More Bang for the Antitrust Compliance Buck: Antitrust Division To Consider Preexisting Compliance Programs at the Charging Stage
By Morgan Kelley and Lindsey Vaala
The Antitrust Division recently announced that it would begin giving credit to companies charged with criminal antitrust violations that have preexisting robust compliance programs. In comments at a May 21 event addressing cross-border antitrust enforcement, Deputy Assistant Attorney General Richard Powers explained that companies under investigation for criminal antitrust violations that have “truly effective preexisting compliance programs” in effect at the time of the misconduct may be eligible for credit at the charging stage, even if they do not qualify for leniency under the Division’s Corporate Leniency program. This change brings the Antitrust Division’s policy in line with how the DOJ assesses corporate compliance in other types of white-collar enforcement actions, and enhances the possible rewards available to companies that have implemented comprehensive antitrust compliance programs. Companies should assess the effectiveness of their antitrust compliance programs in light of this development — an existing compliance program may be the difference between full prosecution in the face of misconduct or the possibility of mitigation credit.
DOJ’s Antitrust Division has long taken the position that the reward for effective antitrust compliance is avoiding cartel behavior or obtaining leniency through the Division’s Corporate Leniency Program. The Leniency Program, however, allows only one company — the first company to self-report and remediate criminal cartel activity and cooperate fully in the DOJ’s investigation — to qualify for leniency benefits, including immunity for the company and its employees, executives, and directors involved in the conduct who admit wrongdoing. A company that is second or third in the door at the DOJ loses the leniency race and is ineligible for immunity, even if there was in place at the time of the misconduct a strong compliance program and the company self-reported to the Division. Over the past several weeks, however, Division leaders have signaled that changes to this policy were imminent.
In the most direct comments to date, DAAG Powers, the head of the Division’s criminal enforcement efforts, reiterated that the time has come for the Division to do more to incentivize companies to proactively invest in antitrust compliance, instead of waiting until after a criminal antitrust investigation. This is a change for which many in the antitrust bar and in-house lawyers on the forefront of corporate compliance efforts have advocated for several years. Powers’ comments build on recent remarks by Assistant Attorney General Makan Delrahim that the Division is considering additional ways to reward companies for investing in robust and effective compliance programs.1 Both Powers and Delrahim have acknowledged that good corporate citizens committed to promoting ethical behavior and a culture of compliance may still find themselves in an antitrust investigation, despite their best efforts. One mistake does not necessarily mean that an otherwise robust compliance program is not working. Although the Antitrust Division has, in limited recent instances, reduced fines for “extraordinary prospective compliance measures” — instituted by companies after the detection and government investigation of misconduct — this new change means that a company may not have to wait for the penalty phase of a criminal antitrust investigation before learning whether it is eligible for compliance credit.
Speaking at the May 21 event, DAAG Powers stated that the Antitrust Division is committed to ensuring that good corporate citizens that self-report and remediate misconduct “get a fair shake,” even if they do not qualify for leniency. An official announcement of the shift in the Division’s approach to compliance is forthcoming. For now, Powers has said that to be eligible for credit, a corporate compliance program will have to be “truly effective.” When assessing the effectiveness of a preexisting compliance program, Division prosecutors will focus on whether the program is well-designed and tailored to the company, applied in good faith, and actually working. “Off-the-shelf” compliance programs that “look good on paper” but do not in fact lead to compliance and ethical behavior being embedded in a company’s culture will not pass muster. Powers also took care to note that leniency will remain the “ultimate credit” for strong corporate compliance, and that a truly effective compliance program includes full cooperation with the government in an antitrust enforcement investigation.
The Division’s shift and anticipated official announcement comes on the heels of an updated DOJ corporate compliance guidance document released on April 30, 2019, which is perhaps the most comprehensive guidance to date on how prosecutors evaluate the design, implementation, and effectiveness of corporate compliance programs in making charging and sentencing decisions. The updated April 2019 guidance was issued by DOJ’s Criminal Division and is understood to apply to the wide variety of criminal cases pursued by the DOJ more broadly.
How This Affects You
The ability to receive credit at the charging stage for a corporate compliance program is a significant development for companies that invest in antitrust compliance. While the Antitrust Division has not formally announced what criteria it will use to judge whether a compliance program is sufficiently robust and thoughtful to warrant credit, the recent guidance from the Criminal Division is a useful starting point. Companies should review their antitrust compliance policies and procedures for consistency with DOJ expectations as articulated through the updated April 2019 guidance. The reasons to invest in proactive and robust antitrust compliance regimens have now expanded significantly — a company that promptly detects cartel behavior may be able to win the leniency race. But, even if leniency is not available, the Division’s new approach to crediting qualifying compliance programs could mean crucial mitigation benefits for companies with strong, preexisting compliance programs in place at the time of misconduct.
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1 Assistant Attorney General Makan Delrahim Delivers Remarks at Fordham University School of Law, Dep’t of Justice (May 1, 2019), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-fordham-university-school-law.