Does a Compliance Program Matter to U.S. Antitrust Enforcers?
Two weeks ago Assistant Attorney General Bill Baer and Deputy Assistant Attorney General Brent Snyder of the Department of Justice’s Antitrust Division gave speeches in which they commented on the role of corporate compliance programs in the Division’s prosecution of antitrust crimes. In their remarks, these top DOJ officials made clear that the DOJ will almost never give a company immunity from prosecution or credit at sentencing for having a compliance program if the program failed to prevent antitrust violations in the first place. Thus, in-house counsel may ask whether it is necessary and/or cost-effective to implement and enforce a robust antitrust compliance program at their company if the return on investment is low. While having an antitrust compliance program may not prevent a company from being charged with an antitrust violation in the first place, a compliance program does increase the likelihood of early detection of such violations, which in turn provides a substantial benefit if the company would like to apply for leniency under the Division’s leniency program and the company needs to be the first in the door. Furthermore, it is important to consider whether the Antitrust Division will be the only U.S. enforcement or regulatory agency investigating the conduct in question as other enforcement/regulatory agencies may give more credit than the Antitrust Division under the Principles of Federal Prosecution of Business Organizations to a company that has a robust compliance program depending upon the circumstances (timing of discovery and self-reporting, etc.) and the nature of the violation. In addition, it remains the case that, under some circumstances, the U.S. Sentencing Guidelines provide for a reduction in the Guidelines range when a company has an effective compliance program; even if the Antitrust Division does not give credit to such programs, the Guidelines calculation remains the starting point for federal judges imposing antitrust sentences. Finally, even if a company does not qualify for leniency and has to plead guilty to an antitrust crime, having a compliance program already in place may allow the company to avoid additional oversight after sentencing such as probation or the appointment of a corporate monitor.
So how should a company craft a compliance program that is effective but still cost-effective? As Deputy Assistant Attorney General Brent Snyder stated, no “one size fits all” when it comes to an effective compliance program. Here are some take-aways from the AAG’s and DAAG’s remarks:
(1) TAILOR THE PROGRAM: Compliance programs should be designed to account for the nature of a company’s business and for the markets in which it operates.
(2) CULTURE OF COMPLIANCE STARTS AT THE TOP: A company’s senior executives and board of directors must fully support the company’s compliance efforts and ensure that the company’s compliance officer or group is provided with the necessary tools and resources to implement the program successfully.
(3) TRAINING AND FEEDBACK FORUM: A company should ensure that training for all executives, managers and employees, especially those with sales and pricing responsibilities, and a forum for employees to provide anonymous feedback, be incorporated into its compliance program.
(4) TREATMENT OF INDIVIDUAL PERPETRATORS: A company should be willing to discipline/take action against employees who either commit antitrust crimes or fail to supervise and take actions to prevent the criminal conduct in the first place. The Division has made it clear that a company’s retention of culpable employees in positions where they can repeat their conduct or impede the government’s investigation, raises serious concerns for them about the company’s commitment to effective antitrust compliance.
(5) “REGULAR CHECK UPS”: Corporate compliance programs need to be revamped if it turns out they failed to prevent the criminal conduct. Even if there is no evidence that a company’s compliance program is not working, a company needs to regularly reevaluate its compliance program and monitor and audit its risk activities.
The clear message from the DOJ is that the existence of a compliance program almost never allows a company to avoid criminal antitrust charges because DOJ believes an effective compliance program would have prevented the crime in the first place. Nevertheless, a robust compliance program enhances the chances that a company will escape being the subject of a criminal antitrust violation in the first place or, at a minimum, that a company will detect any antitrust violation early and allow it to apply for applying for leniency under the Antitrust Division’s Corporate Leniency Program—“a very valuable carrot” as DAAG Snyder described it.
Stay tuned for next week’s recap of the Canadian Competition Bureau’s recent bulletin on Corporate Compliance Programs.