Antitrust and Unfair Competition Law
Antitrust Division Announces a New Policy to Incentivize Corporate Compliance
Law Office of Robert Connolly
On July 11, 2019, Makan Delrahim announced a major reversal in the Antitrust Division’s treatment of Corporate antitrust compliance programs. In a speech titled “Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs,” Delrahim stated: “effective immediately, the Antitrust Division will: (1) change its approach to crediting compliance at the charging stage; (2) clarify its approach to evaluating the effectiveness of compliance programs at the sentencing stage; and (3) for the first time, make public a guidance document for the evaluation of compliance programs in criminal antitrust investigations.”
The Antitrust Division has historically refused to decline to criminally charge a company based on its compliance program. This was essentially a per se rule: If a criminal antitrust violation occurred, your program was ineffective. No credit for you! The Antitrust Division justified this position on the basis that price fixing/bid rigging crimes are (almost always) committed by senior executives—at least senior enough to bind the corporation in pricing issues. After the revised Corporate Leniency Program was issued in August 1993, the Antitrust Division added that it did credit compliance programs in that if the compliance program detected the violation, the company could apply to the Antitrust Division for leniency. The old policy was: “[T]he Antitrust Division has established a firm policy, understood in the business community, that credit should not be given at the charging stage for a compliance program and that amnesty is available only to the first corporation to make full disclosure to the government.” This statement has been deleted from the Justice Manual § 9-28.400 cmt.
Under the new policy, a company may benefit in two ways from an antitrust compliance program even if the company did become involved in a criminal antitrust violation. Even if the one leniency per investigation has been claimed, a company may qualify for a Deferred Prosecution Agreement (DPA). Delrahim elaborated: “Going forward, when deciding how to resolve criminal charges against a corporation, Division prosecutors must consider the Division’s Corporate Leniency Policy, the Principles of Federal Prosecution and the Principles of Federal Prosecutions of Business Organizations, including the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of the charging decision.” Later in his speech, he added, “Precisely how much weight and credit to give a compliance program will depend on the facts of the case.”
The Principles of Federal Prosecution Business Organizations lays out “Factors to be Considered in Charging an Organization.” Delrahim in his speech noted four that relate to a good compliance program: (1) implement robust and effective compliance programs, and when wrongdoing occurs, they (2) promptly self-report, (3) cooperate in the Division’s investigation, and (4) take remedial action.
If a DPA is not secured, a corporation may still qualify for fine reduction at sentencing based its compliance program. There are three possible sentencing benefits: (1) earning a three-point reduction in a corporate defendant’s culpability score if the company has an “effective” compliance program, (2) a reduction in the corporate fine the Antitrust Division recommends, and (3) avoiding having the Division require/recommend probation as part of the corporation’s sentence. The Division may more aggressively seek probation under the Sentencing Guidelines if a corporation does not have an effective compliance program. What constitutes an effective compliance program is still at least partly a (Division) judgment call and, “[p]recisely how much weight and credit to give a compliance program will depend on the facts of the case,” Mr. Delrahim said.
As just noted, a robust compliance program does not guarantee either a DPA or credit at sentencing. It remains to be seen how the Antitrust Division will apply its new policy. But, the change in policy is a huge one, resulting from years of lobbying from the defense bar and compliance professionals who have argued that such a change was needed to incentivize corporations to spend the money to institute serious antitrust compliance programs.
For further information, these documents should be consulted:
Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (hereinafter, “2019 DOJ Guidance on Antitrust Compliance”), U.S. Dep’t Justice, Antitrust Div., July 2019, available at https://www.justice.gov/atr/page/file/1182001/download.
Deputy Assistant Attorney General Brent Snyder, U.S. Dep’t Justice, Antitrust Div., Compliance is a Culture, Not Just a Policy, Remarks as Prepared for the International Chamber of Commerce/United States Council of International Business Joint Antitrust Compliance Workshop, September 9, 2014, available at https://www.justice.gov/atr/file/517796/download.