ICAS Law
What is compliance in Law?
Compliance means respecting the law. In the competition field, it means business proactively respecting competition rules.
Why is it important?
It is the Director responsibility of large, medium and small companies alike to comply with these rules. Companies need to be aware of the risks of infringing competition rules and how to develop a compliance strategy that best suits their needs. An effective compliance strategy enables a company to minimize the risk of involvement in competition law infringements, and the costs resulting from anti-competitive behavior.
The ICAS Commission welcomes and supports efforts by the business community to ensure compliance with International competition rules. If an infringement is found, however, the mere existence of a compliance strategy will not be taken into consideration when setting the fine: the best reward for a good compliance strategy is not to infringe the law. This standing policy has been confirmed publicly (see speeches “Compliance and competition policy” and ”the priority in competition enforcement”.
What Does Business ICAS For?
KEY MESSAGES
- Promote competition compliance by identifying general principles and supporting companies’ actions in this area.
- Encourage competition authorities to demonstrate greater interest and a more positive attitude towards compliance, in order to further encourage a competition compliance culture in the world.
- Facilitate the exchange of best practices on compliance among businesses, to increase awareness, facilitate prevention and help enforcement
1. WHY COMPETITION COMPLIANCE?
ICAS wants to promote competition compliance by identifying general principles and supporting companies’ actions in this area. At the same time, we encourage competition authorities to demonstrate greater interest and a more positive attitude towards compliance, in order to further encourage a competition compliance culture in the world .
Full compliance with antitrust rules is not only a legal obligation, but is also an attitude and a culture that can impact positively on a company’s business. Remaining compliant with rules and maintaining a strong reputation are fundamental matters for every enterprise.
We believe that a lot that can be done in this area through cooperation between ICAS and the authorities enforcing the competition rules.
- Planning and structuring. We can assist with the preparatory steps your business needs to undertake before the launch of an ICAS, including specialist fund structuring and tax advice.
- Scheme documents and authorization. We drafted the industry standard ICAS deed and can prepare and negotiate the relevant scheme documents, ancillary contracts, and manage the authorization process.
- Tax advice and planning. Our funds tax team can advise on every aspect of the ACS regime for both securities and property funds.
- Ongoing regulatory and compliance management. Our team can assist with future changes to the scheme and any regulatory or investor notifications required.
- Depositary advice. Our dedicated depositaries team can advise depositaries on relevant issues and can negotiate and prepare depositary agreements and ancillary documentation.
- Derivatives advice. Our specialist derivatives team advises authorized funds, including ICAS’s , on their derivatives strategies, collateral, security arrangements, agreements and on compliance with their regulatory obligations.
2. What are the benefits for companies?
Balancing sustainable efforts to abide by the rules with the overall need to reduce costs can be perceived as difficult but is certainly achievable and will often lead to a number of advantages. In particular, compliance action brings the following benefits:
- Reducing the risk of reputational damage connected with an infringement
- Being seen as a progressive and ethical business
- Improving internal procedures and making them safer
- Attracting ethically conscious consumers and investors
- As an employer, attracting and retaining ethically conscious talent
- Reducing the risk of fines, or benefiting from the competition authorities’
- Settlement or leniency procedures, and/or mitigating circumstances in the
- Setting up of the fine
- Lowering legal costs
Reinforcing a competition compliance culture in the world will have positive effects for its competitiveness and is therefore in the direct interest of the companies.
ICAS strongly believes that competition provides the best incentive for efficiency encourages innovation and guarantees consumers the best choice for the best price. Abiding by antitrust rules is fundamental for creating and sustaining a competitive economy.
3. WHAT ARE THE KEY DRIVERS OF COMPLIANCE WITH COMPETITION RULES?
We believe that in order to achieve effective results, any good compliance program should be based on the key drivers of compliance for businesses. Identifying the motivation for competition law compliance activities within businesses is an important precondition for any competition compliance policy.
The basic legal responsibilities of a company’s management include supervising and ensuring compliance with the law, including antitrust rules. The aim is to ensure that any breaches of the law are prevented or discovered and remedied early enough, so that the company can avoid administrative and civil liability, protracted proceedings and high legal costs. Providing authorities with volumes of required data to prove that your company is compliant is expensive, it diverts resources and limits productivity, diminishing competitive advantage.
In addition, improving awareness and knowledge of basic competition law principles will help prevent or tackle at an earlier stage any issues that might arise within the company. This can substantially diminish the risk of liability that might have otherwise derived from any misconduct. It can also avoid or decrease costs related to external
legal advice.
Ensuring the observance of antitrust law enables the company to prevent reputational and/or financial damage. But there are other key factors that need to be better underlined.
With compliance being a manifest requirement of doing business with suppliers and customers in many countries, it makes good business sense for companies to take action to meet legal requirements.
The immediate consequences of non-compliance, such as heavy penalties, reputational damage and loss of customers are severe. The image of the company is a key factor. A business actively engaged in compliance will project the image of an ethical business, which will add substantially to its corporate image.
Active engagement in antitrust compliance will also inspire trust from customers and consumers at large. It should not be forgotten that an antitrust infringement – especially in cartel cases – questions the ethics and business model of the company involved. The potential economic impact deriving from the reputational damage can be even greater than the risk of a penalty as it can lead to customer loss and financial loss.
4. WHAT TO DO AND WHAT NOT TO DO WHEN IMPLEMENTING COMPLIANCE PROGRAMMES AND ACTIONS?
Competition rules are often considered very complicated and technical, and the simple idea of developing compliance actions to address them could be a challenge, especially for SMEs which have limited resources and might not have a legal team to develop a fully-fledged program.
However, the content of a compliance program must be tailored to the business’s particular requirements and there is no standard compliance program that can apply in all cases.
“The perfect is the enemy of the good”
To attain perfect compliance could probably be perceived as extremely difficult. It indeed becomes infinitely more difficult as you near it, and this can discourage a small enterprise to take action in the first place. However, BUSINESS EUROPE stresses that instilling the basic principles of antitrust compliance can start with basic, simple and cost-effective actions. Enhanced regulatory awareness will also lead to a better understanding of the consequences of illegal behavior.
Identifying basic and simple principles to guide companies – and especially – in their compliance efforts is key.
Any company’s compliance action ought to create a positive reaction and generate interest among employees. Primarily, it should simply encourage them to seek advice any time they have a doubt as to whether something might raise an antitrust problem.
Many employees in a company may at some point have to deal with an issue were
antitrust law plays a role: this can range from a decision on the issues for discussion in a business meeting to dealing with competitors in the context of trade associations, or responding to a request for information from competition authorities and regulators, etc. Those employees should be clearly identified and receive appropriate education and training.
It is key that employees feel encouraged to contact the relevant in-house or external counsel/officer for compliance and that it is made clear that the latter is at any employee’s disposal to advise and provide practical guidance and help, and not to evaluate or judge the conduct of the staff.
All compliance efforts must be based on a company’s commitment to conducting business in conformity with the law. Therefore, compliance programs will contain basic ingredients necessary for robust antitrust compliance. They must also help companies identify and minimize/eliminate risks that infringements occur.