• Uncategorized

Antitrust Division Continues to Wrestle with Credit for Pre-Enforcement Compliance Programs

The Justice Department’s Antitrust Division maintains a robust criminal enforcement program fueled by the steady stream of leniency applicants.  Since the 1990s, the Antitrust Division has trumpeted a successful leniency program that has been followed by many other foreign enforcement agencies.  There is no question that the Antitrust Division’s leniency program has led to major prosecution and settlement successes.

The Antitrust Division has used this program to recruit corporations that cooperate and provide prosecutors with valuable information.  Antitrust Division prosecutors have a strong record of criminal enforcement against individual antitrust criminal violators.  On average, the Antitrust Division prosecutes three individuals for each corporate enforcement action.

In one area, however, the Antitrust Division continues to wrestle with the issue of credit for a company’s antitrust compliance program.  A company that implements an otherwise effective ethics and compliance program prior to detection of a criminal violation is not usually awarded any credit for its compliance program.

The Antitrust Division argued for years that a compliance program, by definition, was not effective, if a company committed a criminal antitrust violation.  According to Antitrust officials, a criminal antitrust violation and responsibility for pricing or other anticompetitive activities always involves a senior official.  In other words, a price-fixing or territorial allocation conspiracy always involves senior official participation, either knowingly or by blind indifference, to the pricing or other anticompetitive agreement.  Accordingly, Antitrust officials contend that, given the participation of senior officials, a company should not receive credit for an effective antitrust compliance program.  In support of its position, the Antitrust Division cites the Sentencing Guidelines which create a rebuttable presumption that a company’s compliance program is not effective if a senior officer is involved in a criminal offense.

To illustrate the distinction between pre-enforcement and post-enforcement compliance efforts, the Antitrust Division often cites last year’s Barclays antitrust enforcement action in which it awarded credit to Barclays in its criminal fine in the FX euro/USD case because of its compliance efforts as part of its remediation program.  The Antitrust Division is committed to crediting extraordinary post-detection compliance remediation.

All of this may be about to change.  In a May 2018 speech (here), Principal Deputy Assistant Attorney General Andrew Finch opened the door to recognizing and crediting pre-detection or pre-existing compliance programs.  DAAG Finch cited an April 2018 roundtable discussion among Antitrust practitioners and compliance advocates about antitrust compliance programs in which this issue was specifically discussed.

The Antitrust Division is now “considering how best to recognize corporate compliance efforts.”  Such consideration may include credit given at the charging or the sentencing phase of a criminal enforcement action against a company.  While DAAG Finch noted that a determination on this issue has not been made, he encouraged companies to continue with the design and implementation of robust antitrust compliance programs, and specifically comments on the importance of tailoring its compliance program to the particular employees for whom the program is intended and the specific types of antitrust offenses that those categories of employees are most likely to engage in.  For example, if a company faces risks in recruiting and hiring of employees, human resource employees should be provided specific training on the risks of illegal “no-poach” agreements among competitors.

Antitrust compliance programs need greater attention and resources.  While companies have been focusing on anti-corruption and sanctions risks, many face significant antitrust risks but fail to integrate these risks into the company’s overall ethics and compliance program.  In most cases, companies check-the-box on antitrust risks with a basic policy statement and an annual training program.  Such an effort is woefully inadequate.  With a refocusing of DOJ’s perspective on this issue, global companies have to respond to this issue and review and enhance their antitrust compliance programs.

You may also like...