The French Competition Authority published a new Framework Document on the benefits of compliance programs and the conditions for their effectiveness.
Main benefits of compliance programs
This new Framework Document highlights three main benefits of compliance programs:
- Preventing financial and reputational risks;
- Increasing the ease of detection of violations to achieve compliance; and
- Contribution to the establishment of free and undistorted competition.
Key points to ensure the effectiveness of compliance programs
The French Competition Authority explains that the following 7 key points help ensure the success of compliance programs:
- An explicit statement by managers and corporate officers on the need to comply with competition rules;
- Where the company’s structure allows, designate internal individuals responsible for the program;
- Implement appropriate measures to inform, train and educate employees or members of the trade association on the importance of complying with the compliance program;
- Implement a control mechanism to ensure that the compliance program is followed;
- Implement a warning system on the same model as the whistleblower protection scheme established by the EU directive No 2019/1937 to ensure that the employees or members of the trade association can communicate with the compliance officers either to seek advice or to alert them about actual or potential violations;
- Implement an alert tracking system (what actions / sanctions are taken) and a penalty procedure for non-compliance with the program; and
- Design a custom-made compliance program regularly updated with respect to the markets, activities, products, internal organization and corporate culture. It is also essential to anticipate new risks that may arise and to be proactive by carrying out a regular watch.
However, the implementation of a compliance program does not lead to a reduction in penalties
While the first Framework Document in 2012 provided for a reduction in penalties in case of implementation of a compliance program, the Authority reversed this approach in a 2017 decision, considering that compliance programs were intended to be part of the day-to-day management of companies and no longer justified the reduction of penalties.
This Framework Document does not go back on this position and maintain that the implementation of a compliance program does not lead to a reduction in penalties.
The full Framework Document from the French Competition Authority is available here.
For further information, please contact:
Thomas Oster, Partner, Bird & Bird
thomas.oster@twobirds.com
