Combating corruption in the private sector

KEY POINTS

Establishing minimum rules on the definition of corruption in the private sector

• EU Member States are required to penalise the following acts intentionally carried out as part of business activities.
  • Active corruption (giving a bribe). A person promises, offers or gives, directly or through an intermediary, for that person’s or a third party’s benefit, an undue advantage of any kind to a person who directs or works for a private sector entity in any capacity, in order for that person to perform or refrain from performing any act that is a breach of duty⁴.
  • Passive corruption (receiving a bribe). 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 directing or working for a private sector entity in any capacity, in order to perform or refrain from performing any act in breach of that person’s duties.
• The above applies to business activities within profit and non-profit entities. At the time of adoption, the scope was limited to conduct that involves or could involve a distortion of competition in relation to the purchase of goods or commercial services. This limitation is no longer valid, as limitations were valid for five years from 22 July 2005 onwards, upon declarations to the Council of the European Union by Member States that wished to apply this limitation. Member States had to declare to the Council how they were going to act at the time of the adoption of this decision. Before 22 July 2010, the Council had to review declarations made by Member States in relation to limitations.

Liability of legal persons

• The aim of this decision is to make not only natural persons, such as employees, but also legal persons, such as undertakings, liable for corruption offences.
• Legal persons may be held liable for offences involving corruption if these 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 and other sanctions

• Member States must ensure that the acts referred to are punishable by effective, proportionate and dissuasive criminal penalties.
• These include a maximum penalty of at least one to three years’ imprisonment. For example, if in one Member State the conduct is punishable by up to one year of imprisonment, and in another it is punishable by up to two years of imprisonment, both cases satisfy the criteria set by the framework decision. Member States can also apply higher legal thresholds for the maximum term of 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 must also be criminalised as an offence.
• 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 within its territory.

The decision also applies to Gibraltar.

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

Stronger rules to fight corruption proposed

In May 2023, the Commission presented an anti-corruption package. The package comprises:

• a communication that reviews existing legislation and policy in the field;
• a proposal for a directive on combating corruption that would criminalise corruption offences and harmonise definitions and penalties across the EU; when adopted, this would replace Framework Decision 2003/568/JHA; and
• a proposed dedicated sanctions regime to fight serious acts of corruption worldwide, designed to complement the common foreign and security policy toolbox of restrictive measures (sanctions).