The challenges of compliance in a modern world: The changing landscape of cartel enforcement

Why would you want to monitor for risks within your business?

With the rise of technological developments, we also have seen increased risks. In this new digital world, we are creating more data year on year. Data storage, ease of communications (including the use of email and chat), along with the ease of photos and videos means that data volumes are increasing exponentially.

At the same time, existing risks on businesses are increasing. These new technologies pose new challenges and require new regulatory solutions (e.g. cyber security, data protection and data privacy). At the same time, it makes it harder for businesses to monitor the existing risks within their businesses.

Since January 2000, competition authorities in the EU, UK and US alone have imposed fines of over EUR43 billion on over 1,100 entities. Cartel offences can also erode trust between a business, its partners and customers. Even investigations into potential breaches can cause lasting damage from the intense scrutiny of a business, its employees and executives.

The missing link in the compliance programmes is often having an effective detection process in place. The current methodologies of detection for compliance are no longer fit for purpose in this new world order. The costs of using lawyers and audit teams to search for problems within large datasets had previously made the costs of a full audit disproportionate. Consequently, such audits were usually only undertaken if a company had already identified a risk or was under investigation.

How could monitoring for breaches help?

Sophisticated businesses are trying to identify risks as early as possible, allowing them to put more effective strategies in place to mitigate those risks and put the business in the best possible situation.

Managing these risks effectively reduces the risks of fines and exposure – so it hits the bottom line as much as increased sales would. Being more compliant than competitors, can also place you at an advantage.

Equally, detection can serve as a form of prevention. Monitoring for an issue can pick up potential breaches before the damage has happened. It also helps enforce a culture of compliance by demonstrating to employees what behaviour is actually required. Policing an issue demonstrates that it is actually taken seriously by the board.

How can this be achieved?

At DLA Piper, we have been looking at cost effective solutions to help clients monitor and detect the risk of cartels. We have developed Aiscension, a neat solution that can quickly audit a section of your business for cartel risks.

A problem created by the data explosion needs a technology response. Businesses simply cannot rely on traditional audit methodologies to deal with these new world problems. We have used the developments of neural-net Artificial Intelligence (AI), in combination with our own global legal footprint to solve this.

DLA Piper has collaborated with Reveal to train a highly sophisticated AI algorithm to spot cartel signals within unstructured data. Powered by Reveal’s innovative technology, Aiscension is trained and supervised by expert lawyers using the wealth of DLA Piper practice experience and data across its global network. Our legal teams then review what the AI has found, and can advise the business on risks. Organisations with in-house compliance teams could even utilise this themselves.

Competition authorities have smarter detection tools and investigatory techniques for enforcement. These regulators also have the power to impose significant sanctions. A cartel infringement can incur fines of up to 10% of global group turnover, cartels can also result in director disqualifications and are criminalised in a number of jurisdictions. A breach can also erode trust between a business, its partners and customers as well. Even investigations into potential breaches can cause lasting damage from the intensive scrutiny of your business, employees and executives.