As the third in a triumvirate of releases on compliance programs, the Department of Justice (DOJ) Antitrust Division, in July, 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.
I have previously taken a deep dive into the Criminal Division’s 2019 Guidance. Today I will begin a multipart blog series into the Antitrust compliance program by introducing the program and what it changes from the prior Leniency Program for being the first entity to self-report. I will then consider the elements of an effective antitrust compliance program and wrap up with the implications for the anti-corruption compliance practitioner going forward.
The Antitrust compliance program significantly changes the calculus by the government when prosecuting a criminal antitrust violation. Regarding the Leniency Program, Mike Volkovnoted, “Since the 1990s, the Antitrust Division’s policy regarding corporate compliance programs was generally fixed given the ability of companies to seek benefits under the leniency program. In this respect, the first reporting company would earn immunity and a de-trebling of civil liability for antitrust cartel conduct.” However, if your organization was not the first to self-report, you could not avoid a criminal penalty for violation of antitrust laws. It was purely a race to see which organization could self-report first.
This has changed under the Antitrust compliance program as it incentivizes companies to create effective Antitrust compliance programs by creating credit which the government may give at the charging stage of an antitrust violation. This means that the Leniency Policy created in the 1990s for the first in to self-report has now been expanded so that a company which no longer is the first to report can receive up to a Declination if certain criteria are met. Put another way, good corporate citizens who are not the first but do self-report, thoroughly investigate the violation, extensively cooperate with the government and have an effective compliance program under the Antitrust compliance program can receive a significant discount up to a Deferred Prosecution Agreement (DPA) for criminal antitrust violations.
The purpose of the Antitrust compliance program is threefold. The purposes, authored by the Antitrust Division, include a manner to credit compliance programs at the charging stage of an antitrust indictment; clarifying the Antitrust Division’s approach to evaluating effectiveness of compliance programs at the charging stage; and, finally, to provide a public guidance document for the evaluation of compliance programs, once again from the antitrust perspective. In addition to these three considerations made at the charging stage, the Antitrust compliance program may also come into play at any sentencing stage. Volkov stated, “Under the existing Sentencing Guidelines, a company can earn a three-point reduction in its culpability score if the company has an “effective” compliance program. Second, a compliance program may be relevant to deter mining the appropriate corporate fine to recommend within the guidelines range, or even below the range in extraordinary circumstances. And third, the existence of a compliance program is relevant to the government’s recommendation on probation.”
Jesse Caplan, Managing Director, Affiliated Monitor Inc. (AMI), noted in a podcast interview on the FCPA Compliance Report that this new Antitrust compliance program did not come “out of left field and I think that’s consistent with where the Department of Justice is going. Arguably it is the next step after the Leniency Program has been in place for quite a number of years.” He also believes that beyond simply assisting the Antitrust Division in prosecuting, the Antitrust compliance program provides “incentives to any other companies for truly making sure that they had a very effective antitrust compliance program, to ensure that they are good corporate citizens and that they have effective compliance programs.”
The Antitrust compliance program itself states that it focuses on the “evaluation of compliance programs in the context of criminal violations of the Sherman Act such as price fixing, bid rigging, and market allocation. It is intended to assist Division prosecutors in their evaluation of antitrust compliance programs at the charging and sentencing phases of an investigation. Although the evaluation of antitrust compliance programs is an important factor in the prosecutorial decision-making process at both charging and sentencing, a number of other important factors not addressed by this compliance- specific guidance also must be considered.”
Moreover, “effective antitrust compliance programs not only prevent, detect, and address antitrust violations, they also further remedial efforts and help foster corporate and individual accountability by facilitating a corporation’s prompt self-reporting and timely and thorough cooperation in the Antitrust Division’s investigations. Indeed, a truly effective antitrust compliance program gives a company the best chance to obtain the significant benefits available under the Division’s Corporate Leniency program.”
As you would expect from the DOJ, the Antitrust compliance program will not be applied in a formulaic manner but with a more flexible approach. There are three “fundamental questions” prosecutors will have to consider in their evaluation. They are (1) Is the Antitrust compliance program well designed? (2) Is the Antitrust compliance program being applied earnestly and in good faith? And (3) Does the Antitrust compliance program work?
Once again emphasizing that these questions are not to be applied as a formula checklist, the Antitrust compliance program goes on to lay out the factors of an effective antitrust compliance program. The Antitrust compliance program cautions, “Indeed, not all factors will be relevant in every case, and some factors in the Division’s analysis are relevant to more than one question. Moreover, the Division recognizes that a company’s size affects the resources allocated to antitrust compliance and the breadth of the company’s compliance program.” Prosecutors are cautioned that they “should evaluate compliance programs throughout the course of their investigation, including asking relevant compliance-related questions of witnesses, and should not wait for companies to offer a compliance presentation before beginning their evaluation of a company’s antitrust compliance program.”
Join us tomorrow when we begin a consideration of the elements of an effective antitrust compliance program.
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© Thomas R. Fox, 2019