As the third in a triumvirate of releases on compliance programs, the Department of Justice (DOJ) Antitrust Division, released its Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations(Antitrust compliance program) in July. 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. Yesterday, I considered the first four of nine elements of an effective antitrust compliance program. Today I consider the elements 5-9 of an effective antitrust compliance program.
Element No. 5 refers to training and communication. The Antitrust Division stated, “Ideally, [antitrust compliance training] empowers employees to do business confidently insofar as they are clearer on what is and is not permissible, and can resist pressures more effectively (whether these are internal or external).” Not only is training to be risk based but it should also focus on educating employees on how and when legitimate business collaboration becomes “problematic” and into illegal conduct. Some of the questions posed for prosecutors include:
- How has the company communicated its antitrust policies and procedures to all employees and in an effective manner which promotes understanding? In what specific ways are antitrust compliance policies and procedures reinforced through the company’s internal controls?
- It is not enough to simply translates antitrust policies, procedures and training into local languages but any barriers to effective understanding must be addressed.
- Are there mechanisms to track the effectiveness of training and ensure that it is being followed? Is there certification of training and policies and procedures?
- What is the basis for who receives the training? Is it risk based in terms of time and business opportunity? How often is the training updated?
The sixth element is period review, monitoring and auditing. The Antitrust Division stated an organization should, “Periodically assessing whether parts of [a] company’s business or certain business practices are complying with antitrust laws in practice allows senior managers to know whether the company is moving closer to its antitrust compliance objectives.” Not only does such periodic testing help “ensure that there is continued, clear and unambiguous commitment to antitrust compliance from the top down” but also if the antitrust risks have changed then there should be a reassessment of the risk mitigation activities and controls to ensure they remain appropriate and effective. Some of the questions under this element include:
- What method is used to evaluate your antitrust compliance program, how is it done and who does the evaluation?
- What ongoing monitoring and auditing mechanisms are used to prevent and detect antitrust violations?
- What is the company’s process for ongoing improvements to the antitrust compliance program?
The seventh element is reporting. This includes confidential reporting mechanisms as well as the promotion of a speak up culture. Some of the questions posed here include:
- Is the reporting system publicized internally? Can employees make anonymous reports? Is there whistleblower anti-retaliation protection?
- Are supervisors required to notify superiors if a potential violation is reported to them? Are there disciplinary measures in place for the failure to do so?
- Is there an investigation protocol in place if a potential violation is reported?
The eighth element is incentives and discipline, i.e. both the carrot and the stick around your antitrust compliance program. Some of the questions posed include the following:
- What incentives are in place to promote the antitrust compliance program? What considerations have been given to theses incentives, compensation structure and rewards?
- Are disciplinary measures in place and have they actually been used? Has there been any management turnover based upon antitrust issues? Are the disciplinary measures consistent with other types of misconduct?
- For senior executives who may have been involved in cartel behavior, did they cooperate with the investigation and have they accepted responsibility for their actions?
Finally, we have element nine regarding remediation of any violations and the role that the company’s antitrust violation played in the discovery of the violation. Obviously, the robustness of both the investigation and remediation are critical elements in not only a compliance program but also in seeking credit under the US Sentencing Guidelines. But using the compliance program to detect violations can also have the added benefit of allowing a company to be the first to report under the Leniency Program, which of course can lead to a full pass on any criminal charges. Some of the questions posed by prosecutors under this element include:
- What role did the antitrust compliance program play in uncovering the violation? If so how and was the violation reported up the chain?
- Was a root cause analysis performed? What remediation occurred as a result of the root cause analysis?
- What was the role of outside counsel in this process? What role did senior management play?
- Were policies and procedures updated based upon the remediation? Has any update been the subject of training and certification?
- Did the compliance program assist the company in promptly reporting the illegal conduct? Did the company report the antitrust violation to the government before learning of a government investigation? How long after becoming aware of the conduct did the company report it to the government?
Join us tomorrow where we take a look at the sentencing considers set out in the Antitrust compliance program.
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© Thomas R. Fox, 2019