As the third in a triumvirate of releases on compliance programs, the Department of Justice (DOJ) Antitrust Division, in July the released its Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (Antitrust compliance program). This follows the DOJ’s Criminal Division’s release of its Evaluation of Corporate Compliance Programs, (2019 Guidance) in April and the Office of Foreign Asset Control (OFAC) release of A Framework for OFAC Compliance Commitments, in May. These three documents go a long way in cementing the need for robust and effective compliance for corporations. Today I continue a multipart blog series into the Antitrust compliance program by considering elements 1-4 of an effective antitrust compliance program.
The Antitrust compliance program notes that the goal of an effective compliance program is to “prevent and detect violations”. Further, while the DOJ states, “no compliance program can ever prevent all criminal activity by a corporation’s employees”; the “critical factors in evaluating any program are whether the program is adequately designed for maximum effectiveness in preventing and detecting wrongdoing by employees and whether corporate management is enforcing the program or is tacitly encouraging or pressuring employees to engage in misconduct.” The Antitrust compliance program goes on to state, “[t]he keys for successful [antitrust] compliance [programs] in general are efficiency, leadership, training, education, information and due diligence.”
To that end, the Antitrust compliance program lists nine separate elements which should go into an effective antitrust compliance program. They will be familiar to every compliance practitioner. These include (1) the design and comprehensiveness of the program; (2) the culture of compliance within the company; (3) responsibility for, and resources dedicated to, antitrust compliance; (4) antitrust risk assessment techniques; (5) compliance training and communication to employees; (6) monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program; (7) reporting mechanisms; (8) compliance incentives and discipline; and (9) remediation methods.
Under Element No. 1, Design and Comprehensiveness, the DOJ will always see through a paper program, which by definition will not be effective at any rate. Prosecutors are directed to consider the “design, format and comprehensiveness of an antitrust compliance program” as well as its “integration into the company’s business and accessibility to employees.” Questions posed by the Antitrust compliance program include the following:
- When was the program implemented? Updated? Reviewed, assessed, refreshed and upgraded?
- Is the program in writing?
- Who is responsible for the program? Is it integrated with and mapped to the company’s internal controls program?
- Has the company’s antitrust risks been assessed? How often has this been updated?
- Has the company put out guidance to employees on this policy? How about document destruction and obstruction of justice in relations to investigations?
The second element is the “Culture of Compliance” and here the DOJ states that an effective antitrust compliance program will “promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.” Recognizing that such support must flow down from the top of an organization, the support of an antitrust compliance program from the company’s top management is critical to success. Senior management must convince employees “of the corporation’s commitment to the compliance program.” Here prosecutors are required to consider the following questions.
- Has senior management not only talked the talk but also walked the walk of compliance? What concrete actions have they taken to do so? What has senior management done to change the company’s culture of compliance?
- Has senior management tolerated violations in the past or been involved in antitrust violations?
- Is there personal accountability at the senior management level?
The third element centers on the Chief Compliance Officer (CCO) and their autonomy, authority and seniority within your organizations overall corporate governance as well as resources in both head count and monetary means to accomplish training, ongoing training, auditing and ongoing evaluation and assessment of your antitrust compliance program. Some of the questions posed for prosecutors include:
- Who is responsible for the antitrust compliance program? Do they report to the Board of Directors? How is the CCO ensured of independence? What is the stature, rank, compensation of the CCO and is the position senior within the organization?
- What is the structure of the corporate compliance function? Are they subject matter experts? Who do they report to and what is the format of that reporting?
- Are sufficient resources dedicated to the antitrust compliance function, both in terms of headcount and monetary funding? Who reviews the effectiveness of the compliance function?
The fourth element is risk assessments. As with all corporate compliance programs it all begins with each organization assessing its own risks and then tailoring its compliance program to manage those risks. Under this element, some of the questions include:
- Is your organization’s antitrust compliance program tailored to the organization’s industries/business lines and consistent with industry best practice? For example, as employees utilize new methods of electronic communication, what is the company doing to evaluate and manage the antitrust risk associated with these new forms of communication?
- Is the company’s risk assessment subject to periodic review and update? Are new or enhanced risks incorporated into your antitrust compliance program risk management calculus.
While many of these queries will be familiar to the anticorruption compliance practitioner, there are some new twists that could be useful for those not in antitrust compliance to consider going forward. Join us tomorrow when we consider the elements 5-9 of an effective antitrust compliance program.
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© Thomas R. Fox, 2019