Nobody likes paying legal fees for compliance matters. Businesses often feel they derive no tangible benefit from spending money on compliance tasks, and instead feel that they are simply checking the artificial (and meaningless) box imposed by hyperactive government regulation. Two top lawyers at the U.S. Department of Justice’s (DOJ) Antitrust Division – Bill Baer, the assistant attorney general in charge of the Division; and Brent Snyder, the deputy assistant attorney general who leads criminal enforcement – recently gave public speeches heralding the benefits of maintaining and implementing an “effective” antitrust compliance policy. Baer gave a speech in Washington, D.C., entitled “Prosecuting Antitrust Crimes.” Snyder gave a speech in New York City entitled “Compliance is a Culture, Not Just a Policy.”
Both speeches outlined the consequences of an antitrust violation. As Snyder put it: “The risks of participating in a price-fixing cartel should be obvious: high fines for the company; significant jail time for executives; expensive attorneys’ fees; substantial civil damages owed to customers; and exposure to further criminal investigations – not to mention the associated bad publicity and internal distraction from the actual business of the company.” Baer told a similar tale in his speech: “Those who conspire to subvert the free market system and injure U.S. consumers are prosecuted vigorously and penalized appropriately…. Courts have imposed criminal fines on corporations totaling as much as $1.4 billion in a single year; the average jail term for individuals now stands at 25 months, double what it was in 2004. Those penalties tell only part of the story. Perpetrators also must confront private and state civil suits seeking treble damages and risk other collateral consequences for their crimes.”
The upshot of both speeches was a strong recommendation that companies adopt effective antitrust compliance programs. According to both, compliance programs not only help prevent criminal antitrust violations by companies and their employees, but can provide companies with greater opportunities for leniency on criminal fines and penalties, or on imprisonment of their executives. As Snyder stated, an “effective compliance program can help a company meet many of the requirements of the Division’s leniency program.” Also, with respect to company fines, the “United States Sentencing Guidelines ” specifically identify an effective compliance and ethics program as a basis for reducing a company’s “culpability score,” and therefore, the company’s ultimate criminal fine and penalties.
Importantly, the speeches by Baer and Snyder give some insight on what the DOJ considers an “effective” compliance program with respect to antitrust matters. According to Baer, “Corporate compliance starts at the top. The board of directors and senior officers must set the tone for compliance to ensure that the company’s entire managerial workforce not only understands the compliance program, but also has the incentive to actively participate in its enforcement.” Snyder acknowledged that the Division has not provided a “one size fits all” framework regarding what constitutes an effective compliance policy. And, as he said, “nor are we likely to do so.” But Snyder did lay out five principles of an effective antitrust compliance program:
- Senior management must be involved
- Employee training and non-retaliation for reporting possible violations
- Proactive monitoring, audits, and updates
- Discipline and terminate antitrust violators
- Prevention and adapting the policy
Companies would be well-served to contact their in-house or outside counsel and discuss updating their antitrust compliance policies and practices, or if they do not have any, implementing such policies and practices as soon as possible. The DOJ has made it crystal clear that companies may be able to save themselves a lot of legal woes if they undertake simple compliance steps. While compliance in general may not be viewed with enthusiasm, an effective antitrust compliance program has tangible benefits and is well worth a company’s time and effort.