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Time For A Competition Health Check – Antitrust, EU Competition



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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

  1. 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.

  1. 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.

  1. 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.

  1. Treatment

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.

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