The increase in the number and severity of anticompetitive-conduct fines in South Africa is likely to continue this year, especially as more competition authorities become active and effective.
The implementation of an effective competition law com-pliance programme will be high on the list of priorities of com-pany boards in 2013, while competition authorities have come to a much clearer understanding of what effective compliance means, according to law firm Adams & Adams partner Jac Marais.
“In Africa alone, we have seen significant activity from new competition authorities and increased cooperation between agencies in different countries. The number of civil-damages actions from those affected by contraventions of competition legislation has also risen globally and these actions are seemingly encouraged by governments and competition authorities,” says Marais.
He adds that, to ensure effective compliance, a firm should plan ahead and develop an approach that is tailor-made for its situation. “The ultimate goal should be to raise awareness of the potential conflicts of competition law and disseminate knowledge of how to avoid them at all levels of the organisation, from employees to middle and top management.”
Developing an Effective Compliance Programme
Adams & Adams points out that companies and firms need to develop compliance programmes to ensure that any possible fines issued, owing to a lack of com-pliance with the Competition Act, are mitigated.
Marais suggests that com- panies’ compliance strategy should be explicit and distri- buted within the organisation, as it will help if employees under- stand the reasons behind the compliance programme and strategy.
“Employees should have access to a practical set of ‘do’s and don’ts’ applicable to the company’s specific environment. Such a guideline should ideally be developed in cooperation with employees.
“There should also be clear, unequivocal support for the compliance programme from senior management. Overseeing compliance programmes should ideally be the responsibility of a member of senior management,” he explains.
Employees should formally bind themselves to the compliance programmes to the extent that they are practical. They should also be incentivised to actively participate in them to achieve the programmes’ goals. Also, employees should be encouraged to voice their concerns when they are confronted with situations that raise potential competition law concerns.
Adams & Adams partner Alexis Apostolides points out that one of the many advantages of an effective compliance programme is that its detection mechanisms could uncover anticompetitive behaviour before competition authorities become aware of it.
“By detecting anticompetitive behaviour early, firms could be in a position to use the Competition Commission’s corporate leniency policy (CLP), which allows firms involved in cartel conduct to blow the whistle on themselves and their fellow cartelists in exchange for immunity from prosecution,” Apostolides comments.
Anticompetitive behaviour is sometimes entrenched in industries to the extent that participants may believe that it is lawful. The CLP provides an ideal opportunity for firms to come clean without fearing the con- sequences of the Act with respect to historical behaviour, he states.
The CLP has been the Com-petition Commission’s most effective tool in its fight against anticompetitive behaviour and many companies have enjoyed the benefits of the CLP, concludes Marais.