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10 key themes

Antitrust and the individual

Managing individual liability and corporate responsibility

With the global pandemic creating economic uncertainty, companies have had to respond quickly, reacting to evolving circumstances, often under intense resource and time pressure.  It is precisely during such times that the risk of antitrust infringements, and therefore exposure to both individual and corporate liability, is more acute.  New challenges for employers arise with the advent of home-working and the ‘hybrid’ workplace.  Now is the time to make sure that your HR and Risk & Compliance departments are match ready.

Counting the costs… for individuals as well as companies

Antitrust law infringements can be extremely costly for companies: exposure to significant fines, follow-on civil damages claims, reputational damage and/or disqualification from public tenders.  Consequences for individuals can be just as severe.  A Dutch court recently ruled that a North Sea shrimp trading company could recover antitrust fines from a former director involved in the infringement – a course of action always denied by UK courts and which is still pending with at least one court in Germany.  Moreover, in many jurisdictions, individuals can be criminally prosecuted, fined and/or debarred from their profession. Recently, a Dutch national was imprisoned in the US for 14 months for her involvement in a price-fixing cartel, following extradition from Italy.

Such individual liability is increasingly relied upon by authorities to drive antitrust enforcement.  The UK’s CMA Executive Director for Enforcement has made no secret of its policy change to prioritise the pursuit of director disqualifications, noting publicly that it will consider director disqualifications in all cases where antitrust law has been breached:  ‘We are determined to… send a clear message about the personal responsibility that business people have for ensuring compliance with competition laws.’  In Germany, the Bundeskartellamt may, as a general rule, only fine a company where it has also imposed a fine on at least one employee involved in the infringement.

With 20 director disqualifications to date – half of which occurred in the last 12 months – the CMA is clearly ramping up use of this weapon in its fight against anti-competitive behaviour, recognising the importance of the deterrent effect of potential personal liability.

Deba Das
Antitrust and Dispute Resolution Partner,
London

The responsible employer

Emphasising potential individual liability in antitrust law training should help companies in their efforts to ensure everyone abides by the rules.  The stakes are high for companies and employees that do not:  without employees co-operating with them during (external and internal) investigations, companies will usually not be able to meet the high evidentiary thresholds to qualify for immunity from or a reduction in the level of fine under leniency programmes.  A pivotal question in that regard is also whether, and to what extent, a company is permitted to grant some form of amnesty to its employees (from damages claims and/or contractual termination) or to cover individual legal fees.  This requires careful consideration, not least from a corporate, criminal and employment law perspective, and varies significantly by jurisdiction.

As authorities increasingly pursue individuals, it becomes even more important – and strategically challenging – for companies to make sure that they incentivise their employees to co-operate with the investigation while at the same time not being seen as deviating from their zero-tolerance policy.

Tobias Klose
Antitrust Partner,
Düsseldorf

Employment agreements themselves are not immune from antitrust scrutiny. The US DOJ and FTC made clear in their 2016 Antitrust Guidance for Human Resource Professionals that they can, and will, criminally prosecute antitrust violations including no-poach, wage-fixing and other anti-competitive employment terms. 2020 saw the DOJ’s first criminal wage-fixing case against an individual in more than 100 years of antitrust enforcement, which was followed by the agency’s first criminal no-poach case in early 2021. Now is the time to ensure that all employees, including HR departments, are aware of the risks and rules in order to avoid unwanted future surprises.  Robust compliance programmes and appropriate training can effectively help alleviate antitrust risk.

Navigating complex rules across multiple jurisdictions can be a minefield for clients. We have developed the Freshfields Antitrust 101 App to help clients stay on the right side of the law, minimising exposure to expensive and damaging investigations. Easy to understand guidance on the key rules, to the right person, at the right time – all with the push of a button.

Ermelinda Spinelli
Antitrust Counsel,
Milan

But it doesn’t just stop at compliance; effective whistleblowing programmes – if things do go wrong – can make an important contribution to antitrust risk mitigation.  Employees are often the first line of defence against antitrust violations, and their willingness and ability to speak up when they spot issues is critical, not least in a race to leniency. 

Our 2020 Whistleblowing Survey suggests that there is still work to do to strengthen corporate culture around whistleblowing especially now that businesses are preparing for the so-called 'hybrid workplace', where home-working will become permanent, at least on a part-time basis. US tech and other companies that are allowing employees to permanently work from home where home is in a different jurisdiction will find it even more challenging to protect and nurture a speak-up culture.

Maj Vaseghi
People and Reward Partner,
Silicon Valley

Looking ahead in 2021:

What could permanent home-working and the hybrid workplace mean for antitrust compliance?

In assessing whether your HR and Risk & Compliance departments are fit for purpose consider the following:

  • Oversight and management issues: make sure compliance remains high on the agenda and that an individual with the requisite seniority, credibility, experience and qualifications assumes ownership for ensuring adherence (an important point arising in the context of a recent UK High Court director disqualification case in which we successfully represented directors seeking limited permission to continue acting as directors). Moreover, make sure that your compliance function is sufficiently resourced and autonomous to perform effectively with direct reporting lines to the Board and/or Audit Committee. 
  • Examine your current risk assessment and look at how things may have changed, for example through the use of new technology or unusual working environments – do policies need to be updated?  What is considered suitable or reasonable oversight in circumstances where employees are not physically present in the office?  What substitutes could/should you put in place?  Are there any new risks that need to be assessed in light of new working arrangements – for example, new policies in relation to the use of online videoconferencing platforms and cyber security?
  • Impact of new working environments on whistleblowing: will employees’ attitudes to whistleblowing be altered and how should whistleblowing arrangements (or promotion of those arrangements) adapt?  Consider whether you need to refresh your current arrangements and how you can ensure they remain at the forefront of employees’ minds when they are working remotely.
  • Adapting to virtual investigations: conducting an internal investigation, and/or being faced with an external one, in times of lockdown or prolonged home-working poses practical challenges when it comes to interacting with employees, gathering and reviewing data and conducting meetings or subsequent disciplinary processes.  Start thinking now about processes and procedures to ensure that you can adequately explore potential issues quickly and efficiently when needed.

Freshfields’ Whistleblowing Survey 2020

The survey reveals some worrying trends for organisations seeking to strengthen their speak-up culture. There has been a decrease in those who have been involved in whistleblowing (from 47 per cent in 2017 to 32 per cent in 2020), and also in the levels of confidence that senior management would offer support or encouragement in the whistleblowing process (from 40 per cent in 2017 down to 32 per cent in 2020). Perhaps more worrying, 22 per cent of employees are more likely to make a report directly to the authorities or the media, rather than their employer (up from 17 per cent in 2017). This highlights the importance of organisations revisiting their efforts to foster an open culture and to look critically at what might be impacting employees’ willingness to raise concerns internally – especially in a more remote work environment (during and post-COVID-19).

Request access to the survey here.

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