Company directors not only play a key role in determining the conduct of their companies but are also recognised by the Office of Fair Trading ('OFT') as being core to a company's compliance culture. With the introduction in June of the OFT's extended policy on director disqualification orders, directors are facing increased individual exposure and it is more important than ever that directors are aware of their competition law duties and responsibilities.
The OFT may for example look to take action against a director who was aware of a likely infringement but took no steps to prevent it or, potentially, where a director 'ought' to have known of such a breach. Turning a blind eye will therefore not absolve a director of responsibility.
The new draft OFT guidance on 'Company directors and competition law' is intended to provide a framework for directors on the extent of their competition law duties. The guidance covers de facto and shadow directors and partners of limited liability partnerships. In all cases, it is clear that the OFT expects directors to demonstrate a commitment to competition law compliance and to take reasonable steps to mitigate any exposure.
Although directors (including directors with special responsibility for compliance) are generally not expected to be competition law experts, they are expected to understand the most serious forms of infringement and to recognise and assess risk areas. In determining whether to sanction an individual director by seeking a disqualification order, directors will be assessed against the knowledge of competition law they are reasonably expected to have, rather than their actual knowledge.
In terms of detecting and preventing infringements, the OFT considers that directors who have direct management responsibility for a business area ought to have greater awareness of any anti-competitive behaviour within that area. Certain business areas are also considered to be more exposed to the risk of competition law infringements than others. Outward facing staff (such as sales staff) are for example, more likely to come into contact with competitors than staff with a purely internal function. In such high risk areas, directors are expected to take greater steps to prevent and detect breaches of competition law.
Non-executive directors on the other hand are not expected to have an intimate knowledge of the company's day-to-day activities, but are expected to challenge the decisions and actions of the executive directors.
A robust, regularly updated competition compliance programme and training would however appear to be essential across the board.
Interested parties have until 21 January 2011 to submit comments.
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