In 2019, companies need to be prepared for an ever closer scrutiny as the risks of violating antitrust laws have never been higher. This is due to increased coordination of cross-border regulatory bodies, multimillion penalties and significant exposure to new antitrust litigation lawsuits, class action lawsuits and private enforcement as well as possible criminal sanctions. Furthermore, an increasing number of countries worldwide are adopting, proposing or strengthening their antitrust enforcement, including Poland.
Companies will have to plan ahead and include any potential antitrust-related risks. This toughened enforcement environment has prompted companies to undertake antitrust audits to assess and manage antitrust risks. When properly designed and targeted to a company’s specific operations, antitrust audits can uncover areas of exposure, determine the nature and extent of potential antitrust law violations, identify business practices that present heightened risks, and assess the effectiveness of a company’s antitrust compliance.
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. If a company decides that an antitrust audit is appropriate, it should engage counsel that has a degree of independence and deep familiarity with the principles of antitrust law to recognize some of the subtleties of antitrust issues.
Extra care must be taken to prevent the release of confidential information. It is important to have counsel oversee and conduct the audit to ensure that the company can resist disclosure of communications produced during and for the purposes of the audit in court, regulatory, or investigatory proceedings.
Also, 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. 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 competition authority. Good coordination among the lawyers in each country is vital to obtaining clearance.