By Joe Murphy, JD, CCEP, CCEP-I
Hi, Colleagues – I just read a report posted by Deloitte, that the German Federal Court of Justice (BGH) ruled on May 9, 2017 (BGH 1 StR 265/16), that compliance management systems are to be taken into account in determining penalties. According to the Deloitte report:
- For the assessment of a fine imposed on the company, the court shall take into account to which extent the company fulfilled its duty to prevent legal infringements committed within its sphere of responsibility and has put in place an effective compliance management system.
- Such CMS has to be designed to avoid violations of laws and regulations.
- For potential mitigating effects, a court also has to consider whether or not the company has made efforts to improve its CMSin order to make a possible future repetition of the investigated infringements at least more difficult. A court even has to take into account the efforts made during the ongoing proceeding.
As explained to me by Dr. Petra Linsmeier, legal counsel experienced with German law, these rules spelled out by Germany’s highest court in civil and criminal matters would apply to fines under the Administrative Offences Act in general (which is also relevant for competition law).
As readers may know, one glaring exception to the positive approach to compliance programs shown by regulators and enforcers around the world has been in antitrust and competition law. In the past, both the US DOJ’s Antitrust Division and the European Union have refused to credit any compliance program, no matter how diligent.
This trend has shifted, however, and the Antitrust Division showed more flexibility in the recent past. In Europe some national authorities have also become more flexible. This ruling by the German court represents another major step. It certainly gives parties in competition law proceedings in front of the Federal Cartel Office a good reason to stress the importance of their own compliance initiatives.
Here is the site for the Deloitte report
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