Following engagements with several stakeholders which stressed the need for the development of rules governing administrative penalties, the Competition Commission has published for public comment draft guidelines for the determination of administrative penalties for prohibited practices.
The draft guidelines presented the general methodology that the commission would follow to determine administrative penalties for the purposes of concluding consent orders and settlement agreements, and recommending an administrative penalty in a complaint referral before the Competition Tribunal.
Administrative penalties served as a specific deterrent against future anticompetitive behaviour by firms that had contravened the Competition Act and as a general deterrent to other firms that may consider engaging in anticompetitive conduct.
“The commission recognises that the imposition of administrative penalties is not a precise science. Therefore, these guidelines will not prevent the commission from exercising its discretion on a case-by-case basis.
“The primary objective of these guidelines is to provide objectivity and transparency in the method of determining administrative penalties,” the preface to the draft guidelines read.
In developing these guidelines, the commission conducted a review and comparison of guidelines and penal codes developed by other competition authorities, such as the European Commission and the UK’s Competition and Markets Authority as well as the principles laid out by the tribunal in its six-step methodology.
Elaborating on the methodology, the draft document stated that the first step would see the determination of the affected turnover in the base year, after which the commission would “calculate the base amount, being that proportion of the affected turnover relied upon”.
The base amount obtained would then be multiplied by the duration of the contravention, after which factors that might mitigate and/or aggravate the amount reached by way of a discount or premium would be considered.
Where appropriate, the amount calculated may be further adjusted by application of settlement discounts and, in exceptional circumstances, the inability to pay.
Notwithstanding the imposition of an administrative penalty, the commission may consider other remedies that seek to address the harm caused to competition as a result of the contravention.
These remedies could be over and above the final administrative penalty.