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Tips and traps
What would be your recommendations to companies faced with a cartel investigation and what potential pitfalls would you highlight?

Answer ... Leniency applications continue to be a key consideration for companies that identify potential anti-competitive conduct. Although leniency can be an attractive option, particularly if first through the door, significant implications result from any leniency application. Most pertinent is the risk of damages resulting from follow-on claimants.

The admission of guilt also limits a company’s prospects in any later challenge to the infringement finding and may alert competition authorities in other jurisdictions to the existence of an infringement. A leniency application further requires extensive cooperation with the CMA during its investigation, which can be onerous in terms of resources and the amount of evidence that must be provided to secure protection. The CMA will also hold an extensive file of contemporaneous documents and corporate statements about the applicant.

Companies must therefore carefully consider the implications of a leniency application before deciding this is the best course of action to take.

Companies may also face evidentiary pitfalls such as losing documents or access to key witnesses. Investigations can take place years after the event and may take a number of years to conclude. Document retention policies should be kept in mind as soon as an investigation begins, to ensure that the company can maximise its chances of successfully defending its conduct. Similarly, a company should take detailed witness statements from key employees involved at the outset of an investigation.

Related to this, once a party becomes aware of potential infringements, it is advisable to conduct a detailed internal audit in parallel to identify the extent of any infringement and any relevant materials that may exist to help defend or cooperate with the investigation. In particular, parties should seek to identify and catalogue the most problematic evidence, so that they can formulate an appropriate defence strategy as soon as possible.

Any competition law infringement brings with it the risk of adverse publicity. Other than in exceptional circumstances, the Competition and Markets Authority will publish its statement of objections and the infringement decision. As a result, companies should ensure that an appropriate team is in place to manage any PR impact stemming from the investigation and shape the public narrative where possible to minimise any reputational damage.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP