Presented at the london shipping law centre by marjorie holmes 29 may 2007
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Presented at The London Shipping Law Centre by Marjorie Holmes 29 May 2007. PRACTICAL COMPETITION COMPLIANCE. Compliance with Competition Laws (1). Around 110 jurisdictions with competition/anti-trust laws General rules – no price fixing no market sharing no capacity management

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Presented at the london shipping law centre by marjorie holmes 29 may 2007


at The London Shipping Law Centre


Marjorie Holmes

29 May 2007


Compliance with competition laws 1
Compliance with Competition Laws (1)

  • Around 110 jurisdictions with competition/anti-trust laws

  • General rules –

    • no price fixing

    • no market sharing

    • no capacity management

    • no abuse of a dominant position

  • Exceptions different, e.g. : US – 60/65% of market share generally not viewed as sufficient for dominance – Europe can be as low as 39%; at national member state level as low as 30%: e.g. Austria – significant market power is enough in Germany to require non-discrimination between users. [Scandlines/Deutsche Bahn –Putgarden]. Individual and block exemptions vary.



Compliance with competition laws 2
Compliance with Competition Laws (2)

  • Starting point is an audit

  • Record of Restrictive Activities/Agreements (e.g. consortia, pool or trade association membership, as well as distribution agreements)

  • Identify the relevant jurisdictions

  • Self Assessments

  • Compliance Manual

  • Regular training, monitoring and auditing


Regulation compliance

  • US Sarbanes-Oxley –CEO & CFO must sign Certificate of Proper Internal Controls

  • Japan – Corporate Law 2006 (Legally requires companies’ effective internal controls)

  • UK

  • Turnbull Combined Rules on Corporate Governance do not require compliance with the Code – they require companies to state whether they have complied with the Code provisions and to explain and justify any non-compliance

Revaluation compliance

Survey carried out by Japanese Competition Authorities January 2006

  • 86% of companies listed on the Japan Stock Exchange had a manual

  • 77% have installed a help line

  • 72 % have established a compliance committee

    Of this

  • 50% established after 2003

  • 81% the help line had never been used

  • 38% only top management took responsibility

  • 7% conducted internal audit in response to revision of the Antimonopoly Act

Compliance self assessments
Compliance/Self Assessments

  • Required Council Regulation 1/2003 – From May 2004

  • 10% turnover fine [Reputation e.g British Airways shares fell 5.50 points on ftse [OFT/DOJ]

  • Criminal sanctions (UK and other jurisdictions)

  • Damages claim from Third Parties

  • Enforcement of Arrangements/Agreements

  • Arriva PLC/First Group PLC CA 98/9/2002 10% reduction on fine

How do you make your agreement ec compliant
How do you make your agreement EC compliant?

  • Is it a restrictive Agreement? – 81(1)/Chapter 1 applies

  • Block exemptions – Individual exemptions

  • Since 1 May 2004, notifications of agreements to the Commission for clearance abolished

  • Self- assessment means applying to your agreement the four exemption criteria in Article 81(3) as interpreted by EC case law

  • Detailed economic assessment of impact of agreements on the relevant market – market definition is key

Self assessment
Self Assessment

What do you need to show?

  • promotion of technical/economic progress (e.g. agreement achieves economies of scale leading to better and more efficient services)

  • agreement gives shippers a “fair share” of the benefits (e.g. lower prices)

  • no restriction on the parties that are not “indispensable” (e.g. reasonable notice periods, no oppressive exit penalties for withdrawing from the agreement)

  • no elimination of effective competition in the market

Self assessment cont d
Self Assessment / cont’d …

Where to start?

Looking at Commission exemptions given pre modernisation in various sectors, but particularly in shipping

  • 12 consortia exemptions 823/00 (as amended 611/05)

  • 4056 exemptions

  • Failed applications

  • Informal discussions

Self assessment cont d1
Self Assessment / cont’d …

Courts decisions commenting on 81(3) Assessments

  • GSK v Commission re dual pricing with Spanish purchases

  • Ramsey pricing

  • Parallel trading

  • CFI agreed with GSK that Commission rejection without proper review of the effects was incorrect

Self assessment cont d2
Self Assessment / cont’d …

  • Horizontal Guidelines (2001/C3/02) ( )

  • Vertical Guidelines (2000/C291/1) (

  • Commission Guidelines 81(3) (2004/C101) ( )

  • Notification Questionnaire

  • 13 Questions

  • Key issues are

    • What is the market? Supply/Demand

    • What are the benefits?

    • What do your customers say about you?

  • Review your Self-Assessment annually

Self assessment market share
Self Assessment – Market Share

How do you calculate market share?

a) Geographical Scope – World, Europe to Far Eastern; Country by Country or local (e.g: 30 miles radius for ready to use Ready Cement)

b) Product ) – demand side

or Services ) – supply side

Compliance manual
Compliance Manual

  • a brief overview of the relevant competition rules;

  • a statement endorsed by the Board/Management of the business, that the company aims to comply with the relevant competition rules;

  • a bullet point list of ‘dos’ and ‘don’ts’;

  • a clear statement that it will be a disciplinary matter if any employee breaches the compliance requirements;

  • tie participation in competition compliance programme in with annual objectives and appraisal;

  • details of the compliance officer or person to whom all queries on competition issues can be referred;

Compliance manual cont d
Compliance Manual / cont’d …

  • details of any training or seminars organised by the company for it staff, including employees and/or agents;

  • advice on what to do if the company receives an unsolicited approach from competitors who wish to discuss matters relating to prices and the relevant market; and

  • guidance on how to deal with dawn raids.

Investigatory powers european commission
Investigatory powers – European Commission

  • Requests for information – significant fines for not answering or providing misleading information can be up to 1% of turnover

    When a company is subject to a dawn raid by the Commission, the investigators have the following specific powers:

  • Ask any representative or member of staff for explanations of facts relating to the subject matter and purpose of investigation

  • Use reasonable force

Arrival of investigators
Arrival of Investigators

  • First task will be to investigate the investigators’ mandate

  • Will enable lawyers to advise on precise scope of investigators’ powers

  • E.g. only warrant permits the Commission to use reasonable force

  • Seeking a delay of the investigation pending arrival of company’s lawyers

Golden rules 1
Golden Rules (1)

  • Each investigator must be shadowed by an appropriately briefed person

  • Do not volunteer information or documents unless necessary to clarify a response

  • Inspectors can only examine documents relevant to matters under investigation

  • Do not lie or deliberately mislead officials

Golden rules 2
Golden Rules (2)

  • Do not tamper with, hide or destroy documents or records, including e-mails

  • Inspectors not permitted to examine legally privileged documents (extent of what is legally privileged will depend on type of investigation)

  • Detailed records should be kept of all documents copied or taken by inspectors

  • Write down every question asked and every answer given

  • If uncertain of an answer, do not hazard a guess but promise to find out and provide answer later


On-line Compliance system launched by Minter Ellison, Australian lawyers in 1999 – provides courses and test which is monitored

Customers include Air New Zealand, AMP, Quantas

Reed Smith Richards Butler provides the UK/European Competition Compliance content


  • With approximately 110 jurisdictions with Competition Rules in place, Competition Compliance requirements here to stay

  • Part of overall Corporate Social Responsibility

  • 10% reduction in fine just for having some compliance in place (Arriva)

  • Commercial advantages to being compliant

  • [email protected]