Beyond Leniency: DOJ Antitrust Announces New Approach For Crediting Corporate Compliance Programs

​​​Recent announcements from senior Antitrust Division officials have brought about sweeping policy changes that are likely to displace the corporate leniency program as the only potential benefit of prompt self-reporting and an effective compliance program.¹

While details continue to emerge, the Antitrust Division appears to be readjusting its policy focus from one based on leniency alone to one that more fully incentivizes compliance, in line with the Department of Justice more broadly. This policy shift culminated on July 11, 2019 with a major speech by the Assistant Attorney General for Antitrust – titled Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs – which solidified the Antitrust Division’s evolving position away from the “all-or-nothing” philosophy adopted by the long-standing corporate leniency program. 

Under the U.S. Sentencing Guidelines, a corporate defendant is eligible for credit on its pre-existing compliance program only when its compliance program is deemed to be generally “effective.”² The Guidelines specifically recognize that “[t]he failure to prevent or detect the instant offense does not necessarily mean that the program is not generally effective in preventing and detecting criminal conduct.”³ That said, a corporation cannot receive credit for having a compliance program if a high-ranking employee of the corporation or of the relevant business unit “participated in, condoned, or was willfully ignorant of the offense,”⁴ a feature usually present in serious antitrust offenses. In addition, a corporation shall not receive a lower culpability score for its compliance program if “after becoming aware of an offense, the organization unreasonably delayed reporting the offense to appropriate governmental authorities.⁵”  

The Antitrust Division historically has not credited corporations at the charging stage or at sentencing for compliance programs that did not detect criminal conduct. This policy generally was captured by the U.S. Department of Justice Manual, which until recently stated that although “it is entirely proper in many investigations for a prosecutor to consider the corporation's pre-indictment conduct,” “this would not necessarily be appropriate in an antitrust investigation, in which antitrust violations, by definition, go to the heart of the corporation’s business.”⁶ Likewise, the Division generally has not credited corporations that seek to improve pre-existing compliance programs after the start of an antitrust investigation.  

That policy began to shift in September 2014, when Antitrust Division officials began to re-assess their approach. As part of public remarks, officials announced that the Division is “actively considering ways in which we can credit companies that proactively adopt or strengthen compliance programs after coming under investigation.”⁷ As part of that policy assessment, the Antitrust Division preliminarily identified the elements of an effective compliance program as follows: (i) direction from the top; (ii) training of senior management and those executives with sales and pricing responsibilities, and providing employees the opportunity to report anonymously and seek guidance about possible violations without fear of retaliation; (iii) monitoring and auditing of at risk activities; (iv) the willingness to discipline employees who violate the compliance program; and (v) the willingness to make changes to a compliance program that failed to prevent criminal conduct.⁸ In May 2018, a senior Antitrust Division official noted that the Division was taking the further step to examine “whether and under what circumstances it may be appropriate to consider pre-existing compliance programs” “at the charging stage or at sentencing.”⁹  

In May 2019, in a marked policy shift on pre-existing compliance policies, the Assistant Attorney General for Antitrust announced: “Going forward, [] leniency will no longer be the only benefit” for “good corporate citizenship.”¹⁰ The Assistant Attorney General specified that the Antitrust Division “will move away from its previous refrain that leniency is the only potential reward for companies with an effective and robust compliance program,” bringing it in line with other components of the Department of Justice, including the Criminal Division. While the Assistant Attorney General did not specify the details of the Division’s new approach, he stated that “one option would involve formally recognizing that even a good corporate citizen with a comprehensive compliance program may nevertheless find itself implicated in a cartel investigation.”¹²  

In the July 11, 2019 policy statement, the Assistant Attorney General for Antitrust announced that “the time has now come to improve the Antitrust Division’s approach and recognize the efforts of companies that invest significantly in robust compliance programs.”¹³ Although the Antitrust Division reiterated its commitment to the leniency program, under the new framework the Antitrust Division will: (i) change its approach to crediting compliance at the charging stage; (ii) clarify its approach to evaluating the effectiveness of compliance programs at the sentencing stage; and (iii) for the first time, make public a guidance document for the evaluation of compliance programs in criminal antitrust investigations.¹⁴ 

As part of the Antitrust Division’s new approach, a number of features will be implemented immediately. First, the U.S. Department of Justice Manual will be updated. The Manual will delete language from Sections 9-28.400 and 9-28.800 which state that the Antitrust Division would not give credit at the charging stage for a compliance program. Antitrust Division prosecutors now must consider, among other things, “the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision.”¹⁵ In addition, the Antitrust Division Manual will be updated to direct prosecutors to consider all factors “including pre-existing compliance programs in every corporate charging decision.”¹⁶ Prosecutors are to consider whether the compliance program is well designed, whether the program is being applied earnestly and in good faith, and whether the compliance program is effective. This approach allows prosecutors to proceed by way of a deferred prosecution agreement (DPA) when warranted. Notably, the the Antitrust Division will “continue to disfavor non-prosecution agreements (NPAs) with companies that do not receive leniency because complete protection from prosecution for antitrust crimes is available only to the first company to self-report and meet the Corporate Leniency Policy’s requirements.”¹⁷  

Second, the Assistant Attorney General outlined three ways in which a compliance program could be considered relevant at the sentencing stage.¹⁸ A compliance program, if effective, may allow a corporate defendant to obtain a three-point reduction under the Sentencing Guidelines. A compliance program also may be relevant to determining the appropriate corporate fine within the Guidelines range. Moreover, a compliance program is relevant to the probation recommendation. This treatment of compliance programs in the context of antitrust investigations is likely to continue to evolve. In April 2019 the DOJ’s Criminal Division released an update to the “Evaluation of Corporate Compliance Programs” first released by the Fraud Section in 2017.¹⁹ According to the DOJ, the 2019 update “seeks to better harmonize the [Fraud Section] guidance with other Department guidance and standards while providing additional context to the multifactor analysis of a company’s compliance program.”²⁰ The 2019 update provides substantial detail around the fundamental questions that must be addressed with respect to the adequacy and effectiveness of a corporation’s compliance program and remedial efforts. While providing additional guidance, the 2019 update expressly declines to adopt the “use of any rigid formula to assess the effectiveness of corporate compliance programs”²¹ and thus does not rank the factors or offer a methodology for prosecutors to weigh the various considerations. ^​​​​​