Chances are you first become aware that your company is a target or subject of a criminal antitrust investigation when you receive a grand jury subpoena, or worse, when federal agents show up with a search warrant asking questions. This is serious business, given the consequences. Among the many questions experienced antitrust counsel will ask you early on is whether you have an antitrust compliance program, and if so, how it is set up and operates. In recent years, the Antitrust Division of the United States Department of Justice (“DOJ”) assigned no weight to the existence of a compliance program, even a robust and effective one, in making charging decisions. In most cases, the existence of a program had little effect at the sentencing stage either. After all, if it failed to detect or prevent a violation, what value could a compliance program have?
In July, however, the DOJ issued revised policy guidance reinvigorating the utility and importance of having an effective antitrust compliance program (available here). The July 2019 Antitrust Division’s “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations” followed an earlier release by the Justice Department Criminal Division on evaluation of compliance programs generally (available here). While numerous factors inform exercise of prosecutorial discretion at the charging and sentencing stages of criminal antitrust matters, the guidance signals a new willingness to take into account the efforts of a company to comply with the antitrust laws.
What is an Antitrust Compliant Program?
Compliance programs are fundamentally a means of training and sensitizing employees to the requirements of antitrust law, through focused training, together with establishing a culture of compliance and deploying methods to detect, report, and promptly deal with antitrust problems. The highest levels of senior management must visibly support the effort, provide sufficient resources, and enforce compliance policy terms with incentives and disciplinary measures. In this respect, nothing is worse than a program that merely consists of a binder gathering dust on a shelf, or a few generalized paragraphs in an employee manual or code of conduct. Rather, management must work with antitrust counsel to design a program that fits the specific risks of the company’s business sector, the company’s position in the marketplace, and the roles and responsibilities of relevant employees. Rather than episodic activity, effective programs require regular and engaging steps to promote the program and employees’ sensitivity to antitrust risks. For example, the program should address contact with competitors, trade or professional association activities, price management and approvals, and document retention and obstruction of justice concepts. But this is not a one-time “Ted Talk” or PowerPoint. Companies cannot leave employees to their own devices in shades of gray to evaluate the law and make decisions; the program must identify management and relevant legal resources for timely assistance to avoid problems.
How Does the Government Evaluate a Program?
The July Guidance explains the factors in detail. Among the most critical considerations: (1) the comprehensiveness of design and implementation of the program; (2) whether the program creates a culture of compliance; (3) resources devoted to the program; (4) antitrust risk assessments used; (5) regular training and communication to employees; (6) monitoring and auditing compliance; (7) reporting; (8) incentives and discipline to promote compliance; and (9) remediation methods; and (10) accountability of senior management to set the tone and take responsibility for failures. The DOJ will consider all of these matters, as well as the relative size of the company. Each situation is different, however, and pre-charging decision advocacy will be paramount.
The Benefits Today
Antitrust compliance programs have always provided value, even if you never know the precise ROI. Positive reasons include better-educated employees, the potential to avoid harmful situations before they develop, and detection of harmful actions by competitors to enable the company to protect its interests. Negative reasons supporting compliance efforts include protection of the reputation of the company, avoidance of substantial fines, penalties, debarment, the cost of defending investigations and follow-on class actions, and avoidance of actual jail time for company employees.
Companies should not ignore this major shift in policy. The DOJ is moving past providing credit for an effective compliance program solely at the sentencing stage, consistent with its Leniency Policy (available here). Assistant Attorney General Makan Delrahim, on announcing the changes, noted, “Crediting compliance at charging is the next step in our continued efforts to deter antitrust violations and reward good corporate citizenship.” This is a huge incentive for companies to reinvigorate their existing antitrust compliance efforts or create an effective program. It can be a means to avoid a ruinous indictment.
Need more information or help? We have prepared dozens of antitrust compliance programs individually crafted to meet the needs of business and association clients in many professional and business fields.