In the unpleasant event that your company has been ensnared in a U.S. federal criminal antitrust investigation, you may believe that once you have negotiated a favorable plea agreement, the worst is behind you. Perhaps you have negotiated a fine you consider favorable. Perhaps you have escaped with no or very few employees or executives being exposed to individual prosecution. But you might have yet one more hurdle: an ongoing “monitorship” of the company’s compliance activities.
A U.S. monitorship can be a culture shock for some companies, particularly those outside the United States or those with insular cultures not accustomed to being watched closely by an outsider. Recent experiences with U.S. monitorships contain a few lessons about how companies can navigate the monitorship.
In some matters, courts have appointed the DOJ’s Antitrust Division to serve as the monitor. The U.S. District Court for the District of Columbia took this step in the DOJ’s prosecution of Japanese freight- forwarding companies. Thus far, the dockets in these cases indicate that after a year of DOJ reports in both cases, the DOJ monitorships have been uneventful.
In many ways, installation of the DOJ as monitor may be a less intrusive experience. The DOJ, in most instances, would rather devote its limited resources to the next investigation than to an ongoing monitorship. And in many cases, the company may already have shared information and documents extensively with the DOJ, avoiding the need for the DOJ to replicate the kind of inquiry that an outside monitor might need to undertake. The company’s obligations remain the same: Obey all laws and implement effective compliance policies, or face the consequence of adverse reporting to the court, and possibly more court-imposed oversight.
The recent court-appointed monitorship over Apple, Inc., after its criminal conviction on antitrust charges associated with Apple’s marketing of e-books, illustrated how monitorships can go awry. Apple and its private monitor clashed over a wide variety of issues, from the monitor’s discovery requests to the billing and expense guidelines Apple sought to impose on the monitor. After a public fight, the district court in December 2013 denied Apple’s request for a stay of the monitorship pending Apple’s appeal. The Apple case leaves us with a few impressions:
- A private outside monitorship can be expensive, and the company will not have the same ability to control the monitor’s fees and expenses as it does over its own privately retained counsel.
- Many independent monitors will undertake their own limited investigation. They may want access to documents and key executives fairly early in the monitorship. Responding slowly to the monitor’s requests, or not responding to them, carries risks that at some point the monitor will conclude – and tell the court – that the company is not cooperating.
- A public fight over the monitorship will almost never be helpful. Public clashes with the monitor will only lead to more media attention to the case and to the company’s stance, which some might perceive as uncooperative.
- While the company may ask the court for relief from monitorships it believes are oppressive or inappropriate, the argument may be a tough sell. After all, it was the court which decided that the monitorship was necessary in the first place.
Although a company’s reluctance to submit to a probing inquiry by a monitorship may be understandable, in most cases the company will be better off “taking its medicine” by cooperating with the monitor, and working with him or her to generate favorable reports to the court so that the monitorship may come – eventually – to a quiet end.