Christoph Klahold - Importance and Challenges of AT

Importance and Challenges of Antitrust Compliance for Large Corporations

Dr. Christoph Klahold - Chief Compliance Officer ThyssenKrupp AG

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Importance and Challenges of Antitrust Compliance for Large CorporationsDr. Christoph Klahold, December 3, 20122

Importance of Antitrust Compliance for ThyssenKruppRail Cartel (2011)



Reporting system

Training

Group Policies/ Guidance Notes

WhistleblowerHotline

Sanctions for violations

Inform & Advise Identify Report & Act

Compliance audits

Compliance advice

Compliance culture

Compliance organization

Tone from the Top/the Middle Compliance Commitment

Integrate Compliance in business processes

Risk profile

Structure and elements of ThyssenKrupp Compliance Program



Major Challenges for Large Corporations

• Legal privilege for in-house counsel

• Sanctions against employees• Antitrust leniency vs. criminal

sanctions• Consideration of Compliance

Programs

• „Zero Tolerance“• Access to file• Damage claims

by competition authorities

Challenges regarding

private enforcement

Compliance Commitment

Challenges for internal

advice/ investigations

Challenges during

administrative proceedings



Major Challenges for Large CorporationsNecessity to Coordinate Different internal and external Proceedings

Administra-tive

Proceeding

Leniency Application Dawn Raid Cartel

Proceeding Fine

Criminal Investigation Dawn Raid Court

Proceeding Sentence

Private Enforcement

Access to File

Court Proceedings Damages

Internal Measures

Internal Investigation

Employment Sanctions

Labor Law Dispute

Civil Court Dispute for Damages

Damage Claims



Major Challenges for Large CorporationsLegal Privilege

The ECJ has confirmed in Akzo Nobel that in order to benefit from legal privilege vis-à-vis the European Commission, a communication has to emanate from an independent lawyer, i.e., a lawyer that is not bound to the client by a relationship of employment

The ECJ has confirmed in Akzo Nobel that in order to benefit from legal privilege vis-à-vis the European Commission, a communication has to emanate from an independent lawyer, i.e., a lawyer that is not bound to the client by a relationship of employment

Since Commission Regulation 1/2003 increased necessity for companies to conduct self-assessments in the area of antitrust law

Since Commission Regulation 1/2003 increased necessity for companies to conduct self-assessments in the area of antitrust law



Major Challenges for Large CorporationsLegal Privilege

Incentive for companies not to document antitrust law advice by in-house lawyers and compliance officers as this may create an additional hazard by documenting the situation

Incentive for companies not to document antitrust law advice by in-house lawyers and compliance officers as this may create an additional hazard by documenting the situation

Companies are forced to constantly involve outside legal counsel for all major antitrust law issues.Companies are forced to constantly involve outside legal counsel for all major antitrust law issues.

The in-house legal departments need to be involved in all legal aspects and situations, in particular in those that are problematicThe in-house legal departments need to be involved in all legal aspects and situations, in particular in those that are problematic



Major Challenges for Large CorporationsSanctions against Employees

How should companies deal with employees involved in a

cartel?

How should companies deal with employees involved in a

cartel?

Zero Tolerance!Compliance Commitment of companies, Public opinion and many public authorities expect strict sanctions.

Zero Tolerance!Compliance Commitment of companies, Public opinion and many public authorities expect strict sanctions.

Internal leniency/incentives to report and cooperate.Cooperation of involved employees is essential during complete investigation to submit leniency application and in some cases competition authorities even expect and require companies to ensure such cooperation

Internal leniency/incentives to report and cooperate.Cooperation of involved employees is essential during complete investigation to submit leniency application and in some cases competition authorities even expect and require companies to ensure such cooperation



Major Challenges for Large CorporationsAntitrust Leniency vs. Criminal Sanctions for Employees

Leniency benefitfor companygranted byEuropean

Commission

Individual employee

prosecuted bynational public

prosecutor

Best interest ofthe company:

full cooperationto obtainleniency

Interest ofindividual employee:

defense againstcriminal

prosecution



Major Challenges for Large CorporationsConsideration of Compliance Programs in the Setting of Fines

“If a company which has put a compliance program in place is nevertheless found to have committed an infringement of EU competition rules, the question of whether there is any positive impact on the level of fines frequently arises. The answer is: No”(Source: European Commission, Compliance Matters, November 2011)

“If a company which has put a compliance program in place is nevertheless found to have committed an infringement of EU competition rules, the question of whether there is any positive impact on the level of fines frequently arises. The answer is: No”(Source: European Commission, Compliance Matters, November 2011)



Major Challenges for Large CorporationsConsideration of Compliance Programs in the Setting of Fines

Compliance efforts often helpless against conduct by individual employees that knowingly and willfully try to circumvent the internal rules (criminal energy)

Compliance efforts often helpless against conduct by individual employees that knowingly and willfully try to circumvent the internal rules (criminal energy)

Many national competition authorities already incorporated this concept in their fining guidelines (e.g., US, France, UK)Many national competition authorities already incorporated this concept in their fining guidelines (e.g., US, France, UK)

Could provide an additional and “more tangible” argument to implement and intensify the Compliance EffortsCould provide an additional and “more tangible” argument to implement and intensify the Compliance Efforts



Major Challenges for Large CorporationsProtection of Files

Protection of leniency documents essential for decision of a company whether or not to apply for leniency.Protection of leniency documents essential for decision of a company whether or not to apply for leniency.

Private antitrust

enforcement

Effectiveness of leniency program



Major Challenges for Large CorporationsCommission allowed to ask for damages

European Commission is acting both as judge and claimant.European Commission is acting both as judge and claimant.

Firewall necessary between case team responsible for the cartel investigation and division of the European Commission in charge for damage claims

Firewall necessary between case team responsible for the cartel investigation and division of the European Commission in charge for damage claims



Thank you for your attention!

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Christoph Klahold - Importance and Challenges of AT