The Moroccan Competition Council's New Guide to Compliance Programs

1. The main elements of a compliance program

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:

• the commitment and support of the governing bodies to respect the values and rules of competition law;
• the designation of internal relays responsible for managing the compliance program;
• the establishment of a framework document (code of conduct, compliance manual, etc.) and appropriate procedures;
• information, communication, training and awareness; and
• identification and control of non-compliance risks through a prioritization process.

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).

2. Explanatory overview of competition rules

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:

• in the event of an infringement of competition law, fines are calculated on the basis of the group's consolidated turnover;
• in the case of a merger, the notification thresholds are calculated not on the basis of the turnover of the companies directly involved in the transaction, but on the basis of the entire group to which they belong.

Horizontal agreements

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:

• in the context of POs; the CC provides practical recommendations for managing their participation, avoiding risky topics, and, if necessary, distancing themselves if discussions get out of hand;

• in the case of any cooperation project (joint bidding, joint venture, merger project, etc.); here again, the CC adopts a traditional approach by recommending that exchanges be limited to the strict purpose of the cooperation and to what is strictly necessary, and that safeguards (Chinese walls) be put in place to restrict access to the most sensitive information, if possible to external consultants.

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.

Vertical agreements 

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:

• with respect to recommended resale prices, the CC imposes an obligation to verify that prices are not widely followed, and if so, to cease recommending prices;
• non-competition, exclusive distribution and exclusive supply clauses seem to be presented as necessarily having anti-competitive effects;
• tying sales seems to be presented as a potential infringement, regardless of the existence or not of a dominant position.

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.

Abuse of dominance

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).

Mergers

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:

• all factors that may characterize a change in control, and
• the criteria by which a joint venture can be qualified as "full function", namely: (i) sufficient resources to operate independently in the market, and (ii) an activity that goes beyond a specific function for the parent undertakings, which implies not being dependent on its sales to or purchases from the parent companies.

3. Conclusion

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.