With decision of 25 September 2018, published on 4 October 2018, the Italian Competition Authority ("ICA" or "Authority") has adopted its Guidelines on Antitrust Compliance ("Guidelines"), in line with European and national best practices.
According to the ICA’s Guidelines on the quantification of pecuniary administrative fines, the adoption of a specific compliance program is a possible mitigating circumstance that allows the company to obtain a reduced fine.
The Guidelines are therefore intended to provide companies with guidance on the definition of the compliance program's content as well as the method and criteria to assess whether the program will lead to a possible mitigation of the fine (should the company be subjected to an investigation before the Authority and to the imposition of a sanction).
It is noted that the text of the Guidelines contains some critical issues, with particular with reference to the coordination between the possible mitigation for compliance and the leniency regime provided for companies that voluntarily report a secret cartel (so-called leniency program).
These critical aspects had been reported to the Authority by many of the participants to the public consultation phase that preceded the adoption of the final version of the Guidelines, however the Authority didn't change its approach.
Here below a summary of the main features of the Guidelines with some comments.
The content of the antitrust compliance program
As indicated by the ICA Guidelines, an effective compliance program:
- shall be suitable to prevent antitrust infringements and reduce specific antitrust risks on the basis of the specific company's characteristics. The compliance program shall be appropriate to the size and market position of the company, and must be proportionate to the complexity of its business organization and the structure of its management. The company shall therefore carry out an adequate preventive analysis of its own antitrust risks;
- must become an integral part of the corporate culture and policy. Competition must be recognized as a founding value of the activities of the company (e.g., by inserting antitrust principles in the company’s Ethical Code). The company must also demonstrate that it allocates sufficient resources to the implementation of the program and should appoint a program manager, granted with autonomy and independence, reporting directly to the top management. The company’s top management is required to actively support the program. To ensure that the antitrust compliance program becomes an integral part of the corporate culture and policy, the company shall provide continuous training to its employees on the antitrust risks to which the undertaking is exposed: this should take place via training courses and the provision of manuals and guides. This will help to ensure that employees have a thorough knowledge of antitrust matters and an in-depth understanding of the antitrust risks related to their activities;
- shall include a system for the management of decisional processes suitable to reduce the risk of conducts in breach of antitrust rules, which will have to be integrated into the company’s current business processes. The company shall provide internal reporting models allowing staff to point out any antitrust issue. If a whistle-blowing system is adopted, the anonymity of the reporting agent must be ensured. The company must also carry out regular due diligence and self-assessment through internal audits;
- shall foresee the possibility of applying disciplinary measures if employees infringe competition rules. At the same time, the company may define incentives to ensure compliance with the antitrust compliance program;
- shall adapt to changes in the company, regulation or case-law. The compliance program should not be a static document; it shall be constantly monitored and updated.
Requesting the ICA to assess whether the program will lead to the possible mitigation of the fine
To request an assessment of whether the company's compliance program can lead to the mitigation of the fine, the Guidelines provide that the company must submit a request to the Authority accompanied by an explanatory report that clarifies why the program is adequate and efficient. The explanatory report should also detail the concrete initiatives adopted by the company to ensure effective implementation. Documents that show the effective and concrete implementation of the program must also be submitted together with the request.
The request must be presented within six months from the notification of the opening of proceedings. The Authority has established that only compliance programs adopted, implemented and transmitted by the parties within six months from the notification of the opening of proceedings can be assessed. Any changes to the compliance program adopted before the opening of proceedings must be introduced and communicated by the parties within the same six months deadline.
If the company has changed its compliance program after the opening of proceedings, the explanatory report must also clarify the reasons for these changes and demonstrate their effective implementation.
We note that the six-month deadline is more restrictive than the practice followed by the Authority so far. So far the Authority merely required the request for the mitigation to be filed sufficiently in advance with respect to the adoption of the Statement of Objection, in order to allow its assessment. This new limitation does not appear to be fully justified, as the assessment of the compliance program could be still effectively carried out even at a more advanced stage of the procedure.
As to the a possible fine reduction resulting from a positive assessment of the compliance program, the Guidelines distinguish between programs adopted before the opening of proceedings and programs adopted after the opening of proceedings.
For programs adopted before the start of the investigation, the Guidelines provide:
- a reduction of up to 15% of the sanction, if the compliance program worked effectively enabling the prompt detection and interruption of the infringement before the notification of the opening of proceedings. The Guidelines provide that - in cases where the leniency program is applicable, i.e. in cases concerning secret cartels - the mitigating circumstance can be granted as a discount of up to 15% only if, following the discovery of the unlawful conduct, the company submit its application for leniency before the Authority carried out inspections or in any case prior to the notification of the start of the proceeding. This provision seems to discourage the adoption of compliance programs before proceedings are opened, at least for companies not subject to dominance issues. In fact, in all cases relating to secret cartels, should the company decide not to submit a request for leniency (for example, in the context of public tenders preferring not to expose itself to the risk of criminal sanctions), its compliance program will be considered as manifestly inadequate (paragraph 35 of the Guidelines) and therefore unlikely to be considered suitable to benefit from the mitigating factor, which in any case could not be higher than 5% (paragraph 33 of the Guidelines). Therefore, in cases concerning secret cartels, the application of the mitigation circumstance seems to be very limited. On the one hand, the first company to apply for leniency will probably benefit from total immunity and, therefore, the application of the mitigating circumstance will be irrelevant. On the other hand, all the subjects involved in the proceedings that did not apply for leniency before the Authority carried out its inspections or started its investigation, will see their compliance programs automatically classified as "manifestly inadequate";
- a reduction of up to 10% of the sanction, if the compliance program is not manifestly inadequate and the company adequately amends its compliance program and begins implementing it after the opening of proceedings and within six months from the notification of the opening of proceedings; or
- a reduction of up to 5% of the sanction, if the compliance program is manifestly inadequate but the company demonstrates the introduction of substantial changes and its effective implementation within six months from the notification of the opening of proceedings. The fact that the company has not presented a leniency application (in cases eligible for leniency) indicates, according to the Guidelines, that the program is manifestly inadequate.
For programs adopted after the start of the investigation, the Guidelines provide:
- a reduction of up to 5% of the sanction to be imposed, if the compliance program is adequate and efficient.
A maximum discount of 5% may be granted to a repeated offending company that already has a compliance program, only upon demonstration of amendments made to the program after the opening of proceedings. No mitigation may be granted if the company has already benefited from a reduction of antitrust fines in the context of a previous investigation.
Compliance programs and commitments
No presumption of adequacy and effectiveness may be invoked by the company in cases where the compliance program has been the subject of commitments made binding by the Authority pursuant to Art. 14-ter of Law No. 287/90.
Compliance programs and groups of companies
In antitrust proceedings involving groups of companies, the compliance program shall be adopted and implemented at group level, and the compliance measures adopted and implemented by both the parent company and the subsidiary involved in the proceedings will be assessed. The Guidelines explain that the adoption of a compliance program by the parent company shall not be considered sufficient to exclude the liability of the parent company for the anti-competitive conduct of its subsidiary.
Compliance program as an aggravating circumstance
The existence of a compliance program will not be evaluated as an aggravating circumstance, except in exceptional cases, for example if the compliance program has been used to facilitate or conceal an infringement or to mislead or hinder the investigation by the Authority.
Entrance into force
The Guidelines have entered into force at the time of their publication, therefore on October 4, 2018, and they apply to proceedings initiated by the Authority after this date.