Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Global | Publication | February 2022
Fully operational since December 2018, the Moroccan Competition Council (CC) has been particularly active since its appointment, with no less than 112 merger decisions and 69 decisions on antitrust cases in 2019 and 2020 only. In order to further clarify the rules of Moroccan competition law, the CC published on January 25, 2022, a guide to the implementation of compliance programs (the Guide) which is addressed to undertakings and professional organizations.
In addition, and this is rather unusual for this type of document, the Guide includes in its appendix a set of guidelines in which the CC provides a very detailed overview of the applicable rules, and whose content suggests a particularly strict approach to competition policy.
The Guide demonstrates the CC's willingness to assist undertakings and professional organizations (POs) with activities in Morocco in implementing a true culture of compliance. Regrettably, the CC seems to exclude the possibility that the implementation of such programs may result in a reduction of fines in the event of prosecution. However, these programs are nevertheless of major interest, as they minimize the risk of violations, and thus of sanctions, especially since recent cases have revealed the CC's intention to impose sanctions reaching the legal ceiling of 10% of the undertaking’s consolidated worldwide turnover...
Particularly pedagogical, the Guide explains in detail the minimum content that a compliance program must have to be effective, while emphasizing that it must be adapted in practice to the situation of each undertaking or PO in order to take into account its specificities. Five pillars are presented as necessary:
To be fully effective, the compliance program must be based on both a preventive and curative approach, in order to identify and manage competitive risks. It is therefore not enough to prescribe rules, it is also necessary to monitor compliance with them (either internally or through the use of external advisors), to provide for a whistleblowing mechanism, if necessary, and to provide for disciplinary measures (sanctions in the event of non-compliance, but also possible incentives through bonuses or promotions).
For those who may have doubted it, the CC confirms that it intends to be in line with its counterparts on the international scene. Indeed, the (non-exhaustive) overview it provides in appendix to the Guide has many similarities with the guidelines of other authorities, such as the European Commission.
Without being able to go into detail on all the rules presented by the CC, some points of attention can nevertheless be noted.
For businesses in Morocco unfamiliar with the concept of undertaking in competition law, which is not equivalent to that of company, the CC provides a welcome clarification by emphasizing that this concept "encompasses any entity, whether or not it has legal personality, provided that it carries on an economic activity. Indeed, the legal status of the entity is irrelevant. It may be a natural or legal person or an entity without legal personality, such as a group of companies or a branch.”
Remember that this clarification is fraught with implications, including:
The CC emphasizes that the risk of cartel is not limited to formal agreements, whether express or tacit, between competitors, but also includes exchanges of sensitive information, and may cover numerous anti-competitive objects and/or effects (prices, limitation of production, market or customer allocation, manipulation of tenders, boycott, etc.).
Exchanges of sensitive information are indeed one of the main sources of risk for undertakings and POs, wherever and whenever it occurs. The CC recalls notably that particular vigilance is required:
The CC notes, however, that "agreements between undertakings belonging to the same group do not, as a general rule, fall within the scope of competition law, since all the companies in a group are in principle considered to be one and the same undertaking under competition law", an exception for which it is nevertheless necessary to wait for the decisional practice to find out the conditions of application.
The CC also provides many useful clarifications on the risks of anti-competitive effects of certain clauses that may be included in vertical agreements (such as distribution or supply agreements).
However, one may question some of these clarifications, which seem to go beyond the positions generally taken by competition authorities, and seem to augur a stricter approach by the CC, in particular:
It is to be hoped that the CC will refine its approach in the course of its decision-making practice, as such a strict analysis may be difficult to apply in practice. Indeed, depending on the circumstances, such clauses may be objectively justified, or even indispensable to the operation of distribution networks.
With respect to abuses of a dominant position, the CC also seems to follow international practice to enrich the list of abuses expressly referred to in article 8 of law n°104-12 (refusal to sell, discrimination, tying sales, etc.), including by adding particularly technical concepts such as excessive prices and loyalty rebates, which will have to be clarified by the decision-making practice as to their conditions of application.
We are however pleased to note that the CC specifies, as does the French Authority, that a state of economic dependence can only be characterized if five cumulative criteria are met, which should limit litigation on this basis: (i) (significant) share of the undertaking in the partner's turnover, (ii) brand awareness, (iii) size of the partner's market share, (iv) non-existence of alternative solutions, and (v) quasi-constraint leading to the situation of dependence (and not deliberate choice).
Finally, the CC does not forget to recall the rules applicable to merger control, and provides useful clarifications on many points, in particular on the different types of transactions that may constitute a merger. In particular, the CC states:
The publication of this Guide is a strong signal from the CC to undertakings and POs of its willingness to apply competition law strictly. This is by no means a theoretical risk: several investigations have already been carried out by the CC, and it should be recalled in this respect that, while it has so far only used its powers to interview people and request for information, it has much more intrusive powers allowing it to carry out searches and seizures (dawn raids) within undertakings and POs.
The implementation of an effective compliance program can limit these risks, and as the CC points out, the adaptation of the program to the specific situation of each undertaking (or PO) will ensure its effectiveness.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
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