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LEGAL AND COMPLIANCE RISKS
Compliance risks associated with laws, regulations,
Code of Ethics, Policies and Procedures
Compliance risk is the risk of incurring legal or administrative
sanctions, material financial losses or reputational damage
as a result of violations of laws, regulations, procedures,
codes of conduct and best practices. Right at its inception,
the Prysmian Group approved a Code of Ethics, a document
which contains ethical standards and guidelines for conduct
to be observed by all those engaged in activities on behalf
of Prysmian or its subsidiaries, including managers, officers,
employees, agents, representatives, contractors, suppliers
and consultants. In particular, the Code of Ethics requires
full compliance with current regulations and the avoidance
of any kind of misconduct or illegal behaviour. The Group
put in place organisational procedures designed to prevent
violation of the principles of legality, transparency, fairness
and honesty and is committed to ensuring their observance
and practical application. Although the Group is committed to
ongoing compliance with applicable regulations and to close
supervision to identify any misconduct, it is not possible to
rule out episodes in the future of non-compliance or viola-
tions of laws, regulations, procedures or codes of conduct by
those engaged in performing activities on Prysmian's behalf,
which could result in legal sanctions, fines or reputational
damage, even on a material scale.
Risks relating to legal and tax proceedings
Prysmian S.p.A. and some Prysmian Group companies are
currently involved in tax and legal proceedings in connec-
tion with their business, involving civil and administrative
actions. In some of these cases, the company might not be
able to accurately quantify the potential losses or penalties
associated with such proceedings. In the event of an adverse
outcome to such proceedings, the Group cannot rule out an
impact, even for a material amount, on its business, results
of operations and financial condition, as well as reputational
damages that are hard to estimate.
Risks of non-compliance with Antitrust law
Its strong international presence in more than 50 countries
means the Group is subject to antitrust law in Europe and
every other country in the world in which it operates, each
with more or less strict rules on the civil, administrative and
criminal liability of the perpetrators of anti-competitive
practices. In the last decade, local Antitrust Authorities
have shown increasing attention to commercial activities by
market players, also revealing a tendency for international
collaboration between authorities themselves.
The geographical dispersion of its employees, the lack of
knowledge at times of local regulations as well as market
dynamics, make it difficult to monitor anti-competitive
conduct by third parties like suppliers and competitors,
exposing the Group to the risk of incurring economic
sanctions with extremely high negative repercussions for
the reputation and credibility of the Group's system of
governance.
In line with the priorities identified by the ERM process,
the Legal Department has taken steps, with the support of
Group Compliance, to raise awareness of the issues at stake
through the adoption of an Antitrust Code of Conduct that
all Group employees, directors and managers are required
to know and observe in the conduct their duties and in their
dealings with third parties. These activities represent a first
step in establishing an "antitrust culture" within the Group
by stimulating pro-competitive conduct and by heightening
individual accountability for professional conduct.
More specifically, the European Commission, the US Depart-
ment of Justice and the Japanese antitrust authority started
investigations in late January 2009 into several European and
Asian electrical cable manufacturers to verify the existence
of alleged anti-competitive practices in the high voltage un-
derground and submarine cables markets. Subsequently, the
Australian Competition and Consumers Commission ("ACCC")
and the New Zealand Commerce Commission also started
similar investigations. During 2011, the Canadian antitrust
authority also started an investigation into a high voltage
submarine project dating back to 2006. The investigations
in Japan, New Zealand and Canada have ended without any
sanctionsfor Prysmian. The other investigations are still in
progress, except for the one by the European Commission,
which has ended with the adoption of the decision described
below.
In Australia, the ACCC has filed a case before the Federal
Court arguing that Prysmian Cavi e Sistemi S.r.l. and two
other companies violated antitrust rules in connection with
a high voltage underground cable project awarded in 2003.