The recent raid by the Competition Commission on prominent players in the insurance industry serves as a wake-up call for companies to ensure that their affairs are in order. One way to do so is through a competition health check whereby an independent attorney conducts an assessment to establish whether your company's policies and practices comply with the Competition Act.
What is a competition health check?
A competition health check, also referred to as a fair competition review or audit, is a pro-active assessment of a company's level of compliance with the Competition Act. Such an assessment broadly includes risk identification, risk assessment, mitigation, and implementation.
The purpose of a competition health check is to proactively identify potential contraventions of the Competition Act. If, during the assessment, potential contraventions are uncovered, these can be remedied or mitigated proactively. Alternatively, the Competition Commission can be approached for potential immunity through its corporate leniency policy.
A further benefit of a competition health check is that it can serve as a factor in mitigation should a company later be found to have contravened the Competition Act. A company's compliance efforts will be favourably viewed by the Competition Tribunal in the determination of potential future administrative penalties.
A competition health check is therefore an important tool which can be utilised towards establishing a culture of compliance.
The 'health check' process
- Getting the background
A competition health check starts with an introductory discussion with your appointed competition practitioner. The purpose of this is to discuss your company's unique business operations, key employees and to gain insight about its position in the market. This is followed by extensive desktop research regarding your company's operations, the competitive landscape and potential risks to competition in the particular market.
- The assessment
This phase of the health check includes direct engagements with key persons in the organisation. It also entails the evaluation of policies (e.g., information sharing, rebate, discount policies etc.), agreements, the provision of training (e.g., competition training), your company's involvement with professional bodies and understanding the level and frequency of engagements with competitors.
- The diagnosis
Once sufficient information about your company, the competitive landscape, its policies and existing agreements have been obtained, the competition practitioner will prepare a report setting out the risk assessment of different facets of the company. This is typically done through a grading system and organising risks (if any) in order of priority. Naturally, this stage of the assessment can also lead to a finding of a clean bill of health.
Based on the risk assessment and grading, the competition practitioner will identify how to alleviate, mitigate or address existing risks. They will comment on the appropriateness of certain policies, identify potential areas where the company falls short of the Competition Act and make recommendations to rectify potential shortcomings. As part of this, they can also prepare a customised competition compliance programme for your company to upskill employees in the field of competition law, provide guidelines on the identification of future competition risks, and to provide guidelines on how to address these risks.
Adams & Adams is well-placed to assist your company with all its competition needs, including conducting a competition health check.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.