third parties, focusing particularly on M&A transactions. As such, commercial agreements should contain clauses whereby the parties undertake to implement an effective competition compliance program.
M&A transactions, on the other hand, should involve a competition due diligence aimed at identifying the existence of a competition compliance program implemented by the target company, as well as of any competition risks arising from its activity. Furthermore, the use of ‘clean teams’ is highly recommended.
RELEVANCE OF THE COMPLIANCE GUIDE
It is important to keep in mind that the purpose of a compliance strategy is not only risk minimization, but also the reduction of or exoneration from costs resulting from anti-competitive behaviour. The existence of an effective compliance programme allows the company to file for a leniency application, and is a particular advantage in case of settlements.
The RCC can apply fines of up to 10% of the global turnover in the financial year preceding the RCC’s decision. Additionally, corrective measures (e.g. termination of exclusive distribution contracts) or structural measures (e.g. transfer of IP rights) may be applied, as well as deeming anti-competitive agreements as null.
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