How does a company demonstrate its commitment to competition compliance?

Any company may enact its own regulations for competition compliance and then submit these in writing to the Fair Trade Commission for filing, as well as take action towards these regulations, or may publish similar content on the company's website. This article aims to give you guidance on how to implement the compliance programme under Taiwan's Fair Trade Act.

Risk Identification

In regard to risk identification, cartel behaviour (including joint pricing, limitation on production capacity and quantity, allocation of markets or consumers, joint purchasing, exchange of sensitive information with relevance to competition, etc), abuse of market dominance (including abuse of monopoly power, discrimination without justifiable reasons, tie-in sales, predatory pricing, refusal to deal, etc) and resale price maintenance are generally considered as having a higher risk of illegality.

Risk Assessment

The risk level can be assessed based on the employee's hierarchy and department within the company:

• employees who are at higher risk of getting involved in cartel behaviours include high executives, marketing department personnel, purchasing department personnel, personnel who frequently participate in trade association meetings, personnel who often negotiate with competitors, personnel related to price setting, and personnel who have switched jobs from a competitor and are engaged in the same role;

• employees who are at a medium risk of getting involved in cartel behaviours include those who are high executives but have never had any dealings with competitors or counterparties, administrative staff, and those who have switched jobs from a competitor but have not engaged in high-risk behaviours as above; and

• employees who are at lower risk of getting involved in cartel behaviours include labourers, logistics personnel, and human resources personnel and administrative staff who have never interacted with competitors.

Risk Mitigation

The following measures can mitigate the risk of illegal activities:

• reducing high-risk employees' opportunities to contact competitors or participate in trade association meetings, reinforcing education and training for high-risk employees;

• prior review and approval of relevant agenda by law department personnel before high-risk employees contact competitors or participate in trade association meetings, post review of relevant meeting records by law department personnel after high-risk employees contact competitors or participate in trade association meetings, confirming that there is no exchange of price, quantity or other sensitive information relating to production and sales, keeping documentation properly;

• regularly checking written information and computer records (including emails) of employees who have contact with competitors, as well as the contracts, meeting minutes, or phone calls with competitors or counterparties, keep the written and digital documentation properly;

• providing high-risk employees with education and training more frequently;

• rendering internal compliance regulations to external legal professionals for evaluation; and

• praising units or departments that have successfully implemented the compliance regulations.

Monitoring and Reviewing of Business Practices

We recommend that enterprises establish a checking and reporting mechanism as follows:

• checking mechanism – this is the process that can determine whether there is any potentially illegal behaviour and how the enterprise can deal with the illegal behaviour appropriately. Specific measures that can be adopted include:

  • set up auditors to regularly check whether the company's business practices are illegal;

  • stop it immediately and deal with the aftermath properly, if any illegal behaviour is found; and

  • cooperate with competent authorities as early as possible, whenever any illegal behaviour is found; and

• reporting mechanism – this is the system and process enabling employees to provide timely and reliable information in coordination with the company's internal investigation of illegal activities. It should provide incentives for employees to provide information, including:

  • set up an internal hotline for compliance consultation;

  • establish a confidential and anonymous reporting system or assign legal personnel to assist employees who provide information; and

  • make employees aware of external reporting mechanisms (such as reporting to competent authorities) and leniency policies.