Many have criticized the U.S. Department of Justice Department Antitrust Division for its position on corporate compliance. The criticism is twofold: first, the division should provide general compliance guidance, and second, it should provide corporate defendants with compliance program credit under the U.S. Sentencing Guidelines.
Compliance guidance. Although the Antitrust Division has long espoused support for compliance programs, it has provided minimal guidance on the key elements of an effective compliance program. There are few speeches on the topic, and none after 2002. The few public statements addressing corporate compliance have been narrow in scope, only addressing the issue within the confines of the sentencing guidelines. In response to requests for guidance, the division has said that company counsel is in the best position and has the greatest expertise to identify compliance needs and implement an effective program. Additionally, the division has been concerned that any guidance on the issue might be perceived as providing a safe harbor, leading companies that break the law but argue for leniency when DOJ’s guidance has been heeded.
Although the division has abstained from providing compliance guidance, practitioners can nevertheless discern its thinking on the issue by looking to United States v. AU Optronics. In that case, the division provided guidance, in relation to the implementation of a corporate monitor, as to the minimum elements required for AUO’s corporate antitrust compliance program. Presumably, however, any company could use these basic elements as a road map for an effective antitrust compliance program. Further, the AUO compliance program provides DOJ guidance on the issue.
The division’s compliance recommendation in AUO was thoughtful and measured. Antitrust practitioners and their clients would benefit from a discussion of the considerations in AUO and also from the “required elements” that may apply generally. The division could use the AUO recommendations to open a dialogue with the defense bar about compliance and thereby foster effective compliance.
Compliance credit. Critics also argue that the division unfairly declines to provide credit for corporate compliance programs, arguing that DOJ should appropriately credit defendants for the quality of the compliance program.
The Antitrust Division has never publicly credited a corporate defendant for a compliance program. Critics argue that this policy creates a disincentive for companies to undertake the significant effort and expense of implementing or improving a compliance program. Further, critics maintain that, under the guidelines, credit should be given in at least some cases. The guidelines call for a reduction in the corporate fine for defendants with an effective compliance program. As applied by the Antitrust Division, however, this reduction is available only if no high-level personnel (defined broadly) were involved in the illegal activity, and no delay in reporting the activity occurred. The division has reasoned that cartel conduct necessarily involves high-level management. And, although under the guidelines there is a limited exception for high-level personnel involvement when specific criteria are met, the division takes the position that the exceptions would effectively qualify the defendant for amnesty. Consequently, the division has never reduced a defendant’s penalty for compliance efforts.
Similarly, other than in AU Optronics, the division has never imposed changes to a company’s compliance program. It has never publicly required a defendant to implement or improve a compliance program, employ a corporate monitor, or submit to a probationary period or corporate monitor as part of a negotiated plea resolution. On those occasions when district court judges have asked about a corporate defendant’s efforts to remediate past and avoid future cartel conduct, particularly in the context of probation, defense counsel has addressed the issue without comment from DOJ. Moreover, even in the most egregious cases, where the same company has been prosecuted multiple times for antitrust crimes, the division has not required changes in corporate compliance. Thus, when it comes to corporate compliance in the plea context, the division brandishes neither a carrot nor a stick; the issue instead goes unaddressed altogether.
If the division slightly modified its current position on compliance, by employing both a benefit and penalty in appropriate cases, it could significantly incentivize companies to improve their corporate compliance efforts. Although justifiably the division will not reduce fines under the guidelines, there are other forms of credit that could be given to companies that undertake the effort and expense to implement or strengthen their antitrust compliance programs. For example, the division could give an additional fine discount to cooperating companies that significantly bolster their existing compliance programs. Such a discount would motivate cooperating companies to make significant compliance program investments. Moreover, this approach would be consistent with policies being considered or employed by other global cartel enforcers. For instance, the Canadian Competition Bureau recently announced that it is considering a policy to promote compliance by treating companies with compliance programs more leniently. Increasing the incentive can only improve how corporate defendants approach compliance.
Moreover, if the division used penalties—corporate monitors, probation or specific compliance-program improvements—in the most egregious cases, companies might proactively undertake compliance changes to avoid such penalties. Companies would be inclined to quickly address compliance lapses and aggressively improve compliance programs early in an investigation. If the division seriously reviewed a cooperating company’s compliance program, the company would undoubtedly review its compliance program and aggressively tackle weaknesses in that program.
Conclusion. The division’s mission is to “promote economic competition through enforcing and providing guidance on antitrust laws and principles.” By encouraging and fostering effective corporate compliance, the division will be meeting this objective and ultimately protecting American consumers. Providing guidance on adequate compliance programs and addressing compliance as part of the negotiated plea resolution with cooperating defendants should lead to stronger compliance programs, and stronger compliance programs should lead to fewer breaches of the law.
Kathryn Hellings and Janet McDavid are partners at Hogan Lovells in Washington. Hellings is the former assistant chief of the Department of Justice Antitrust Division’s national criminal enforcement section.