Importance and Challenges of Antitrust Compliance for Large Corporations. Dr. Christoph Klahold - Chief Compliance Officer ThyssenKrupp AG

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1 Importance and Challenges of Antitrust Compliance for Large Dr. Christoph Klahold - Chief Compliance Officer ThyssenKrupp AG

2 Importance of Antitrust Compliance for ThyssenKrupp Rail Cartel (2011) 2

3 Structure and elements of ThyssenKrupp Compliance Program Compliance culture Tone from the Top/the Middle Compliance Commitment Integrate Compliance in business processes Inform & Advise Identify Report & Act Group Policies/ Guidance Notes Training Compliance advice Risk profile Compliance audits Whistleblower Hotline Reporting system Sanctions for violations Compliance organization 3

4 Major Challenges for Large Access to file Damage claims by competition authorities Zero Tolerance Challenges regarding private enforcement Compliance Commitment Sanctions against employees Antitrust leniency vs. criminal sanctions Consideration of Compliance Programs Challenges during administrative proceedings Challenges for internal advice/ investigations Legal privilege for in-house counsel 4

5 Major Challenges for Large Necessity to Coordinate Different internal and external Proceedings Administrative 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 5

6 Major Challenges for Large Legal 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 Since Commission Regulation 1/2003 increased necessity for companies to conduct self-assessments in the area of antitrust law 6

7 Major Challenges for Large Legal Privilege The in-house legal departments need to be involved in all legal aspects and situations, in particular in those that are problematic Incentive for companies not to document antitrust law advice by inhouse 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. 7

8 Major Challenges for Large Sanctions against Employees 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. 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 8

9 Major Challenges for Large Antitrust Leniency vs. Criminal Sanctions for Employees Leniency benefit for company granted by European Commission Individual employee prosecuted by national public prosecutor Best interest of the company: full cooperation to obtain leniency Interest of individual employee: defense against criminal prosecution 9

10 Major Challenges for Large Consideration 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) 10

11 Major Challenges for Large Consideration 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) 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 Efforts 11

12 Major Challenges for Large Protection of Files Protection of leniency documents essential for decision of a company whether or not to apply for leniency. Private antitrust enforcement Effectiveness of leniency program 12

13 Major Challenges for Large Commission allowed to ask for damages 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 13

14 Thank you for your attention! Any Questions? 14