Chief Compliance Officers Have to Address Criminal Antitrust Risks (Part I of II)

We often read articles and blog postings about anti-corruption, anti-money laundering, export controls and sanctions compliance issues. The focus on these topics is justified. However, there is one glaring omission – antitrust compliance programs.

There are a number of reasons for this omission.

First, the Justice Department’s Antitrust Division has been slow to credit companies for their compliance programs. For many years, the Antitrust Division has taken the position that companies that engage in cartels should never receive credit for their compliance programs because the program, by definition, did not work.

Joe Murphy (Here) and many other antitrust compliance professionals have argued and, in the end, persuaded the government to adjust its view. The Antitrust Division will now credit companies for an effective antitrust compliance program.

Second, antitrust compliance has been viewed as under the purview of corporate legal departments because of the complexity of the issue. Such a view is misleading.

One area is clear – horizontal collusion among competitors involving price-fixing, territorial allocations, bid rigging, customer allocations, and other illegal agreements under Section 1 of the Sherman Act. These activities do not require legal analysis – they are by definition prohibited.

Legal officers and chief compliance officers have to devote more attention to this issue. Compliance programs have to address antitrust risks, just as much as anti-corruption risks. Companies that ignore antitrust risks do so at their peril.

Chief legal officers and CCOs have to coordinate on antitrust issues to ensure effective compliance. Aside from the clear violations from cartel activity, a CLO has to guide corporate conduct to avoid antitrust risks. CCOs should support these efforts.  In antitrust parlance, when rule of reason issues (Section 1) or monopolization claims (Section 2) arise in commercial activities, CLOs have to analyze these issues, identify risks and guide corporate conduct to avoid potential civil enforcement and litigation.

The consequences of a criminal antitrust investigation and enforcement action are significant. Global antitrust enforcement is a mature and evolving program. The United States and the European Union have played a strong leadership role.

Individual countries are expanding their respective antitrust enforcement programs, enhancing their enforcement programs by enacting corporate and individual criminal liability laws and regulations. For now, the United States has assumed the leadership role with its aggressive criminal enforcement program

The United States’ antitrust enforcement program is fueled by its well-established leniency program. The first company to report cartel activity receives a pass, along with executives and employees who assist the government’s investigation, and receives a de-trebling of damages to single damages for the inevitable civil liability class action brought by companies injured by the cartel activity.

Over the last ten years, the Justice Department has prosecuted numerous companies and individuals. Unlike the FCPA area, Antitrust Division prosecutors have targeted culpable individuals.

Companies Individuals
2007 10 47
2008 25 59
2009 22 65
2010 21 63
2011 27 82
2012 16 63
2013 21 34
2014 18 44
2015 20 66
2016 19 52
199 575

The ratio of individual to corporate prosecutions is approximately 3 to 1, meaning that, on average, 3 culpable individuals are prosecuted for every company.

In the last few years, the Antitrust Division has been successful in prosecuting culpable individuals, securing plea agreements and prevailing at criminal trials. To be sure, the Justice Department has lost antitrust cases, but such results are to be expected when prosecutors are committed to charging culpable individuals.

In Part II, I will review antitrust compliance program elements for criminal antitrust risks.

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1 Response

  1. August 25, 2017

    […] often read articles and blog postings about anti-corruption, anti-money laundering, export controls and sanctions compliance issues. The focus on these topics […]