On 9 April 2018 the U.S. Department of Justice Antitrust Division (Antitrust Division or Division) hosted the second of a series of roundtable discussions on antitrust enforcement. Attorneys from the Antitrust Division moderated panels of private practitioners, in-house lawyers, and foreign competition enforcers, who each offered their views on how enforcement agencies should incentivize companies to enact effective criminal antitrust compliance programs.
Throughout the afternoon, two key suggestions for the Antitrust Division emerged:
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Credit at sentencing for existing compliance programs – Companies should get credit at sentencing for compliance programs existing at the time the offense was committed.
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Additional guidance on expectations for
compliance programs – Practitioners and in-house lawyers want clear guidance from the Antitrust Division on what the Division considers to be an effective antitrust compliance program. |
Under the Section 3572(a)(8) of the U.S. Sentencing Guidelines, defendant companies may seek a sentencing reduction for having an effective compliance program. However, only twice has the Antitrust Division ever requested or supported a sentencing reduction under the Sentencing Guidelines. Instead, the Division has historically taken the position that a truly effective corporate compliance program will uncover any cartel behavior. The company, therefore, would be rewarded by reporting the uncovered violation to the Division and receiving complete amnesty under the Division’s leniency program. The Division has concluded that these incentives under the leniency program are sufficient to entice companies to enact robust compliance programs.
Panelists at last Monday’s conference pushed back on the Antitrust Division’s position. In response to questions from DOJ moderators, panelists argued that the Division should offer credit in the form of a reduced sentence to companies with existing compliance programs. Several panelists argued that no compliance program can be expected to achieve 100 percent compliance, by 100 percent of employees, at 100 percent of the time, and that such a standard for judging the efficacy of compliance programs is unreasonable. Moreover, even if a company does uncover cartel conduct, it may not be able to take advantage of the Antitrust Division’s leniency program simply because its compliance program did not uncover the conduct as quickly as one of its competitors. Offering sentencing credit in exchange for genuine compliance efforts acknowledges that violations can occur even when strong compliance programs are in place and would further incentivize companies to invest in compliance.
During the discussion, the Antitrust Division sought alternatives to providing sentencing credit for compliance programs. Several of the panelists suggested that the Division offer compliance guidance, particularly guidance on how to detect possible antitrust violations. The panelists suggested that the Division provide additional guidance regarding red flags to look for when administering their compliance programs, as well as additional policy statements and speeches to help guide them. Several panelists referred to the Antitrust Division’s 2016 Guidance for Human Resource Professionals as an example of useful guidance.
One point of disagreement among the panelists was whether the Antitrust Division should require the implementation of compliance programs as a condition of its leniency policy. The Division’s current policy does not require leniency applicants to enact a compliance program: some panelists suggested that this could be an effective way to ensure that leniency applicants do not engage in repeat offenses. Other panelists disagreed, arguing that such a requirement could deter self-reporting through the leniency program. They also pointed to the significant costs of self-reporting, including extensive cooperation obligations and increased civil damages exposure, as sufficient to deter organizations from violating criminal antitrust law. Moreover, companies that receive leniency for one antitrust violation and fail to uncover and report additional antitrust violations face potential sentencing enhancements for the unreported violation under the Antitrust Division’s “Penalty Plus” program.
Regulators from the United Kingdom Competition and Markets Authority (UKCMA), Canadian Competition Bureau (CCB), and Hong Kong Competition Commission (HKCC) contributed to the discussion by comparing approaches to compliance. The UKCMA enforces a civil antitrust regime that offers reduced penalties to offenders in exchange for implementing forward-looking antitrust compliance programs. The CCB, on the other hand, offers a sentencing reduction for corporate compliance programs. The CCB explained that although it has offered such a reduction for nearly three years no company has applied for the reduction. The Canadian regulator suggested that the program’s incentives may be too low and too vague, and indicated that the CCB might make the program more attractive by supplying concrete reductions in exchange for effective compliance. Hong Kong is in the process of implementing an antitrust regulatory scheme. Although the HKCC has not yet decided whether to offer reduced penalties in exchange for compliance programs, it noted that encouraging corporate compliance programs was essential in preventing cartel conduct.
The Antitrust Division has been heavily criticized for its treatment of compliance programs at sentencing. The Division has fallen behind other enforcement agencies, such as the CCB, in incentivizing compliance programs. The Antitrust Division’s willingness to host the roundtable may signal that the Division is open to reconsidering its position on corporate compliance programs and may be willing to join some of its sister agencies by effectively incentivizing meaningful corporate compliance programs and giving them proper credit.
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