Regulators’ continued focus on the detection
and punishment of deceptive, manipulative
and other anti-competitive conduct requires all
companies and financial institutions to examine
and test truly effective global compliance policies
and systems to avoid allegations of misconduct,
and prepare to defend themselves wherever an
investigation may be being launched.
Over recent years, antitrust authorities worldwide
have continued to work ever more effectively
together to share information and act jointly
to detect and punish anti-competitive behaviour.
However, this model of co-operation is being
tested by the more frequent involvement of sector
regulators who launch parallel investigations into
the same or similar conduct, often under different
laws, powers and sanctions and, in a number of
cases, ‘cross-stimulated’ by the actions taken in
In 2014, regulators around the world continued
to pursue multiple, parallel investigations into
suspected anti-competitive conduct and market
manipulation by global financial institutions
and other companies.
With multiple authorities, both within and across
several jurisdictions, launching investigations and
imposing record fines, the risk of copycat inquiries,
heavy sanctions, damaging publicity and follow-on
actions in 2015 and beyond is significant.
Although the financial services sector has dominated
headlines, it is not alone in experiencing the spread
of truly global investigations. Other sectors in the
spotlight – including digital, telecoms, energy and
consumer products – face scrutiny into their market
structures and business models.
Global antitrust investigations:
dealing with multiple regulators
in multiple jurisdictions –
lessons learned in the financial sector
4And regulators are increasingly shifting the
investigatory burden onto the business being
scrutinised, particularly in financial services
where regulators’ powers over regulated institutions
– such as the ability to withdraw banking licences
– create significant incentives to conduct very full
internal investigations and to self-report.
Different relationships with, and duties towards,
regulators can have a material impact on how
companies respond to investigations, particularly
as regards the disclosure and sharing of information.
The availability of antitrust amnesty, for example,
with no analogous non-antitrust amnesty procedure
creates a significant antitrust incentive that must
be balanced against sector regulator penalties.
And the requirements imposed by one authority,
such as restrictions on interviewing witnesses,
can have a material impact on a company’s ability
to progress other regulatory work streams.
Across all sectors, these multi-authority,
multi-jurisdictional and multi-defendant
investigations are raising challenges for global
businesses seeking to comply with a panoply
of legal and regulatory obligations.
Key challenges in defending
a global investigation
• The race for leniency in multijurisdictional,
and multi-defendant investigations
In the initial race for leniency, applicants
increasingly seek, and regulators have been
known to grant, broad markers even if the
full details of reportable conduct are not
entirely known. The decision as to when and
how to approach the authorities will have
major implications for a company’s financial
exposure over many years to come. Key criteria
include the particular features of any leniency
regime in place (availability of marker systems,
the cost of co-operation versus the benefits),
exposure to criminal prosecution and/or civil
damages and the risk of sensitive information
becoming known to other regulators or parties.
Undertakings must be aware that each relevant
fact/circumstance that could in itself relate
to or represent a separate infringement needs
to be promptly reported even when apparently
broad markers have been granted so as to
preserve ranking and protection level; failure
to do so could open the door to a number of
unpredictable and undesirable consequences.
• Antitrust immunity is only for antitrust
and does not avoid regulatory fines
Although co-operation may earn discounts
from non-antitrust regulators, even successful
antitrust leniency applicants may face considerable
non-antitrust fines for the same or related
conduct from sector regulators, including
financial services regulators.
Prevention is key but when the
unpredictable comes, a company
should be ready to react swiftly in
each jurisdiction, including in relation
to whistleblowing in multiple venues
across different countries.
Gian Luca Zampa
2• Deferred and Non-Prosecution
Agreements (DPAs and NPAs)
US antitrust and non-antitrust investigations
may be resolved through DPAs and NPAs which
involve substantial fines and remedial measures,
but no criminal indictment of the company.
Both the companies under investigation and
the Department of Justice rely on these agreements
to punish banks and other institutions for whom
criminal indictment could result in catastrophic
consequences. The obligation to co-operate
in order to secure a DPA or NPA may drive
regulatory strategy in the US and elsewhere.
Recent public statements by the Antitrust Division
that it will consider bringing antitrust indictments
against banks subject to global investigations may
be tested in the coming year.
The rules governing settlements, and the
benefits in terms of mitigating future claims,
differ significantly between jurisdictions and are,
in many areas, still developing. Often, they have
to be seen as a complementary tool in a broader
defence strategy. A decision to settle in one
jurisdiction, possibly with ongoing investigations
into other parties, needs a global assessment
of the relative costs and benefits, often in the
face of many factual and legal uncertainties.
• Diverging powers and priorities
Each regulator will have different investigation
powers, approaches to enforcement and penalties
they can impose. A company with an effective
defence strategy will understand, and anticipate,
which issues each regulator is most interested in,
what evidence they need to prove their allegations
and whether one or more regulators is taking
the lead in a multi-jurisdictional investigation.
A co-ordinated and consistent response from
the dawn raid onwards, which meets the needs
of individual regulators, is essential to protecting
a company’s rights of defence throughout lengthy
investigations and possible follow-on actions with
resulting disclosure obligations.
Agency powers and corporate
compliance: main procedural risks
• Dawn raids
Surprise inspections continue to be a key
investigatory tool for authorities worldwide.
Regulators are increasingly co-ordinating
early on to enable them to launch multiple
simultaneous raids and seize vital evidence.
Companies must have the procedures and policies
in place across all of their operations to respond
to these far-reaching and intrusive powers.
Procedures include having trained response
teams at all sites, and having agreed protocols
on group communication, IT response and
dealing with critical issues that will need
escalation such as privilege, relevance, employee
interviews and leniency.
• Delay and obstruction
Wide-ranging powers of investigation are
coupled with heavy financial, and sometimes
criminal, sanctions for any unreasonable delays
or obstruction. Companies have obligations to
co-operate fully and actively with investigations,
and not to interfere with or delay any searches.
As significant fines are more frequently imposed
for behaviour such as delaying entry to premises
(even to wait for lawyers), refusing to answer
questions or disclose full information, failing
to block email accounts quickly enough and
unexplained interruptions to IT access, all
employees need to understand the powers
of the regulators in their jurisdictions
and their duties to co-operate.
6• Evidence gathering
In order to respond to regulators’ increasing
demands for large volumes of electronic evidence,
companies quickly need to establish systems and
procedures that enable them to gather and preserve
evidence centrally, and respond to demands across
several jurisdictions. Experience in recent
investigations has highlighted the importance
of having advanced systems in place quickly that
allow companies to keep track of all the evidence
seized by, or disclosed to, different authorities
and conduct a cohesive global defence strategy.
• Privilege and data protection laws
A global defence strategy must anticipate the
impact key differences in privilege and data
protection laws have on evidence disclosed
to particular regulators, and the ability
of companies to control information flow.
• Disclosure and accounting obligations
Any company under investigation needs to consider
any disclosures needed under listed company and
accounting rules. Disclosure requirements differ
across jurisdictions but announcements will
need to be drafted carefully to avoid allegations
of lack of market transparency while protecting
the company’s position, often at relatively early
stages of investigations.
• Employees interviews
Regulators increasingly supplement documentary
evidence through employee interviews, often with
little or no notice. Authorities in the US have used
these powers for many years and, in 2014, the UK’s
CMA moved closer to that position by adopting
compulsory interview powers.
As interview evidence plays an increasingly
influential role, in-house counsel are faced
with a number of critical decisions in very
short time-frames: the need for separate legal
representation; access to interview evidence
if a company representative is prevented from
attending; and disciplinary action, particularly
where an employee’s ongoing co-operation is
needed. Having up-to-date HR policies in place
which deal with such issues significantly helps
decision-making on the day.
• Individual criminal prosecutions
When employees are faced with the threat
of prosecution for conduct that amounts to a
criminal offence, interests between company
and employee quickly diverge. Corporate
defence strategies should anticipate the
impact that more prosecutions will have,
particularly on disclosure of evidence and
ongoing co-operation with the authorities.
• Regulatory intrusion into compensation
Regulators continue to exert pressure on
companies, particularly banks, to claw-back
compensation from employees implicated
in wrong-doing and to reduce compensation
to managers with supervisory responsibility.
This is both a legal and a broader stakeholder
management issue where appropriate HR
policies are essential.
Legal, compliance and HR functions,
and local management, need to join
forces to manage cohesively the often
conflicting demands across the parallel
2High stakes global investigations
force companies to choose a regulatory
strategy, including potential leniency,
before they learn the scope of the
underlying conduct and often before
regulators have opened investigations.
Counsel, Washington DC
8Looking ahead to 2015
There are a number of steps companies should take
to ensure they have proper plans and procedures
in place before they are needed.
} Compliance and risk assessment must
be tailored to business line functions
Training, risk assessment and other compliance
measures must contemplate risk factors presented
by the commercial activity of each business line.
Different commercial activities present unique
risk factors that must be addressed through
bespoke training and compliance measures.
} Global compliance
With different laws and procedures around the
world, the delivery of compliance and training
must be tailored to local needs but the content
needs to protect the position of the international
business. Regulators’ broad assertion of jurisdiction
to regulate extraterritorial conduct and global
markets often requires companies to adhere
to global standards not just local norms.
} Whistleblowing policies
As part of a wider compliance initiative,
corporations should review their internal
procedures to handle employee concerns.
A well-communicated whistleblowing policy
can be a vital part of a company’s defence
and response strategy.
} Management and communication
All local teams must be trained to deal with firstresponse,
with clear protocols in place on which
issues should be escalated (and how) to ensure
the right decisions are taken which may impact
investigations and financial exposure elsewhere.
} Stakeholder strategies
Damaging wider relationships with shareholders,
suppliers, customers, the media and politicians
as a result of infringing behaviour can have
serious and long-standing effects on a company,
particularly where concerns arise as to the conduct
of senior management or company culture. Having
agreed protocols in place, and a central point of
decision-making to deliver a well-planned and
consistent message is vital to minimising this
impact while ensuring no misleading information
is provided to the market.