Internal audits and thorough documentary analyses are often triggered by regulatory investigations, so as to enable companies under inspection to respond to the regulator’s demands. Following a number of billion-dollar fines imposed in antitrust cases recently, regulators’ demands are becoming more and more extensive.
In 2017, companies need to be prepared for an ever closer scrutiny. They will need to plan ahead and put those plans into action. We have now reached the stage where businesses are required to gain a whole set of skills they have thus far been able to keep in the “don’t need to know” box. One of those skills is carrying out an informal antitrust audit.
In particular, internal audits are increasingly being conducted:
  • in advance of a deal
  • where a company wants to test the effectiveness of its compliance measures
  • in response to potential charges
Internal antitrust audits conducted independently of the transaction and without pressure from the regulator can be an extremely effective way of uncovering and managing antitrust risks within the business.
Audits generally have one common objective: to establish whether the company has been in compliance with antitrust rules, and if not, to remedy the situation and mitigate any liabilities and risks before the regulator finds out about the irregularities.
Internal audits can be conducted by qualified practitioners or by external law firms. Personally, I am a strong advocate of the latter. First, antitrust audits need to be carried out in line with the local laws on data protection, privacy and employment. It is important to understand all the relevant restrictions and obligations and to obtain all the necessary details ahead of the audit.
Second, extra care must be taken to prevent the release of confidential information in the audit. It is important to understand that any material disclosed to the advising lawyers during the audit must be kept confidential.
Third, witness evidence may play an important role in any potential investigations by the regulator, therefore employees should be protected and taken care of. On the one hand, it is essential for companies to secure cooperation from its employees and encourage disclosure in order to find out about any internal misconduct, but on the other hand, it must be able to take sanctions against those who breach the rules.
The outcome of the internal audit should consist of a report for the management giving a comprehensive overview of the state of the company, together with conclusions and proposals on what needs to be done.
Even if the audit does not reveal any wrong-doing or misconduct, the process will be useful and beneficial to the business because it demonstrates the company’s unequivocal determination to respect antitrust regulations and intolerance of misconduct.
If the deal in question or the intended merger involves a cross-border element, it should be reviewed, analysed and coordinated by lawyers in all the relevant jurisdictions. This cross-border aspect is particularly important and usually requires a well-thought-out strategy on the part of all legal advisers. Competition authorities are becoming increasingly cooperative in reviewing transactions, hence why the parties to cross-border deals should do the same. The most important factor in devising a strategy in these types of cases is to prepare a coherent antitrust plan, identical for all the companies, which will be suitable for submission to any of the respective national antitrust agencies. Good coordination among the lawyers in each country is vital to obtaining clearance.

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