What is antitrust compliance?

What is antitrust compliance?


In the Ukrainian business environment, antitrust compliance is a quite new phenomenon. And if the corporate compliance for banking institutions and joint-stock companies is already mandatory, the issue of the need for legislative implementation of internal antitrust codes is yet to be discussed. 

Ukraine is working hard to create its own legislative base in this area, trying to adapt it not only to the legal system of the European Union, but also to world trends in various sectors of the economy. However, taking into account that the legal systems of many leading countries of the world have long contained references to the antitrust compliance, such attempts of Ukraine are rather strange (as it is possible to use trusted foreign experience). Moreover, today in Ukraine there are very few professionals for whom the antitrust compliance is a mandatory component of business activity. 

What is the essence of antitrust compliance? It is a system that serves the internal securement of conformity of the subject’s activity with the requirements of the antimonopoly legislation. Thus, the main functions of antitrust compliance are: identification and management of potential risks of the violations of the law; algorithm implementation control aimed at the elimination of such risks; analysis of the overall system performance. 

The antitrust compliance, as well as any other system of control at the enterprise is effective only if the management of the enterprise is interested in its work, interested in the transparency of information, continuity, and consistency of system operations. This is something similar to accounting principles. However, the business in Ukraine is not yet aware of the serious consequences of antitrust risks and does not see the need to create an internal system to prevent such risks. In the future, of course, the situation will certainly change. 

Firstly, the penalty sanctions for the violation of the legislation on protection of economic competition are quite large and can be up to 10% of the company’s revenues (or profits) for the last reporting year, in which the penalty is imposed. Thus, the actively the Antimonopoly Committee of Ukraine acts, the faster the business will understand that antitrust compliance should be established in the near future. However, using solely the punishment method is not rational for achieving the main goal: the formation of antitrust compliance only at the level of business culture. Secondly, proceeding from the above, there is going to be a start of a long process of obtaining the relevant knowledge and skills, stimulation and efforts to implement compliance at a practical level for business in Ukraine. Perhaps, significant results in this direction will appear in about five or six years. In this regard, it should be noted that the awareness of the need to implement antitrust compliance, which is an important step in conformity with the legislation, should be instilled into the future experts while they are still at the university. 

Development and implementation of antitrust compliance at a particular enterprise has its consistent algorithms of work. In addition, there are great long-term examples of the implementation of compliance in many of the world’s leading countries, as mentioned above. The results of this practice were the basis for the creation of a practical guide on the Antitrust Compliance Toolkit developed by the International Chamber of Commerce (ICC). The antitrust compliance tool was introduced in 2013 at the fifth round table of the ICC on the Competition Policy (Warsaw), which took place in April. It is important to note that this manual was formed by specialists who implemented internal compliance techniques not only for large, but also for medium and small businesses. 

What is important from the practice of these specialists in case of launch of the antitrust program? First of all, it is to realize the existence of antitrust risks. Also, to create internal codes of ethics that help employees understand that adherence with internal standards should not be based on the fear of punishment, and should be based on self-conviction, that it is necessary to do so, not otherwise. However, for this purpose it is necessary to ensure active participation of the management of the enterprise: Undoubtedly, the bright example superior behavior in this regard will significantly correct the psychology of the team in a positive direction. 

The second important step – appoint employees from the highest management of the enterprise responsible for adherence with the compliance program. If the enterprise is large, it is possible to involve several specialized professionals in this work. This work includes, among other things, setting up a reporting algorithm both before the management of the enterprise and before the end beneficiaries. It is also important to provide the necessary funding for the implementation of the antitrust compliance program. 

The third important step – develop antitrust risk identifying algorithms and methods for evaluating the effectiveness of the identification. In this area the important factors are: systematic training of the company’s personnel and formation of stimulation methods, which will guarantee the attraction of employees in the process of compliance-program execution. 

In the last step it is necessary to launch control measures, which should include: internal antitrust inspections at a complex level; periodic investigations; disciplinary procedures. 

Based on the above-stated principle, compliance programs are standing out as efficient and promote fair competition, reduce the risks of antitrust requirements violations. Most importantly, they will help employees and management of enterprises to conform with the legislation without the hassle of their personal initiative. 

However, business should start working on the formation of the antitrust compliance at the enterprise should be now, rather than waiting for the inspection of the Antimonopoly Committee of Ukraine, since it is physically impossible to promptly eliminate existing violations and prevent new ones in such a short period of time. Note that the formation and effective launch of the compliance will require real work and should not have a purely formal, on-paper character. There is no doubt that in just a few years Ukraine will join the circle of countries in which the compliance program is an integral part of business culture. 

4 Compliance-Agreements. Top-5 legal recommendations on risk reduction 

A lot of Ukrainian companies have started using a tool that is named compliance. Compliance is in fact a set of measures by which lawyers prevent various violations of the law and internal procedures. What is it and what are its pros? This will be expanded on below. 

The value of compliance

The success of a business depends on countless conditions and factors – the price and quality of the product (service), marketing, competition in a certain market, innovation of the enterprise and the product (service), market needs, etcetera. 

However, as the modern society shifts towards rational consumerism more and more ordinary consumers do not pay as much attention to the price and quality of the product, and in turn consider the impact on the small and large communities by enterprises, look into the ecological activity of the enterprise-producer (service provider), and overall value the positive image of the company, which produced the necessary goods.

Thus, when choosing a contractor for business activity, the overwhelming majority of enterprises checks the legality of the conduct of a potential contractor of business. A business may also check for the absence of legal disputes, which reflects not only the authenticity of the counterparty’s activities, but also the counterparty’s failure to comply with its contractual obligations.; absence of tax debts; absence of scandalous situations in social networks or mass media. 

Therefore, compliance is extremely important for the success and profitability of the enterprise, as each of the above aspects is a potential risk factor the owners and the management: and both are interested in preventing the negative consequences for the company mentioned above, which is done by such a set of measures.

Building compliance in a company

For the majority of business owners, it has become an obvious necessity to build a compliance-system within companies.

Objectives of the compliance-system: 

– to fight corruption and fraud; 

– to identify risks that have resulted from non-compliance with internal and external norms; 

– to comply with the requirements of international standards and Ukrainian legislative norms. 

It is always necessary to start with the logging of the company’s policies. 

There is a number of standard policies that are applied to some extent in most organizations : 

-Corporate Code of Ethics. It is a standard document applicable to almost all aspects of the company’s operations. The document contains moral and ethical principles of its activity, norms of employee behavior and their duties. 

– Anti-Corruption Policy. It provides certain procedures and practical actions for both employees and clients, as well as contractors. 

– Policy on Gifts and Invitations. In Ukraine, such a policy is quite pertinent, as it has been widely practiced for a long time in the social system with regulatory and supervisory authorities, partners and counterparties. 

– Policy on Reporting Ethical Violations. Effective execution of this function is one of the most efficient ways to combat various violations within the company. 

– Conflict of Interest Policy. This document outlines ethical norms and standards of employee behavior in the event of a conflict of interest, namely, when the employee’s interests and actions contradict the interests of the company. 

– Policy of Interacting with Regulatory Bodies. Proper and productive interaction with regulatory bodies is an extremely acute issue, as even in law-abiding companies, various difficulties may arise during collaboration with state services. 

– Privacy Policy. 

It is important to outline that any company can additionally conduct necessary processes on the basis of principles approved by the management, and in such a way create its original structure of compliance control.

Politicians explained: now we need to recognize the risks. Certainty, it is optimal for the company to draw up a risk map for short-, medium- and long-term periods. However, one may ask a question: why do businessmen need it?. The answer is that with the help of such maps, companies understand what to pay special attention to, what to fear less and what does not matter in a particular economic sector. The risk map is not just a common list of potential problems or risks for the company (for analysis and control purposes), but also a tool for effective implementation of a strategy. 

Unfortunately, not everyone that uses a compliance-system knows how to build it effectively.

Name: Natalia

Surname: Osadcha

Email: osadcha@ap.agency

Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine


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