Six key attributes of an effective antitrust compliance program

Author: Aaron Gott

If you haven’t been told you need a strong antitrust compliance program, then you probably haven’t spent much time with an antitrust lawyer. But it’s true: a strong antitrust compliance program will benefit your company in myriad ways.

The U.S. Department of Justice Antitrust Division recently announced it will consider an effective antitrust compliance program as a factor in deciding whether to charge a company with a criminal antitrust violation. An antitrust compliance program can also help prevent your company from violating the antitrust laws in the first place and, hopefully, avoid an antitrust blizzard. But if it doesn’t, it can still give you a leg up in the race for leniency by ensuring prompt detection and internal reporting, earn the company points for sentencing reductions, and reduce the amount it pays in fines.

The key here, though, is that it must be an effective antitrust compliance program. Effective doesn’t mean perfect—after all, DOJ wouldn’t be making a charging decision if a perfect program were in place—but it does mean that it should be well-designed, applied in good faith, and it should actually work.

In practice, that means your antitrust compliance program should:

1. Identify, assess, and define the likely antitrust risks in the company’s line of business

The first step in any risk management process is, of course, to determine and assess those risks. Your antitrust lawyer should look closely at all aspects of your operations:

• The jurisdictions in which you operate
• Your industry sectors and the markets in which you compete
• Competition, concentration, and barriers to entry in those markets
• Your regulatory landscape
• Your existing and potential customers and business partners
• Your supply and distribution chains
• Your business transactions
• The extent to which you use third parties in your business
• Your involvement in trade associations and joint ventures
• Your culture and climate
• Your past antitrust issues

As part of this process, the company should identify leaders most knowledgeable about these various aspects of the business and have them take the time to thoroughly educate antitrust counsel.

2. Be designed to detect and manage those risks

It should go without saying that your compliance program won’t be effective unless it is tailored to manage the antitrust risks the company is most likely to face. There is no effective off-the-shelf antitrust compliance program.

Company leadership should be consulted and involved in the crafting of your antitrust compliance program. You should consider the company’s past successes and failures in other areas of compliance, reporting, and risk management, and work directly with your antitrust lawyer to implement processes and techniques that proved successful in other contexts.

3. Facilitate prompt reporting of violations

DOJ’s guidance takes into account whether the antitrust compliance program facilitates the prompt reporting of violations. But there is another reason why prompt reporting should be a company priority: when it comes to DOJ leniency, slow and steady does not win the race. In fact, if you discover a potential antitrust violation, you should run, not walk, to DOJ (if you want leniency). The company that “wins the race” for leniency receives the most benefit, which could include the avoidance of criminal penalties but also significantly reduced liability in the civil antitrust cases that follow in the antitrust blizzard.

Given these benefits, the company’s antitrust compliance program should be comprehensively designed to facilitate prompt reporting. It should include policies and procedures that create reporting mechanisms (such as anonymous or confidential reporting mechanisms), establish duties to report on the part of managers who become aware of potential antitrust violations.

But reporting mechanisms and duties alone will not accomplish this goal. The company should establish a culture of compliance, implement incentives and disciplinary procedures and, most importantly, make sure that every employee is aware of and understands when and what they must report.

4. Be effectively communicated and understood by all employees

Your antitrust compliance program will not be effective if your employees’ main exposure to it is buried somewhere in the middle of the employee handbook that they probably didn’t read.

The company should establish an active and systematic training program to ensure your employees understand your antitrust compliance program. Every employee should understand:

• What conduct is prohibited under the antitrust policy
• How to recognize a potential antitrust problem
• Tips to avoid potential antitrust issues
• Reporting duties and mechanisms
• Incentives and discipline for compliance/noncompliance

This training should be mandatory for new employees and periodically required for existing employees. And it is vitally important that it is both engaging and accessible: antitrust can be a complicated subject, so consider short sessions that incorporate visual aids, vignettes, and practical exercises.

Each employee should be required to sign an acknowledgement of the antitrust compliance policy, and the company should keep detailed and accurate records of employee training attendance.

In addition to basic mandatory training, personnel in sensitive positions (such sales, senior management, roles that are likely to involve meeting competitors, and positions with pricing or contracting authority) may benefit from additional periodic training and workshops on more advanced topics.

If your company is involved in any trade associations, standard-setting bodies, or joint ventures, personnel involved in those activities should be given additional, advanced training because the activities carry substantial antitrust risk and require special precautions.

5. Establish active monitoring and auditing programs

Even if you do everything discussed above with perfect execution, you will still have antitrust risk. A reporting mechanism will invariably fail or your people might not recognize an antitrust problem for what it is.

You should work closely with your antitrust counsel to actively monitor and audit your company’s activities to identify potential antitrust risks. The company likely has existing systems, processes, and resources that could facilitate monitoring and auditing, including those relating to your information technology systems. Use these systems proactively because they will be used against you in discovery in an antitrust investigation or litigation.

6. Be continually reviewed, evaluated, and revised

An antitrust compliance program isn’t a “set it and forget it” endeavor. Figuring out what works best for your company may require some trial and error. But even if it is effective today, the world—and your business—is in a constant state of change. What works this year might not work next year. And antitrust law changes, too.

Periodically review and evaluate your antitrust compliance policy and revise it as necessary. And make sure to document it. Not only will you assure its effectiveness, you’ll check another one of the boxes that DOJ factors into its evaluation of antitrust compliance programs.

 

If you don’t have an antitrust compliance program with all these characteristics, your antitrust risk is not effectively managed, and you should contact an antitrust attorney right away.

 

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