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Combating corruption in the private sector

The European Union (EU) combats corruption in the private sector. A harmonised definition of concepts should give more muscle to the fight against corruption, which destroys the basis of economic life and distorts competitiveness: the Union emphasises the need to prevent crime which favours a minority but is detrimental to society at large.

ACT

Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector.

SUMMARY

Active and passive corruption in the private sector is a criminal offence in all Member States. Legal persons * may be held liable for such offences.

Inclusion of the concept of corruption in national criminal law

Member States are required to penalise acts intentionally carried out as part of business activities:

  • Corrupting a person: by promising, offering or giving directly or through an intermediary to a person who in any capacity directs or works for a private sector entity, an undue advantage of any kind, for that person or for a third party in order that that person should perform or refrain from performing any act in breach of that person's duties *;
  • Demanding an undue advantage: a person requests or receives, directly or through an intermediary, an undue advantage of any kind, or accepts the promise of such an advantage, for him or herself or for a third party, while in any capacity directing or working for a private sector entity, in order to perform or refrain from performing any act in breach of one's duties *.

The above applies to business activities within profit and non-profit making entities. Member States may limit the scope to conduct which involves or could involve a distortion of competition in relation to the purchase of goods or commercial services. Member States must declare to the Council how they are going to act at the time of the adoption of this Framework Decision. Limitations are valid for five years as from 22 July 2005. Before 22 July 2010, the Council will review declarations made by Member States in relation to limitations.

Liability of legal and natural persons

The aim of this Framework Decision is to involve the liability not only of natural persons in the capacity of employees but also of legal persons such as firms.

With regard to the liability of natural persons, Member States must ensure that the acts referred to are liable to a maximum penalty of at least one to three years' imprisonment. The right to engage in business activities may be temporarily suspended. Instigation to commit one of the acts set out above or aiding or abetting such conduct is also an offence.

Legal persons may be held liable for offences involving corruption if they are committed for their benefit by any natural person acting individually or who has a leading position within a legal person based on:

  • a power of representation of the legal person;
  • an authority to take decisions on behalf of the legal person;
  • an authority to exercise control within the legal person.

Penalties for legal persons may include criminal or non-criminal fines. Moreover, Member States may consider exclusion from entitlement to public benefits or aid, temporary or permanent disqualification from the practice of commercial activities, etc.

Jurisdiction

Each Member State has jurisdiction if the offence has been committed:

  • within its territory;
  • by one of its nationals;
  • for the benefit of a legal person that has its head office in the territory of that Member State.

This Framework Decision repeals Joint Action 98/742/JHA. It applies to Gibraltar. Member States must take the necessary measures to comply with the Framework Decision before 22 July 2005.

This act is affected by the judgment of the Court of Justice of the European Communities in Case C-176/03 concerning the distribution of powers in criminal matters between the European Commission and the Council of the European Union.

Key terms used in the act
  • Legal person means any entity having such status under the applicable national law, except for States or other public bodies acting in the exercise of State authority and for public international organisations.
  • Breach of duty shall be understood in accordance with national law. The concept of breach of duty in national law must cover as a minimum any disloyal behaviour constituting a breach of a statutory duty, or a breach of professional regulations.

REFERENCES

ActEntry into force - Date of expiryDeadline for transposition in the Member StatesOfficial Journal
Framework Decision 2003/568/JHA31.07.200322 July 2005OJ L 192 of 31.07.2003

RELATED ACTS

Report from the Commission to the Council based on Article 9 of the Council Framework Decision 2003/568/JHA of 22 July 2003 on combating corruption in the private sector [COM(2007) 328 final - not published in the Official Journal].

The European Commission analyses the measures taken by Member States to achieve the objectives in the above Framework Decision, and then goes on to call for the immediate adoption of the necessary legal measures to combat corruption in the private sector.

In relation to Article 2 of the Framework Decision, the Commission notes that most Member States found it difficult to incorporate into national law this "key Article" defining criminal acts of active and passive corruption. Only Belgium and the United Kingdom correctly transposed all its elements. According to the Commission, the gaps in the legal measures by the other Member States must be corrected rapidly to prevent this legislation from being easily circumvented. The report then concentrates on Articles 1 to 7 and 10. Articles 8, 9 and 11 do not need to be transposed.

Lastly, the Commission draws attention to two matters to be dealt with in future: the amendment of the legal basis of the Framework Decision following the judgment in Case C-176/03 (see above), and the review of Article 2 of the Council Framework Decision before 21 July 2010 with regard to renewing the declarations by Member States.

Last updated: 11.07.2007
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