How do I get into compliance

"The authorities do not find it easy to take compliance into account"

Mr. Mundt, the “Network Submission Agreements” met for the third time this year. What does this exchange mean for you?

Andreas Mundt: The trigger for the intensified cooperation with the public prosecutor's office was the accumulation of cartel cases in recent years in which the agreements we pursued were made in the context of tenders. A wide variety of areas such as de-icing salt, fire engines and turntable ladders, steam boilers for lignite power stations, rails and special mining work were affected. The starting signal for the network was given in 2012. In the area of ​​submission fraud there is a split responsibility. The Federal Cartel Office primarily prosecutes companies that have violated antitrust law and the public prosecutor's office the natural persons involved for possible violations of the criminal offense of submission fraud. The need for law enforcement cooperation is evident. That was done before, but we wanted to intensify the cooperation and develop a certain routine.

You expressly want to “bundle” your strengths through the exchange and support each other. At which interfaces do you want to improve your collaboration?

There are many things we have to do together when working on a case. It starts with the question of who takes action and who takes up which case. How and to what extent we conduct a search must be organized. For example, we have to coordinate which locations we are going to, how many investigators are required on site and who is to secure which evidence. So we can bundle our colleagues here, as well as the representatives of the public prosecutor's office and the police. Another example is the handling of instruments that one person has and the other does not, by which I mean the bonus or leniency program. The Federal Cartel Office can offer cooperating companies and persons the prospect of a waiver or a reduction in the fine, the public prosecutor has no comparable regulation for submission fraud - how do we organize that? How do we ensure that natural persons are still ready to give evidence? We need that in turn to bring our cases to an end. In principle, two authorities are also involved in evaluating seized documents and IT data, hearing witnesses and other investigations. It makes sense to coordinate who does what and how to proceed. So we have resources that ideally complement each other and better interlink what I do.

At these meetings, a lot of experience in following up the submission agreements is exchanged. What are you discussing?

We do not talk about the details of ongoing proceedings. But it is clear that the discussions are fairly detailed in terms of certain procedures. Take a search, for example. This is of course a special situation for everyone involved. How do you deal with it, how do you react to certain reactions of those affected? We exchange information about which evidence is relevant for whom and where and how further evidence could be found. We discuss legal issues, such as the conditions under which telephone surveillance can be considered. And finally, we are also considering how we can uncover even more cases, what indicators there are for submission fraud and how we can involve the potentially harmed contracting authorities more closely in the detection. These are all useful things that can greatly benefit from each other's experience.

The draft of an information sheet is planned, which should contain possible clues in the submission agreements. How far has its elaboration progressed? When is it available to companies?

The information sheet was developed by the Federal Cartel Office in coordination with the participants in the submission fraud network. It contains an overview of typical suspicious factors for submission agreements. The addressees of the information sheet are actually the registration offices in Germany. However, it can also help other potentially cartel victims to uncover cartels. The information sheet will shortly be published on the Bundeskartellamt's website and made available to awarding authorities.

Some lawyers still take the view that the prosecution of bid agreements is punished twice, which in turn is unconstitutional under Article 103 (3) of the Basic Law. What is your opinion on this?

That is an attitude that I honestly cannot understand. Above all against the background that we at the Federal Cartel Office also have the option in normal cartel cases to impose a fine on both natural persons and companies. That is also accepted and cannot be questioned under the rule of law. Now the legislature has made an assessment that submission agreements are particularly reprehensible. And because it is so, natural persons are punished a little more severely here. This happens in such a way that it is not only an administrative offense, but also criminal law comes into play. The natural persons are not punished twice because the prosecution is solely responsible for their criminal prosecution.

Last year you discussed the bonus program for companies willing to report as part of the “Network Submission Agreements”. What is the current situation here?

With the bonus program, of course, we have an efficient investigation tool. Half of the cartel cases can be traced back to the bonus program. In any case, the public prosecutor's office itself does not have the means for submission fraud in this form. We also advertise this bonus program to the public prosecutor. In the cartel area in particular, information from an insider is particularly important because the first thing to do is not to find the perpetrator. Rather, it is first and foremost about identifying the crime at all, and the number of unreported cases is likely to be high. As part of the network, we discussed what it means for the public prosecutor not to have such an instrument available and how to deal with it. In general, it has led to an awareness of the problem on both sides. It can be said, however, that the public prosecutor's office also benefits from the fact that at least we have the instrument at our disposal, because this creates strong indirect pressure on the perpetrators in cooperation with the public prosecutor's office. Through our dialogue, we were also able to determine that the public prosecutor's offices are making every effort to find legally impeccable and practicable solutions within the framework of the StPO, which are based on the evaluations of our bonus regulations. Experience in recent years has shown that someone who has used the bonus program and also cooperates with the public prosecutor's office can experience a mitigation in the sentencing. If this practice becomes established, it can in turn have a positive effect on the willingness of the perpetrators to work with us.

Does a company also get reduced sentences if it has a properly developed compliance management system?

There are authorities in the world that take into account the existence of a compliance program. We do not do that directly on the question of sentencing. But of course, a compliance program still has enormous advantages for the company in the context of official prosecution. On the one hand, if a compliance officer finds a cartel violation, remedies it, processes the incident in the company and uses the leniency program, it also helps to be the first to present and possibly to avoid a cartel penalty completely. On the other hand, in the relationship between parent and subsidiary, a good compliance program can play an important role in the question of the mother's liability for the daughter. That's another great benefit. The question of whether or not these compliance programs should be used when sentencing is not an easy matter for any competition authority. In Europe we have somewhat divergent views on what I find a little uncomfortable. Because from my point of view that is something that we have to discuss in the European Competition Network (ECN).

The compliance officers invest a lot of time and energy in their anti-cartel training. And the antitrust authorities are still very busy. If you look at your statistics, you don't necessarily have the feeling that things will get better in the future. Are all these anti-cartel trainings pointless?

It's like the penal code: theft is also prohibited and punishable, but theft does occur nonetheless. After all, man is man. And there will always be misconduct. I am convinced that compliance programs really have a good sense because they create awareness in many people of what is allowed and where you cross a line where behavior is no longer allowed. Some are not even aware of this. There are areas of law where broad sections of society do not realize that things are prohibited. For example, the subject of vertical price maintenance. There are clear regulations in Germany that the manufacturer is not allowed to bind the prices to the dealers. Even so, sales people can sometimes be unaware of this, and a compliance program can help raise awareness. But compliance programs can completely stop cartel behavior, even with the toughest penalties.

I asked you this question because some compliance officers have doubts as to whether they are possibly setting the wrong focus in their anti-cartel training ...

I am familiar with many compliance programs. The company tries everything possible to avoid criminal acts. It can still occur. But compliance programs make it harder.
They reduce the risk. And of course we don't know at all how much they actually prevent the bottom line.

And with that you are addressing the eternal problem of compliance managers to prove their added value. Wouldn't you like to help them a little more and disagree with your opinion?

Yes, I know that many compliance officers struggle with this, even if the mentioned advantages of a compliance program should be conveyed to the board members. For me, too, assistance in improving the company's internal standing of those responsible for compliance is a point where I keep brooding. Because the compliance officers tell us that if you would give us visibility in the measurement of fines, it would be much easier for us to make compliance in management more positive. That is surely an argument that cannot simply be ignored. But, as I said, no authority finds it easy to do so.

Network submission agreements

At the invitation of the Federal Cartel Office, the “Network of Submissions Agreements” has been meeting once a year since 2012 to exchange experiences on the pursuit of agreements in connection with public and private tenders. This network is a closed circle of representatives of the antitrust authorities and public prosecutors from all over Germany.