Experts are engaged in a lively discussion regarding development scenarios of an internal system to prevent violations of antimonopoly laws (antimonopoly compliance) in Russia. Tatiana Radchenko, the Head of the Department for Competition Policy of the Analytical Center, replies questions of the reporter from Competition and Law (Konkurentsiya i Pravo) magazine.
Development of an antimonopoly compliance system may cost companies RUB 20-50 mln
In the article "Formula 'Discount' for Compliance", the magazine asks a question whether a company may be released from liability in full if it has taken all measures within its control to comply with law provisions by implementing a mechanism to prevent antimonopoly risks? According to Tatiana Radchenko, incentives to develop and continuously improve antimonopoly compliance may arise at least in two cases. First, when potential benefits from such mechanism exceed total costs of its development and expenses on adherence to implemented rules for observing requirements of competition protection laws. Second, when a company’s senior management, who may face criminal liability in case of their anticompetitive actions, is interested in adopting a corporate system of measures for preventing violations to mitigate risks of personal liability.
However, if the practice of imposing criminal liability for violations of antimonopoly laws is rather exceptional, the number of initiated proceedings only grows when the Federal Antimonopoly Service of Russia adopts behavioral rulings and imposes administrative penalties, warns the expert.
Developing a system of measures for internal corporate prevention of violations may cost from RUB 20-30 to 50 million (taking into consideration its implementation and adaptation costs, revision of contractual relations, personnel training, etc.) and the basic turnover penalty is 8%. Due to this fact, implementing compliance ‘with 1/8 discount’ may have sense for organizations with the annual turnover of over RUB 30-50 billion and higher risks of antimonopoly investigation.
On the other hand, in the opinion of Ms. Radchenko, the world practice of applying programs of easing punishment for participation in cartels has not proven its efficiency yet: there is no evidence that reducing the gravity of punishment results in preventing further violations by the same companies. This fact puts in doubt the efficiency of punishment easing provisions. Moreover, the existence of compliance could be considered even as an aggravation in these cases, as the organization has not only failed to prevent violations, but committed them knowingly.
It seems that the development of this institute in Russia should follow the way of self-regulation: when business associations and/or unions of lawyers develop and promote recommendations on compliance with laws subject to best practices without special liability easing measures stipulated in law provisions. Companies themselves should be interested in mitigating their risks and costs and the existence of compliance may not act as an indulgence.