information about successful practices in world trade and in the development of competition policy. Question & Answer Session When asked about the effectiveness of compliance programs, Mr.
a dishonest agent and began working with a new one, initiating a FAS investigation concerning a breach of competition law. He stressed that the company should have declared its infringement of the law and the corrupt practices of its employees or agents to a law enforcement body rather than simply
Corrupt Practices Act (FCPA) remains imperfect. He called for legislation to avoid potential FCPA manipulation, noting that it was written in general terms and was designed to meet the standards of the U.S. regulatory system; therefore, it cannot effectively influence other markets where the judicial system has procedures differing from those of the United States. Within this framework, companies themselves must develop clear, precise policies that can be easily verified, whether the company acts in good faith or not.
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In answering a question about the distribution of products in the Russian automotive sector and the relationship problems between manufacturers, distributors and buyers, Mr. Nizhegorodtsev stressed that the automotive market in Russia is problematic. It is riddled with discriminatory practices that contribute to higher prices on repairs and spare parts and, overall, prevents competition between the services of authorized dealers and independent service centers. Consequently, FAS undertakes a number of investigations of antitrust laws against companies operating in the automotive sector.
Mr. Nizhegorodtsev recommended two ways to resolve such a situation. In the first option, the company reports its violations to a law enforcement agency and, during the subsequent waiting period, ceases all collaboration with the offending agent. He pointed out that if an investigation failed to confirm the abuses, the company would be obligated to resume its cooperation with the agent. In the second option, the company publically declares its suspicions and terminates its relationship with the agent in connection with the accusation of corruption. In this situation, the agent has the right to protect his reputation by going to trial. If the offenses cannot be confirmed, the company could be required by the court to carry on a rapport with the agent. Mr. Nizhegorodtsev stressed that the practice of carrying out the verdicts of U.S. courts for violations of the Foreign
Mr. Nizhegorodtsev reiterated that the main object of the Russian Federal Anti-Monopoly Service is not to penalize as many companies as possible, but to amend market rules in order to increase competition. In this regard, he believes public discussion about the commercial practices of large companies will have a bigger impact on the establishment of rules of fair competition on the market than any other time-consuming investigative and litigation procedure. n
Spring 2012
As a practical example, Mr. Nizhegorodtsev noted the experience of an American pharmaceutical company that nullified its contract with
break off its relationship with the concerned parties.
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Nizhegorodtsev said that while many international companies have some sort of compliance program, it usually remains “a thing in itself�: despite their complex internal structure, compliance programs do not lead to an obvious improvement in the work of companies on the market. He explained that the reason for the ineffectiveness of most compliance programs is that it is difficult to assess policies internally without receiving external feedback. The main objective of the delegation has become to convince corporate executives that, even with a thorough system of internal accountability, it is imperative to put more trust in the external evaluation of the effectiveness of compliance programs, which will give a company the chance to receive objective information about how well it is following antimonopoly laws in reality.
As a positive example of cooperation between FAS and international companies, Mr. Nizhegorodtsev highlighted the recent practice of holding open discussions of commercial policies with companies that have resulted in the reform of the business and relationships between the distributors and dealers of these companies. He stressed that this is a positive tendency because when a large company demonstrates its readiness to follow competition laws, other businesses will follow suit and seek to attain a higher level of standards.
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