Crediting Compliance: U.S. DOJ Antitrust Division Reverses Long-Standing Policies and Issues Detailed Guidance on Corporate Antitrust Compliance Programs
In a major policy shift applauded by companies and compliance professionals, on July 11 the Antitrust Division (the “Division”) of the U.S. Department of Justice (the “DOJ”) announced that it will now give consideration in criminal charging decisions and penalty recommendations to whether a company has an effective corporate antitrust compliance program, and that it will enter into Deferred Prosecution Agreements (“DPAs”) in appropriate circumstances.
The Division also issued detailed guidance on precisely what it will look for when evaluating corporate compliance programs.
Corporate compliance officials have for decades complained that the Division was out of step with the rest of the DOJ in crediting good-faith compliance efforts and in providing some opportunity for resolution of a criminal investigation short of a felony conviction, which can lead to debarment and other significant collateral consequences. Companies will now be eligible for a DPA if they implement robust compliance programs, self-report wrongdoing, cooperate in Division investigations, and take remedial action.
These policy changes are relevant for any company that does business in the U.S., regardless of its physical location, as U.S. antitrust laws have extraterritorial effect and apply to all U.S. trade and commerce.
The new policies are intended to incentivize investment in antitrust compliance programs and self-reporting of violations by crediting “robust” compliance programs at the charging and sentencing stages, and will work in tandem with the Division’s Corporate Leniency Policy in which the first company to self-report a criminal antitrust violation receives immunity from criminal prosecution for it and its current employees, as well as lessened civil exposure.
The Division’s guidance follows recent DOJ Criminal Division guidelines addressing how prosecutors should evaluate a company’s compliance program in the context of a criminal investigation, as well as specific compliance guidance issued earlier this year addressing:
Recognizing that a company’s size affects the resources allocated to antitrust compliance and the breadth of the company’s compliance program, the DOJ’s Justice Manual instructs all federal prosecutors to consider three overarching questions when evaluating corporate compliance programs:
- “Is the corporation’s compliance program well-designed?”;
- “Is the program being applied earnestly and in good faith?”; and
- “Does the corporation's compliance program work?”
The Division’s new Guidelines provide substance to that evaluation by enumerating nine factors for antitrust prosecutors to consider when determining if a company’s antitrust compliance program is robust or merely a “paper program.” The factors are:
1. Design and comprehensiveness
- This element covers a program’s design, format and comprehensiveness, as well as how the program is integrated in the company’s business (i.e., do employees have access to antitrust compliance resources?).
2. Culture of compliance
- Recognizing how critical senior management support is for reinforcement of compliance values, this factor assesses the extent to which corporate management has articulated the company’s commitment to good corporate citizenship.
3. Responsibility for the compliance program
- Is operational responsibility for the program undertaken by those in the company with sufficient means, authority, and autonomy?
4. Risk assessment
- Effective compliance programs should be tailored to a company’s business and provide opportunities to detect violations through periodic review and the collection of metrics and information.
5. Training and communication
- Do employees receive adequate training and communications regarding their antitrust compliance obligations?
6. Periodic review, monitoring and auditing
- An effective compliance program should feature review procedures and should include proactive auditing specifically aimed at uncovering antitrust violations.
- Compliance programs should include mechanisms that allow employees to anonymously and confidentially report antitrust violations.
8. Incentives and discipline
- Does the company have proper incentives and discipline that ensure the compliance program is integrated and enforced?
9. Remediation and the role of the compliance program in discovery of the violation
- In recognition that antitrust violations can still occur even with compliance programs in place, this factor credits remedial actions taken by companies to prevent recurring violations.
At the sentencing stage, the Division noted that compliance programs could be relevant to a corporation’s sentencing in three ways: (i) effective programs could result in a three-point reduction in a defendant’s U.S. Sentencing Guidelines score; (ii) both the existence and effectiveness of a compliance program could be relevant to the Division’s probation recommendation; and (iii) compliance programs could be relevant in determining fine recommendations within the Sentencing Guidelines range, and even below the Sentencing Guidelines range for exceptional cases.
Crediting compliance programs in charging and sentencing decisions and offering the possibility of resolving cases with a DPA are welcome policy changes, and the Division has provided a great deal of specific guidance that should be helpful for companies in structuring and implementing their antitrust compliance programs. Companies should take this opportunity to re-examine their existing compliance programs to ensure that they meet or exceed the DOJ’s expectations.
Please contact anyone listed on the right or your usual Linklaters contact(s) to discuss how best to maximize the impact of the Division’s new policy.