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Antitrust risks can be managed when competitors fight graft together

Joe Murphy recently talked in a post on the FCPA Blog about antitrust concerns under U.S. law for competitors who band together to fight corruption. I’d like to explain how and why the antitrust issue can be mitigated.

Before I start, it’s worth noting that various U.S. companies such as GE, Lockheed, General Dynamics, and others are already active members of various collective anti-corruption efforts, and other companies listed on U.S. exchanges are also participants, including ABB. This shows, I think, that it’s possible to get comfortable with meetings and communications among competitors for the purpose of developing and implementing collective anti-corruption strategies.

Here are some of the arguments:

The UK Ministry of Justice Guidance describes the “adequate procedures” a company needs to implement under the UK Bribery Act to defend against a charge of corporate criminal liability for bribery. Included is a reference to involvement in anti-corruption collective action. In Principle 2: Top-Level Commitment, the last bullet states that top-level commitment is likely to include:

reference to the organization’s involvement in any collective action against bribery in, for example, the same business sector.

It’s Important to note the specific reference to the same business sector. This is a strong indication that the UK Ministry of Justice not only permits but encourages competitors to take  collective action in favor of compliance and against corruption.

The full text of the UK Guidance can be found here (pdf).

Here are some additional points to consider:

Antitrust laws and regulations do not prevent competitors from discussing best practices in relation to compliance issues. In order to mitigate risks of inappropriate exchanges of information by companies during the discussions around corruption risks, there are several things that can be done.

First, the presence of a third-party facilitator such as the Basel Institute on Governance is crucial and provides a safeguard for all participants through risk-mitigation precautions undertaken by the facilitator.

Such antitrust risk mitigation includes: The facilitator proposing the dates, times, and locations for the meetings, issuing the invitations, and providing the meeting agenda. Thereafter, the facilitator should act as the chairperson, formulating the minutes of every meeting, whether by phone, webcams, chatrooms, or in person, and reminding the participants that sensitive information is not to be exchanged. These simple procedures should be followed even if the meetings include senior compliance and legal staff who are already well aware of antitrust laws and regulations.

Second, in the unlikely event that discussions stray toward competitive information even inadvertently, the facilitator needs to interrupt the speaker or speakers. At this point, the facilitator will want to remind those in the room about antitrust (or competition law) related risks. I should point out that in the Basel Institute’s long years of experience, this scenario rarely occurs in practice.  

Third, where there is even a slight indication of a possibly sensitive matter arising in any written document produced through anti-corruption collective action, the facilitator should direct each participating company to clear the proposed text with their antitrust or competition counsel before any further discussions are undertaken. Such antitrust or competition counsel may be in-house anti-competition specialists or external legal counsel.

We’ve seen these straightforward precautions and practices work well over many years.

For these reasons, we at the Basel Institute are confident that any antitrust risk arising from anti-corruption collective action initiatives can be satisfactorily managed and mitigated, even under U.S. legal standards.

________

Gemma Aiolfi, pcitured above, is the Head of Corporate Governance, Compliance, & Collective Action at the Basel Institute on Governance. She can be contacted here.

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