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Competition Law Compliance Programmes: A Law and Economics Perspective

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Abstract

We provide a law and economics perspective on competition law compliance programmes (CLCPs). Building on a general discussion of various motivations to ensure compliance with competition law, we discuss both key challenges in the design of an effective CLCP as well as the main building blocks of such programmes. Subsequently, we provide an overview of recent discussions by both academics and practitioners on the role of CLCPs in fine setting procedures as part of competition law enforcement. We close the article by providing a brief review of its main insights.

Sections 2.2. and 2.3. are updated versions of the respective sections in Hüschelrath (2010a). We are grateful to Michael Hellwig for comments on an earlier version of the article.

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Notes

  1. 1.

    A detailed overview of the fine setting procedure is provided by the European Commission itself, e.g., in the form of a brochure on ‘Fines for breaking EU Competition Law’ available at http://ec.europa.eu/competition/cartels/overview/factsheet_fines_en.pdf (last accessed on 29 March 2016).

  2. 2.

    European Commission, Competition: Commission revises Guidelines for setting fines in antitrust cases, Press release IP/06/857, 28 June 2006, Brussels.

  3. 3.

    Firms within one group are linked through ownership and are jointly liable for cartel fines.

  4. 4.

    Although five cartel cases were decided by the European Commission in 2015, the respective fines imposed were low resulting in the substantial reduction in both ‘sum of fines’ and ‘average fine per firm group’ shown in Fig. 2.1.

  5. 5.

    The respective information is available (and updated on a regular basis) on the website of the U.S. Department of Justice at https://www.justice.gov/atr/division-update/2015/criminal-program-update (last accessed on 29 March 2016).

  6. 6.

    Directive of the European Parliament and the Council 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 (PE-CONS 80/14). The Directive was signed into law on 26 November 2014 leaving the Member States 2 years to implement it in their national legal systems.

  7. 7.

    Case No IV/M.1524 — Airtours/First Choice.

  8. 8.

    See generally Rodger (2005, p. 354f.) for an overview. Following such an approach, competition law infringements are not the consequence of deliberate wrongdoing by ‘amoral calculators’ but rather happen because of ‘organisational incompetence’ of different ‘compliance school’ approaches.

  9. 9.

    Another argument for a clear focus on the provision of the relevant knowledge is limitations in the absorptive capacity of individuals.

  10. 10.

    In general, risk management can be defined as all policies, procedures, and practices involved in the identification, analysis, assessment and control of risks. An effective risk management aims to avoid, minimise, or eliminate unacceptable risks; its successful implementation depends on the correct adoption to the business specifics in the respective industry.

  11. 11.

    Such a proposal is in line with, e.g., Kolasky (2002) who analyses the specificities of detected cartels and argues that an effective CLCP has to incorporate these factors.

  12. 12.

    As a consequence, policy makers have to assure that competition rules are as clear as possible (e.g., by the provision of guidelines or possibilities for firms to consult the competition authority with specific competition problems). Furthermore, internal legal service departments might face a loss of trust if they are not able to give clear advice to the manager on the pro- or anti-competitiveness of certain behaviour. Such a ‘loss of trust in legal advice’ might raise the incentives for competition law infringements (see OFT 2010, p. 7).

  13. 13.

    Following Kolasky (2002), such red flags include trade association activity, sales transactions between the firm and competitors, stable market shares over a long period, or sudden unexplained price increases.

  14. 14.

    U.S. Sentencing Guidelines, Chapter 8, §8B2.1. Effective Compliance and Ethics Program (2009 Guidelines Manual, effective November 1, 2009). In the United States, the effective implementation of a compliance and ethics programme can lead to a reduction in fines for detected competition law infringements.

  15. 15.

    Wils (2013) sees substantial positive effects of CLCPs in situations when they prevent antitrust infringements that would otherwise have occurred, when they lead to an on-going infringement being terminated earlier and when they lead to an infringement being reported to the competition authority that would otherwise not have been reported.

  16. 16.

    The respective data (not adjusted for court judgements) is published (and frequently updated) by the European Commission’s Competition Directorate-General on the following website: http://ec.europa.eu/competition/cartels/statistics/statistics.pdf (last accessed on 29 March 2016).

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Authors and Affiliations

  1. ZEW Centre for European Economic Research, Competition and Regulation Research Group and MaCCI Mannheim Centre for Competition and Innovation, Mannheim, Germany

    Stefan Frübing & Kai Hüschelrath

  2. University of Mannheim, Mannheim, Germany

    Kai Hüschelrath

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  1. Stefan Frübing
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  2. Kai Hüschelrath
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Correspondence to Stefan Frübing .

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Editors and Affiliations

  1. Department of Economics and Business, Justus-Liebig-University, Gießen, Germany

    Johannes Paha

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Frübing, S., Hüschelrath, K. (2016). Competition Law Compliance Programmes: A Law and Economics Perspective. In: Paha, J. (eds) Competition Law Compliance Programmes. Springer, Cham. https://doi.org/10.1007/978-3-319-44633-2_2

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