IFLR Competition Law Forum 2014 - December 9, 2014



FORUM OVERVIEW

IFLR hosted the inaugural IFLR Competition Law Forum on December 9 2014 in partnership with Tavistock Media.

Delegates met with key authoritative speakers who provided expert insights into the competition law landscape. Attendees also benefitted from interactive panel formats to engage with their peers and share in best practice to understand how best to protect their business. Dedicated breakout workshops facilitated the sharing of best practice and benchmarked case studies on:

  • Workshop A: Cartels
  • Workshop B: Economics in Competition Law
  • Workshop C: Merger Control

We were also delighted to welcome Roland Green, Deputy General Counsel of the Competition and Markets Authority as the keynote speaker for the event who addressed the CMA’s agenda for competition policy in 2015. 
 

Those in attendance received a high level focus on:

  • How to prioritise competition law practices to ensure compliance with the new regime
  • The new procedures which need to be followed in merger notification
  • The latest cases in competition litigation and identify the courts’ approach to damages
  • Tactical considerations to be considered if applying for leniency in a cartel investigation

KEY TAKEAWAYS


The impact of the new regulator on competition law in practice

  • Industry reaction to the first months of the UK Competition and Markets Authority (CMA) has been broadly positive
  • The regulator was particularly praised for engaging with the market ahead of its launch
  • But questions were raised around independence and the regulator maintaining a separation with the UK Treasury
  • With numerous competition bodies now active in the UK, panellists urged the CMA to carve out its leadership role or be clear about its remit. Failure to do so will confuse the industry but also consumers
  • When undertaking mergers under the CMA speakers were surprised by depth of the CMA’s engagement and the demand for information
  • Some were concerned at the level of involvement required from within the business, meaning the disclosure of sensitive information to employees about the transaction

Breakout: Cartels

  • Companies should have training in place to prevent a cartel from happening. This training should have senior management buy-in
  • If the organisation has training in place, consider how often this takes place, and whether it is audited
  • Consider whether employees should be required to obtain prior permission to attend trade association meetings; whether there is a policy of reviewing agendas; and whether employees who attend these meetings legitimately should be required to take notes
  • If an in-house counsel suspects a cartel, they should firstly work out how serious the risks are; then discreetly set up a small internal investigation team; and consider engaging external lawyers
  • When conducting an internal investigation, it’s important to keep a record of all the steps taken and who has been spoken to. Evidence must also be secured

Breakout: Economics in competition law

  • There are very few clear-cut cases in competition law, with a large grey area of cases which may be wrong in principle but ok in practice
  • Economists have to be very clear about what the theory of harm is and how it would work in practice
  • The Competition and Markets Authority has alighted on the concept of a hypothetical well-functioning market, but this is not always helpful. Rather, it may be better to think about what the remedies are in reality
  • There is a danger that the focus on behavioural biases and consumer behaviour detracts from other issues
  • The area of mergers has become increasingly economics-based in Europe. Case teams on mergers are led to a significant extent by the economists

Breakout: Merger control

  • Under the new UK merger regime, there is now a binding timetable of 40 working days on the CMA for phase one investigations
  • The European Commission deals with phase one cases in 25 days or less
  • Under the UK’s new regime the phase one remedy process begins only once the CMA has issued its phase one reference decision
  • A related change is that parties get access to a phase one decision-maker in the issues meeting
  • The European Commission recently proposed extending its jurisdiction to include the review of acquisitions of minority shareholdings. It proposed that what is known as a competitively significant link will trigger this jurisdiction 

Strategies for ensuring a competition compliant culture across the organisation

  • The CMA is attempting to tie its enforcement into its compliance work to maximise the return in investment in enforcement cases
  • It is a healthy culture when the enforcement agency is helping at the root of issues and not just when things have gone awry
  • Multinational companies struggle to create a global competition policy which can remain 100% up-to-date. It is therefore sensible to concentrate on the areas of highest risk
  • Day-to-day, most employees aren’t interested in competition law. It can be useful to frame training about how employees can keep their clients honest (and how that can be positioned to create an advantage on rivals)
  • Online training isn’t necessarily just “paying lip service”. Often it is the best way to reach a workforce, but it has to be targeted
  • Use external whistleblowing services: the reality is that a whistleblowing line that goes to someone internal, will not be used
  • For buy-in, periodically agree with business leaders to send out short, sharp updates
  • It is also useful to train the finance group more. That is particularly useful in trickling down knowledge, especially if you treat them as business champions

Information Exchange and co-operating with competitors

  • Authorities globally are clamping own on the practice of information exchange, or so-called signalling, among corporates
  • Australia introduced rules in 2012 to apply to banks prohibiting types of signalling. The regulator is looking to expand it to other industries
  • China’s treatment of Unilever shows that country is taking an active look at signalling too
  • In Europe, Dutch, UK and Spanish authorities have looked into the practice
  • Most importantly, the EU is currently pursuing shipping companies for making inappropriate announcements. The outcome of that will determine how keen the EU is to pursue this
  • There are steps that corporates can take though: be aware that the type of information overwhelmingly concerns either things price or output, and it’s usually price
  • Companies should think carefully before communicating more information than necessary, particularly regarding future pricing or strategic plans
  • Avoid naming specific competitors
  • Take great care about generic statements about discipline or the need to manage/reduce capacity

Competition litigation and private enforcement

  • The Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union was published on December 5.
  • Now even foreign national competition authorities will be treated by the English courts as prima facie cases of infringement
  • There are sweeteners for whistleblowers: leniency applicants will only be liable for harm that the cartel causes to their customers, not the entire cartel’s
  • In terms of preparing for litigation, instant messaging can be an issue – with the vast majority of office communications taking place over the technology.
  • There have been recent developments within overcharge and passing on practices. Article 17 (2) established a presumption of harm among cartels. But it is rebuttable and therefore weak in the context of courts.
  • On pass-on, companies should clearly understand what the value chain is and the scope of the cartel is vis-à-vis the complainant
  • Developments in e-discovery such as sophisticated search techniques have advanced the process for litigants

 

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