Compliance Reboot At The Antitrust Division

In my column in the June/July 2014 issue of Today’s General Counsel Magazine, I called on the Antitrust Division to eliminate the antitrust exception to overall DOJ guidelines that take into account the existence of a compliance program when considering whether to charge a corporation with a federal crime. This exception was “codified” when the DOJ’s corporate charging guidelines were updated in 2008 and placed in the DOJ’s manual for prosecutors. The manual contained two express statements that compliance programs would not be taken into account when considerations were being made to charge a corporation with an antitrust violation.

At a public forum held in Washington, D.C., some time prior to my column, I had confronted the Deputy Assistant Attorney General for Criminal Enforcement in the Antitrust Division about the Division’s attitude towards compliance. His response was that allowing antitrust prosecutors to consider the existence and effectiveness of a compliance program would weaken the Antitrust Division’s leniency program. At another public forum in April 2015, I again raised the antitrust exception with his successor, who explained that it was his belief that an antitrust violation is rarely committed by a rogue employee and instead typically involved senior management. To the Antitrust Division, timely uncovering the violation and winning the race to qualify for leniency was the ultimate benefit of an effective compliance program.

POLICY REVERSED

However, in July of this year, the Antitrust Division reversed this policy. In a speech in New York, the Assistant Attorney General for the Antitrust Division, Makan Delrahim, announced that the DOJ would eliminate the exceptions to considering compliance programs in updated guidelines for prosecutors. He also announced the release of a document providing guidance as prosecutors consider compliance programs as part of their decision whether to charge a corporation with an antitrust violation.

The Antitrust Division’s guidance emphasizes that the goal of an effective compliance program is to prevent and detect violations of the antitrust laws. But the Division recognizes that no compliance program can ever prevent all unlawful activity.

The leniency program is still a key focus of the compliance guidance. Indeed, the guidance expressly states that prosecutors must consider the Division’s leniency policy along with the principles set forth in the Justice Manual when deciding whether and to what extent to bring criminal charges against a corporation. This focus includes consideration of whether the compliance program detected the violation enabling the company to promptly report it, and whether senior management was involved.

Many of the factors that are to be considered by Antitrust Division prosecutors in evaluating a compliance program are similar to those set forth by the DOJ’s Criminal Division in the updated compliance guide issued this past April. In that regard, an overarching concept in the guidance from both the Criminal Division and the Antitrust Division is whether the compliance program is merely a program on paper or whether it is a proactive and robust program designed and implemented to be effective.

FACTORS IN PROSECUTORS’ DECISIONS

There are several factors specific to antitrust compliance programs that are worth mentioning. Under the Antitrust Division’s compliance guidance, prosecutors will consider ways that antitrust compliance policies and procedures are integrated into the company’s business practices and reinforced through the company’s internal controls.

An example would be compliance policies and procedures concerning
the antitrust risks of employees participating in trade association meetings or standard-setting bodies. Because both types of organizations involve competitors, there is a risk of collusion as to prices or exclusion of rivals. Internal controls might require employees who want to attend such meetings to submit a memo to upper management detailing the purpose of the meeting, the agenda and any antitrust compliance protections instituted by the association or standard-setting body. Integration of antitrust compliance with those internal controls might require both the supervisor and the employee to undergo antitrust training specifically tailored for such programs.

Another example is guidance for prosecutors evaluating whether the antitrust program is a paper-only program or involves monitoring and auditing. The Antitrust Division’s guidance indicates that prosecutors should examine what monitoring and auditing mechanisms the company has in place to detect violations. And, quite aggressively, it suggests that a company should be undertaking a periodic review of documents and communications of specific employees and undertaking statistical testing to identify antitrust violations.

A third example comes in the guidance pertaining to both risk assessment and training. Division prosecutors will examine whether the company has a methodology to identify antitrust risks. Prosecutors will assess whether the company has designed its compliance training program to account for such risks. For example, does the compliance program identify and adequately train employees who have frequent contact with competitors? The guidance provides specific examples of training that should teach employees that competitor communications could be facilitating an antitrust violation unless they are part of a joint venture, or other procompetitive or competitively neutral collaboration.

The guidance also refers to training for employees involved with joint ventures to be sensitive to the idea that an exchange of data and information beyond what is needed for the legitimate purposes of the joint venture may create an antitrust issue.

The Antitrust Division’s reboot regarding compliance and charging a corporation with an antitrust violation is significant. If a company does not win the race for leniency from the Division, it still may avoid being charged with a crime if it has in place a robust and proactive compliance program. Furthermore, if Antitrust Division prosecutors do decide to charge the company, the existence of such a program may result in benefits at the sentencing phase, including a decision by the Division not to ask the court to impose a compliance monitor on the company.