Category: Poland

There are a number of not-so-obvious issues related to running an internal investigation that are often missed or simply disregarded as not important. Some of them pose risks to the success of the investigation, while others may not only jeopardize the results but also lead to potentially severe liability of the company and/or the individuals running the investigation).

Internal vs. External Investigations

One of the most important issues that arise in the context of internal investigations is how to deal with potential conflict between internal and external investigations. Why is this important? 

First of all, we need to remember that the aims of internal and external investigations are different. Although theoretically both look at potential breaches of the law, the aim of external investigations is quite often directed only at finding and punishing a potential perpetrator or even an entire company for a breach of the law, while the interest of the company (or its shareholders, when the investigation is led by the owner) is much broader. This is not just a question of punishment but also of understanding the underlying grounds of the problem, as well as breaches of internal rules, the potential (non-public) liability of the officers of the company (e.g., for lack of proper supervision), and finding arguments (if any) to defend the company and its employees against claims – either of the authority or third parties. 

Second, the other side of the story relates to the interest of the individuals involved in the interviews. One needs to remember that (contrary to the general rules for public proceedings) witnesses in internal proceedings are not obliged to tell the truth, with potential criminal liability attaching for false statements (which is usually quite a significant argument). Of course, employment sanctions (e.g., termination of the contract) for lying to one’s employer can be used, but they are obviously less severe. This makes the position of the people conducting the interview especially tricky; they need to take into account that the witness may not necessarily tell the same story in an internal interview as they would in an external one. What is particularly important is that the people being interviewed are usually interested in presenting their own actions in the best possible light, usually minimizing their role and importance to the case. This reaction, though quite natural, may lead to a false or incomplete picture. The consequences of such situations are very serious, and not just because of the potentially lost case. A company answering any questions or presenting its position towards the authorities upon such an incomplete picture may generate not just doubt as to the fairness of its cooperation with the authorities, but even suspicion that it is willfully obstructing the investigation. 

What can investigators do? Are they completely powerless compared to officials from law enforcement authorities? Certainly not. First of all, they usually know the company much better than external authorities do. Second, because they are not necessarily seen as adversarial or posing a consequential threat, they may be able to obtain more information than law enforcement officials can. Of course, there are cases where openly stating the consequences of incomplete cooperation is both useful and necessary

Third, what may happen with the outcome of the internal investigation? Is it going to be a potential burden when disclosed? In principle – though there are differences in antimonopoly proceedings – the outcome of internal investigations will be covered by client-attorney privilege. On the other hand, the law may impose a duty to disclose any materials/evidence relating to the case when prompted by the authorities. There are also cases where one is legally obliged by law to inform the authorities that a crime has been committed (in Poland, Art. 240 of the Criminal Code imposes this duty in relation to the most severe crimes). Even when this duty is not direct, the company needs to consider how reluctance in disclosing the details will be perceived by the authorities. Since in certain circumstances it might be treated even as an obstruction of the existing investigation, decisions in this respect must be made very carefully. One needs to remember that an internal investigation is not aimed at the protection of particular individuals and their wrongdoing but at protecting the company.

All in all, it is necessary to build a complicated picture of the mixed interests in the investigations, requiring extra caution from the investigators and a very carefully planned approach.

By Radoslaw Nozykowski, Head of Compliance, Baker McKenzie Poland

This Article was originally published in Issue 4.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

It would not be unreasonable to suggest that most developments in commercial markets occur as a result of competition between participants and manufacturers of similar products. From an end-user’s perspective, it is always easier to recognize products and/or make comparisons between products on the basis of specific brands/trademarks. 

However, for an ordinary customer/end-user, who often does not have the ability to try out and then pick and choose from a wide array of products, advertisements would be a primary source of information allowing them to compare (at least) the fundamental differences between the options on the table and make an educated decision. 

In Turkey, companies are prohibited from referring in advertisements to actual brands that their own products are competing with. However, the rules about what information advertisements can legally provide in comparing products to those of competitors in the market are changing.

Legal Developments

On January 10, 2015, the Regulation on Commercial Advertisement and Unfair Commercial Practices entered into effect in Turkey, allowing enterprises to use their competitors’ commercial title and trademark in their own advertisement for comparative purposes. The effective date of the provisions regulating the principles of such competition was initially set for January 10, 2016, and then postponed to December 31, 2016. The basis for such postponement has not been specified.

Further, by virtue of a regulation published on January 4, 2017, the effective date of Article 8 was again postponed, this time to January 1, 2018, and certain amendments to the principles were introduced as well. 

Principles

According to that January 4 regulation, the following principles will apply to comparative advertisements:

a) Enterprises may engage in comparative advertisement provided that: 

• such advertisements are not deceptive and misleading;
• such advertisements do not lead to unfair competition;
• the goods and services that are compared satisfy the same needs or serve the same purpose;
• only issues that are relevant to the customer are made subject to comparison;
• the advertisements objectively compare one or more characteristics, including price, of the goods and services which are tangible, essential, justifiable, and typical;
• comparative claims are based on objective, measurable, or numeric data evidenced by scientific tests, reports, or documents;
• such advertisements do not disparage or discredit the competitors’ intellectual and industrial rights, commercial title, business name, other distinguishing marks, goods, services, practices, or other characteristics;
• the competitor’s goods and services are from the same geographical origin, to the extent the origin of any goods or services for which comparison is made is stated in the advertisement;
• such advertisements do not lead to confusion between the trademark, commercial title, business name, or any other distinguishing mark, goods, or services of the owner of the advertisement and its competitor; and
• such advertisements are not contrary to principles determined by the Advertisement Board.

b) Names, trademarks, logos, or other distinguishing figures or expressions and commercial titles and business names of the competitors may be included in advertisements, provided that the advertisement in question complies with the conditions set out in paragraph a). It is also possible to refer to the testimonies of persons and/or institutions with respect to such comparative analysis.

c) With respect to food advertisements, issues that fall under the scope of a health declaration under relevant legislation shall not be the subject of comparison. 

Only the issues relating to nutritional characteristics may be used as an element of comparison for food advertisements. Comparative advertisements of food supplements are prohibited.

d) With respect to advertisements related to the sectors where price corrections and significant market power obligations are regulated by the relevant administrative authorities, a price comparison shall not be made.

Conclusion

As set out above, efforts to allow competitors to use each other’s brands, products, etc., for comparative purposes in advertisements have been made for the past couple of years in Turkey, and it is hoped that the resulting legislation will be effective no later than January 1, 2018, making it easier for end users to pick between competing products.

It is also clear that the applicable legislation makes a distinction between certain types of products, such as foods, healthcare products, and other regulated products in an attempt to minimize any adverse effect on both the market and the end users/customers due to subjective and unlawful comparisons made in advertisements. 

By Doene Yalcin, Managing Partner, CMS Turkey

This Article was originally published in Issue 4.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.