United States: A New Take On Compliance Programs

Keywords: antitrust, DOJ, compliance,

Brent Snyder, the Deputy Assistant Attorney General for Criminal Enforcement at the US Department of Justice's Antitrust Division, recently provided advice on maintaining an effective antitrust compliance program. Some of the advice is familiar but much of it is new and noteworthy. All of it merits attention.

First, he emphasized the importance of buy-in at the top, and recounted a story about a company in which the CEO and senior executives diligently attended compliance sessions, only to walk out and fix prices regularly. In the eyes of the Justice Department, adequate buy-in from the top requires (i) becoming "knowledgeable" about the compliance program; (ii) committing enough resources; and (iii) assigning the right people to the job.

Second, the entire organization must be included in compliance training. According to Snyder, this includes "most employees," especially those with sales and pricing responsibility, as well as, when "appropriate," a company's "subsidiaries, distributors, agents, and contractors." (Snyder did not elaborate on when this step becomes appropriate.) Plus, there must be an opportunity for employees to report violations anonymously and to seek guidance without fear of retaliation.

Third, the company must be "proactive" by assuring that "at risk" activities are regularly "monitored" and "audited," and regularly evaluated to determine what can be improved. (Details were not provided as to the types of activities the Division considers "at risk," or what degree of monitoring and auditing would be considered suitable.)

Fourth, the company must be prepared to discipline employees who either commit criminal violations themselves "or fail to take the reasonable steps necessary to stop the criminal conduct in the first place." The Antitrust Division's policy has been to stay out of personnel decisions. At the same time, the Division's leaders believe that a company's retention of violators in positions in which they can impede internal investigations or influence potential witnesses "raises serious questions" about the company's commitment to compliance. In a speech concerning application of the Division's leniency program, Assistant Attorney General Bill Baer echoed this same position:

Finally, according to Snyder, a company that discovers antitrust violations should take steps to prevent a recurrence, which usually includes changing the compliance program that failed to prevent the illegal conduct in the first place.

Snyder emphasized that the mere existence of a compliance program almost never enables a company to avoid criminal antitrust charges, and that the Division almost never recommends that companies should receive credit at sentencing just for having had a compliance program. The Sentencing Guidelines provide for lower culpability scores for companies that have "effective" compliance programs, and the Division does not consider a company eligible for such credit unless it has discovered and self-reported the violation by turning itself in under the Division's leniency program.

Nevertheless, implementation of an effective compliance program may benefit a company even if the company does not qualify for full leniency under the leniency program (because a competitor turned itself in first, for example). A company that pleads guilty without the benefit of full leniency, but can show that it adopted or strengthened a compliance program, may be able to avoid court-supervised probation and the appointment of a compliance monitor, which comes at the company's expense. (A "second in" leniency applicant also may qualify for a lighter sentencing recommendation by providing valuable assistance to the Division in uncovering additional wrongdoing.)

Naturally, speeches of this kind are designed to strike a certain amount of fear into the hearts of compliance officers, but they provide important insight into the government's priorities and must be taken seriously. It makes little sense to fashion a costly, state-of-the-art compliance program only to find that the government deems the implementation of that program to have been inadequate.

Bottom Line: It is not enough simply to have a compliance program. If someone within a company engages in fixing prices, rigging bids, limiting output or dividing customers with competitors, the company will need to demonstrate that it had a top-down, broad-based, proactive program, with teeth as well as safeguards, if it expects any empathy on the part of the Antitrust Division.

Originally published 2 March 2015

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