Effective compliance programs are high on its agenda, and that given the opportunity, the Division will seek monitors with increasing frequency
The Antitrust Division is charting a course for more robust corporate antitrust compliance programs in 2015. Taking advantage of its win last year in U.S. v. AU Optronics Corp., in which it imposed a court-appointed monitor on a convicted cartelist for the first time, the Division made a point of wrapping up the year with two policy speeches setting forth its expectations. Though in keeping with past Division policies, the speeches made clear that effective compliance programs are high on its agenda, and that given the opportunity, the Division will seek monitors with increasing frequency. Investment in sound compliance policies are particularly important in today’s enforcement climate. And given the expense and intrusiveness of compliance monitors, companies in the United States and abroad should pay close attention to guidance about how to avoid them.
In a speech at the Georgetown University Law Center Global Antitrust Enforcement Symposium, Assistant Attorney General Bill Baer explained that the Division sought probation and a monitor in the AU Optronics case because the company, a Japanese corporation, and its U.S. subsidiary demonstrated a lack of commitment to implementing an effective compliance program. Despite its conviction, the company refused to acknowledge the illegality of its conduct, and it refused to remove convicted and indicted senior executives from positions of responsibility. Under the circumstances, a court-supervised monitor was therefore necessary to change the corporate culture and reduce the risk recidivism.
In comments before the International Chamber of Commerce and United States Council of International Business, Deputy Assistant Attorney General Brent Snyder said that, in keeping with longstanding departmental policy, the Division would not require termination of culpable executives. However, Snyder observed that retention of “culpable employees in positions where they can repeat their conduct, impede a company’s internal investigation and cooperation, or influence employees who may be called up to testify against them” would raise significant doubt about a company’s commitment to effective antitrust compliance.
Snyder cautioned that the Division would seek probation in cases where a company does not have a compliance program or makes no effort to strengthen a preexisting compliance program. He added that companies may be able to avoid probation by adopting or strengthening a compliance program while under investigation.
The Division also typically seeks probation for recidivists, as it did in its April 2014 plea agreement with Bridgestone Corp. Bridgestone admitted to fixing the price of automotive anti-vibration rubber parts in 2014; only three years previously, it had pled guilty to fixing the price of marine hose. Under the terms of its probation, Bridgestone must report on its antitrust compliance program to a probation officer and the Antitrust Division annually for three years. If Bridgestone fails to make timely and complete reports, the Division may seek a court-appointed monitor.
But even when the Division seeks probation, it typically allows a company to design and implement its own compliance program, within general guidelines. Snyder emphasized that the Division will not provide such autonomy to companies that refuse to remove culpable executives from positions of authority. Instead, the Division will seek to impose a compliance monitor to oversee the adoption of an effective compliance program. In the case of AU Optronics, the Division specified that its compliance program prohibited indicted executives from holding any pricing, sales or marketing authority. In practice, then, if culpable a company may face the choice between stripping its culpable executives of such authority or having a compliance monitor do it for it.
Snyder refuted the charge that the Antitrust Division does not adequately reward companies for antitrust compliance programs already in place before unlawful conduct is discovered. In the Division’s view, such preexisting programs are by definition ineffective if they fail to prevent cartel conduct or fail to detect it early. Therefore, the Division rarely recommends credit at sentencing for such programs, much less allows a target to avoid charges. Snyder observed that the benefit of an effective compliance program is that it prevents unlawful conduct in the first place, or uncovers the conduct in time for the company to enter the Division’s leniency program. In his view, “receiving leniency is the ultimate credit for having an effective compliance program.” He also stated that the Division was actively considering ways to credit companies that proactively adopt or strengthen compliance programs after coming under investigation. But he did not provide any details, and to date the Division has not provided any company with such credit.
Snyder summarized the elements of an effective antitrust compliance program as including:
- The full support and active involvement of senior executives and the board of directors
- Training for all executives and managers, and all relevant employees
- A means for any member of the organization to report suspected criminal violations anonymously without fear of retaliation
- Regular monitoring and auditing of risky activities
- Regular evaluation of the compliance program itself
- Improving the compliance program when it fails to detect wrongdoing
- Disciplinary action for employees who commit antitrust crimes
The Division’s message is clear: At the end of the day, an antitrust compliance program is only as good as the executives that establish and nurture it. Through example and leadership, senior executives shape a company’s compliance culture. And if they cannot or will not, they must step aside. In Snyder’s words, “It starts at the top.”
Originally appeared in InsideCounsel on March 16, 2015