by Michael W. Peregrine and Mary N. Strimel

Board-level audit and compliance committees should support efforts to revise the organizational compliance plan to incorporate specific provisions focused on antitrust law-related guidelines.  This is especially important given the Department of Justice’s (“DOJ”) plans to credit pre-existing compliance programs that incorporate such provisions.  A company’s General Counsel, perhaps teaming with the Chief Compliance Officer, can support the committee in this initiative.

In a recent speech,[1] Principal Deputy Assistant Attorney General (“DAAG”) Andrew Finch stated that the Antitrust Division is examining whether, and to what extent, to recognize and credit pre-existing compliance programs, potentially during charging or at sentencing.  This consideration might mirror the approach taken by the Canadian Competition Bureau, which announced last month that it would recommend fine discounts of up to 20% for companies that have a “credible and effective” compliance program.[2] 

The Antitrust Division already grants credit for extraordinary compliance measures taken after the discovery of wrongdoing, and such credits have likely saved companies millions of dollars in fines.  For example, in connection with a $650 million corporate plea by Barclays PLC in May 2015 for manipulating the spot market for foreign exchange of dollars and euros,[3] the DOJ told the court that the proposed fine took into consideration “the substantial improvements to the defendant’s compliance and remediation program to prevent recurrence of the charged offense.”  This suggests that Barclays had received a reduction against the fine that would otherwise have been called for under the United States Sentencing Guidelines, based on improvements that Barclays made to its compliance program after discovery of the offense. At the Public Roundtable on Criminal Antitrust Compliance held on April 9, 2018, the strong consensus among speakers, many of whom are from the private bar or are in-house counsel, was that DOJ ought to also give credit for pre-existing compliance programs.  DAAG Finch’s recent statements signal a step in that direction, and should prompt corporate compliance officials to take actions that may prove beneficial should a company find itself accused of wrongdoing.

Until now, the Antitrust Division has not considered the quality of a company’s antitrust compliance program a mitigating factor in proposing a sentence. The DOJ had reasoned that if a compliance program had been effective, the violation would not have occurred.  The problem with DOJ’s approach was that it failed to acknowledge the efforts of firms that maintain strong or even exceptional antitrust compliance programs, but that nonetheless find themselves in an antitrust enforcement situation due to the concealed actions of one or two ill-intentioned employees.  The DOJ’s old policy missed an opportunity to incentivize compliance programs by offering sentencing credit.

The DOJ’s latest statements reinforce the benefits of having a strong, up-to-date plan for antitrust compliance.  Such a plan would include implementing guidelines that reflect known areas of civil and criminal antitrust enforcement, such as price fixing, bid rigging, market allocation, wage-fixing, and so-called “no-poaching” agreements among employers not to recruit each other’s employees.  Such a plan may also seek to embody principles that the Antitrust Division previously articulated when it described how it will evaluate defendants’ compliance programs. These principles include:

• Compliance must “start at the top,” and reflect commitment and support from senior management;
• the entire organization should be committed to compliance efforts such that all executives and managers, and most employees, receive compliance training;
• the program should be proactive and include systems for employee feedback, auditing, and monitoring.[4]

Broad antitrust education could be particularly important given that legitimate antitrust exposure can arise from a wide range of individual and organizational conduct that has traditionally been perceived to be within the realm of corporate operations.  Those who may not regularly interact with the compliance department, such as employees working in strategic/business development, human resources, marketing and communications, and finance or the treasury, may take actions, therefore, that could subject a company to liability. Given the risk that some board leaders may communicate confidential matters to peer representatives from competitors in an effort to boost their leadership portfolio, companies should also consider implementing a board briefing to discourage this practice. For example, the Antitrust Division previously obtained a consent decree in a case in which it alleged that a company’s chairman had reached an improper “no-poach” agreement with another company on whose board he served.[5]

Adopting such provisions to the compliance program would be consistent with the board’s Caremark[6] obligations to provide oversight of the company’s corporate compliance plan.  It would also be prudent given the recent uptick in enforcement of civil and criminal provisions of state and federal antitrust law.

Ultimately, and from a business perspective, companies should include antitrust law provisions in their compliance programs to avoid violations in the first place. Detecting violations early can also result in amnesty for a company that may benefit from the Antitrust Division’s leniency policy,[7] which applies only to the first company to self-report criminal wrongdoing and cooperate with the Division’s investigation.

Footnotes

[1] Principal Deputy Assistant Attorney General Andrew Finch, “Antitrust in the Financial Sector: Hot Issues & Global Perspectives,” (May 2, 2018).

[2] Corporate Compliance Bulletin, June 3, 2018.

[3] Press Release, U.S. Dep’t of Justice, Five Major Banks Agree to Parent-Level Guilty Pleas (May 20, 2015).

[4] Deputy Assistant Attorney General Brent Snyder, “Compliance Is a Culture, Not Just a Policy” (Sept. 9, 2014).

[5] United States v. eBay, Case No. 5:12-cv-05869-EJD (N.D. Cal.)

[6] In re Caremark Int’l Inc. Deriv. Lit., 698 A.2d 959 (Del. Ch. 1996).

[7] See USDOJ Antitrust Division Corporate Leniency Policy (PDF: 48 KB) (Aug. 10, 1993).

Michael Peregrine and Mary Strimel are partners at the law firm of McDermott Will & Emery.

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