For more than a quarter of a century the Antitrust Division of the US Justice Department (the “DOJ”) was an outlier among the components of the DOJ with respect to crediting compliance programs in enforcement matters. That changed on July 11 of this year when, as described in a DOJ press release: https://www.justice.gov/opa/pr/antitrust-division-announces-new-policy-incentivize-corporate-compliance “Assistant Attorney General Makan Delrahim announced the Antitrust Division’s new policy for incentivizing antitrust compliance. For the first time, the Division will consider compliance at the charging stage in criminal antitrust investigations, a change which is reflected in the Justice Manual. The Division also announced revisions to its Manual and published a document to guide prosecutors’ evaluation of corporate compliance programs at the charging and sentencing stage. ‘The Antitrust Division is committed to rewarding corporate efforts to invest in and instill a culture of compliance’ said Assistant Attorney General Delrahim. ‘The Division’s Leniency Policy has long provided the ultimate credit for effective antitrust compliance programs. Beyond leniency, recently we have credited prospective compliance efforts at sentencing. Crediting compliance at charging is the next step in our continued efforts to deter antitrust violations and reward good corporate citizenship. We also remain dedicated to predictability and transparency. As such, in concert with today’s policy changes, the Division issued a public guidance document that outlines what prosecutors look for when evaluating antitrust compliance programs.’ The Justice Manual previously explained the Antitrust Division’s policy that credit should not be given at the charging stage for a compliance program. That text has been deleted. The Division also updated its Manual. The revisions address evaluating compliance programs at the charging and sentencing stage, and Division processes for recommending indictments, plea agreements, and selecting monitors. For the first time, the Division also published a guidance document that focuses on evaluating compliance programs in the context of criminal violations of the Sherman Act. https://www.justice.gov/atr/page/file/1182001/download It is intended to assist Division prosecutors in their evaluation of compliance programs at both the charging and sentencing stage of investigations, and to provide compliance officers and the public greater transparency of the Division’s compliance analysis. To that end, it contains two sections: the first relates to evaluating antitrust compliance programs at the charging stage, and the second addresses compliance considerations at sentencing.”
The above-mentioned guidance document (“the Guidance”) is indeed of great importance to those working in the compliance and ethics field, as it discusses in some detail government expectations for designing, improving and assessing antitrust programs. As one would expect, it tracks the approach of the compliance guidance document published recently by the DOJ’s Criminal Division. https://www.justice.gov/criminal-fraud/page/file/937501/download Under the Guidance, the “fundamental” questions in this evaluation are whether the program “(1) is well designed, (2) is being applied earnestly and in good faith, and (3) works in practical application. To facilitate this assessment, the Guidance directs prosecutors to consider whether antitrust compliance programs “address and prohibit criminal antitrust violations” and “detect and facilitate prompt reporting of the violation” as well as “to what extent a company’s senior management [was] involved in the violation.”
The Guidance also provides a list of nine factors, and questions and considerations related to each, that prosecutors should consider when determining the effectiveness of an antitrust compliance program: (1) the design and comprehensiveness of the program; (2) the culture of compliance within the company; (3) responsibility for, and resources dedicated to, antitrust compliance; (4) antitrust risk assessment techniques; (5) compliance training and communication to employees; (6) monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program; (7) reporting mechanisms; (8) compliance incentives and discipline; and (9) remediation methods.
The Guidance recognizes that one size does not fit all for compliance programs – e.g., the size of a company and the corresponding effect on resources allocated to antitrust compliance are recognized as factors to be considered.
The questions and considerations underlying each of these factors are indeed numerous and – in our view – well thought out. Some examples include:
- Design and Comprehensiveness. When was the company’s antitrust compliance program first implemented? How often is it updated? Is it periodically reviewed and does it seek feedback from employees? Are compliance materials updated with recent developments and periodically refreshed so they do not become stale?
- Culture of Compliance. What is the company’s senior leadership doing to convey the importance of antitrust compliance to company employees? How have senior leaders, through their words and actions, encouraged (or discouraged) antitrust compliance? What concrete actions have they taken to demonstrate leadership in the company’s antitrust compliance or remediation efforts, if relevant?
- Responsibility for the Compliance Program. Who has overall responsibility for the antitrust compliance program? Is there a chief compliance officer or executive within the company responsible for antitrust compliance? If so, to whom does the individual report, e.g., the Board of Directors, audit committee, or other governing body? How often does the compliance officer or executive meet with the Board, audit committee, or other governing body? How does the company ensure the independence of its compliance personnel?
- Risk Assessment. Is the company’s antitrust compliance program tailored to the company’s various industries/business lines and consistent with industry best practice? Does the compliance program provide specialized antitrust compliance training for human resources personnel and executives responsible for overseeing recruitment and hiring? What efforts has the company made to implement antitrust-related policies and procedures that reflect and address the antitrust risks it faces, including legal and technical changes in the way the company conducts business? For example, as employees utilize new methods of electronic communication, what is the company doing to evaluate and manage the antitrust risk associated with these new forms of communication?
- Training and Communication. How has the company communicated its antitrust policies and procedures to all employees? Did the company introduce antitrust policies in a way that promotes and ensures employees’ understanding? In what specific ways are antitrust compliance policies and procedures reinforced through the company’s internal controls?
- Periodic Review, Monitoring and Auditing. What monitoring or auditing mechanisms does the company have in place to detect antitrust violations? For example, are there routine or unannounced audits (e.g., a periodic review of documents/communications from specific employees; performance evaluations and employee self-assessments for specific employees; interviews of specific employees)? Does the company use any type of screen, communications monitoring tool, or statistical testing designed to identify potential antitrust violations?
- Reporting. Do supervisors or employees who become aware of a potential antitrust violation have a duty to report it to those with responsibility for compliance? What disciplinary measures does the company have for those who fail to report such conduct?
- Incentives and Discipline. Has the company considered the implications on antitrust compliance of its incentives, compensation structure, and rewards? Does the company incentivize antitrust compliance? Have there been specific examples of actions taken (e.g., promotions or awards denied, or bonuses clawed back) because of compliance considerations? Who determines the compensation, including bonuses, as well as discipline and promotion of compliance personnel?
- Remediation and Role of the Compliance Program in the Discovery of the Violation. Has the company revised its antitrust compliance program as a result of the antitrust violation and lessons learned? How did the company address, and determine how to address, failures in the compliance program? Was outside counsel or an advisor involved?
We wish to emphasize that this is a sampling of the evaluation criteria – and there are many more questions and considerations in the document itself.
The publication of the Guidance represents an important development in the history of the compliance and ethics field. But whether it is a positive development for any given company will depend on how that company can respond to the thoughtful and demanding questions the document poses.