Best Practices in Competition Compliance: A Global Perspective Aryeh Friedman, Vice President, Associate General Counsel & Chief Privacy Officer, Dun and Bradstreet Gary Zanfagna, Chief Antitrust Counsel and Associate General Counsel, Honeywell International Jacques Buhart, Partner, McDermott Will & Emery, Brussels, Paris Leon Liu, Partner, Partner, MWE China Law Offices

Agenda Regional enforcement Can compliance programs be effective? Cultural attitudes What are the main danger areas? The contents of a compliance program Criminal law issues The international element 2

Antitrust violations can subject both individuals and corporations to criminal penalties: – Individuals: Up to 10 years in jail and $1,000,000 per offense – Corporations: Up to $100 million fine per offense (and potentially even more) 3 Regional enforcement – United States

Heightened Antitrust Enforcement Larger fines sought against corporations – In FY 2014, the Antitrust Division received $1.3 billion in criminal fines 4 Regional enforcement – United States

Individuals going to jail for longer periods of time – The average jail sentence has tripled during the past two decades DOJ tries to require “binding” sentence recommendations, which require the judge to impose a prison sentence 5 Regional enforcement – United States

Substantial fines – In the EU, fines can be up to 10% of annual worldwide turnover – Examples of recent fines Non-compliant agreements are unenforceable Civil injunctions EU directive 2014, but issue of admissibility of claims remains national Private damages actions – No treble damages under EU and national law – EU cases can trigger a private lawsuit in US courts for treble damages – Private damages actions are rapidly increasing in national courts in the EU, but problem of discovery 6 € 705 million – Philips – TV and Computer Monitor Screens cartel (2012) € 715 million – St Gobain - Car glass cartel (2008) € 1.06 billion – Intel (abuse) (2008) € billion – Microsoft (abuse) (2004/2007 ) Privileged & Confidential Regional enforcement – EU

Risks of Non-Compliance: Individuals Criminal exposure – No criminal sanctions under EU law – Imprisonment/fines under national law in certain EU Member States In the UK, 3 executives sentenced to between 2.5 and 3 years imprisonment, reduced on appeal to between 20 months and 2.5 years – Marine Hoses cartel Extradition – Individuals can be extradited from EU to face criminal antitrust charges in the US Romano Pisciotti – Marine Hoses cartel (2014) Ian Norris – Graphite Electrodes cartel (2010) 7Privileged & Confidential Regional enforcement – EU

Infant Formula (May 2013) – The NDRC launched investigations against infant formula producers milk companies for alleged vertical price maintenance; in August, the NDRC imposed penalties on six of these companies for their alleged price maintenance conduct, with a total fine of RMB million (approx. USD million) LCD Panel Cartel: Horizontal price fixing (January, 2013) – The NDRC imposed total fines of approx. USD 56 million on six companies, and confiscated illegal gains for alleged price fixing; the fines were imposed under the Price Law because the alleged conduct predated the AML Luxury Liquor: Vertical resale price maintenance (February, 2013) – The NDRC imposed RMB 449 million fines (approx. USD 73.4 million): RMB 247 million on Moutai, and RMB 202 million on Wuliangye for allegedly imposing penalties upon distributors for selling below minimum prices Gold Jewelry Dealers: Horizontal price fixing (August, 2013) – The NDRC imposed fines of over RMB 10 million (approx. USD 1.6 million) on five gold jewelry retailers and their trade association for participating in an alleged price fixing cartel 8 Regional enforcement – China

Can compliance programs be effective? Can we extrapolate from our compliance risk assessments (e.g. for anticorruption) to the antitrust field? – What factors should be considered in such extrapolation? Higher risk lines of business Higher risk countries Company specific risks This should be done annually and internal reviews on practices and controls conducted based on the risk-based assessments. 9

Can compliance programs be effective? What evidence do we have that compliance programs actually reduce the likelihood of participation in a cartel? 10

Can compliance programs be effective? What lessons can be learned from companies that had a compliance program, and still got caught? – Compliance program needs to be supported by top management – Monitoring of enforcement of compliance program – Sanctions for breach of compliance programs 11

Can compliance programs be effective? How does one ensure that compliance program do not encourage corporate officials to be even more secretive? – Regular monitoring of s 12

Can compliance programs be effective? Can it ever be appropriate or advisable for a corporation not to have a compliance program? 13

Cultural attitudes How does one deal with long-standing ingrained cultural attitudes? – Europe before the 1950s? – Attitudes to market intelligence in the Far East? – What is the current trend in China? – Compliance training? 14

Cultural attitudes Is the US the only country where people really believe that cartels are "wrong"? – The extra territorial reach of US laws and its related criminal sanctions 15

Cultural attitudes How do Chinese people see their SOE companies? 16

Cultural attitudes Inside the corporation, is the root of the problem the attitude of management (head in the sands), or the attitude of sales staff? 17

Cultural attitudes Are sales performance reviews an element that drive people to engage in cartels? – Lessons from the car parts cartel international investigations 18

What are the main danger areas? Meetings of trade associations? Dealing with competitors? Dealing with customers or suppliers? Invitations to submit bids? Unilateral conduct such as – Pricing decisions – Preferential treatment of your own products to others, by firms viewed as possessing significant market power. Others? 19

The contents of a compliance program How should compliance programs be structured? – Teach-in on the legal rules? – Practical examples from cartel cases similar to the company industry and structure – Continual preaching of the "Do's" and "Don'ts" – Obligatory on-line training at regular intervals 20

The contents of a compliance program What makes up an effective compliance program? – What are most essential elements? – How often should compliance training be given, and required to be followed? – Should special training be organized for newly acquired entities? – Should the Chief Executive play an active role in compliance training? To what extent? – Can there ever be too much effective antitrust training? 21

The contents of a compliance program Should compliance programs have a hotline so that dubious conduct can be reported? – Is it good for staff morale to know that their colleagues may be spying on them? – Are there any issues under the law of privacy? – Internal leniency program 22

Criminal law issues How should a corporation manage the situation where the company is accused of a cartel offence, and individual members of its staff are also under investigation? – Presentation order – Immediate preliminary investigation – Cooperate or not? – Filing marker – Focus on US investigation – The role of outside counsel 23

Criminal law issues Are the individual’s interests not necessarily the same as those of the corporation? – When to hire outside counsel for individuals 24

The international element What additional considerations enter into play in the organization of compliance on an international scale? 25

The international element Does compliance vary by jurisdiction? – Or should compliance vary by jurisdiction? – Where is the fine line? – Is there any effective “jurisdictional defense”? 26

The international element How does a global corporation deal with global compliance? 27

The international element Tracking Global Legal Changes – Compliance programs have Tools that track proposed and enacted legal changes Have a process whereby those changes are reviewed and those needing to know about the changes for purposes of changing business practices, or policies and procedures are notified of the changes and required actions There is a process for implementing those changes and monitoring compliance with those changes 28

The international element How does a company operate in Protectionist/Highly Political Legal Environments – Operating in market where national laws prefer local businesses to foreign businesses and the interaction with trade laws – Selective competition law enforcement where foreign companies are, or are perceived to be, at a higher risk for enforcement actions 29

Thank you! Aryeh Friedman, Vice President, Associate General Counsel & Chief Privacy Officer, Dun and Bradstreet Gary Zanfagna, Chief Antitrust Counsel and Associate General Counsel, Honeywell International Jacques Buhart, Partner, McDermott Will & Emery, Brussels, Paris Leon Liu, Partner, Partner, MWE China Law Offices