Just in case you needed more evidence that demonstrating an effective compliance program is beneficial, recently the Department of Justice introduced changes in the Antitrust Division’s Corporate Leniency Program that factors in a company’s investment in and effectiveness of their corporate compliance program.
Why is This a Big Deal?
This is the first time that the DOJ is willing to credit a robust compliance program at the charging stage of a criminal antitrust investigation. Bottom line, even if the organization failed to detect the misconduct, they could still get credit by demonstrating they had an effective compliance program.
This new guidance is a complementary document that follows a familiar philosophy and methodology as the DOJ’s recent revision of the “Evaluation of Corporate Compliance Programs,” with a focus on evaluating compliance programs in the context of criminal violations of the Sherman Act such as bid rigging, market allocation and price fixing. It focuses on determining if the compliance program is well designed, applied earnestly and in good faith, and whether it actually works.
The Nuts and Bolts
The guidance is broken into two parts: evaluation of an antitrust compliance program at the charging stage and sentencing considerations.
When deciding whether, and to what extent, to bring criminal charges against an organization, Antitrust Division prosecutors consider several factors and they start with three fundamental questions:
- Does the company’s compliance program address and prohibit criminal antitrust violations?
- Did the antitrust compliance program detect and facilitate prompt reporting of the violation?
- To what extent was a company’s senior management involved in the violation?
In other words, did you educate your employees to know their responsibilities, did you have the right methods in place to detect unlawful behavior, and what did you do about it? Let’s dig a little deeper on what this means.
When designing an antitrust compliance program, the DOJ is looking for an organization to employ effective tools so that it’s more than just a “paper program.” Consider tools such as:
- Create an experience. When establishing antitrust standards and procedures to prevent and detect criminal misconduct, consider reimagining your code of conduct as an interactive digital experience, rather than a static PDF, to keep policies and education top of mind and at an employee’s fingertips with practical examples to make it relevant and meaningful.
- Be proactive. Ensure policies and procedures are integrated into business practices across the organization through targeted campaign messages. Are you doing anything to nudge the right behavior before it happens?
- Measure change. Use reporting metrics to measure changes in behavior, track attestation of antitrust policies and procedures, and effectiveness of antitrust training. Are you delivering just-in-time training and awareness to your employees before they interact with competitors?
- Rethink your toolbox. Utilize a disclosure tool to track, monitor and approve employee contacts with competitors or attendance at trade association meetings, trade shows or other meetings attended by competitors.
- Empower your employees. Maximize speak up tools like a helpline and anonymous SMS to flag potential antitrust violations.
- Gain new insight on risks.
- Set the right tone. Design a robust awareness and training program that includes senior leadership involvement in conveying the importance of compliance.
- Get focus. Dedicate resources to have day-to-day responsibility for the compliance program.
- Assess, test and repeat. Periodically assessing risk, and continuing to monitor, test and evolve the program based on lessons learned.
- Reward the right behavior. Building incentives into the compensation and performance structure to reward lawful behavior, and creating disciplinary actions (such as clawbacks and bonus reductions/eliminations) for consequences of not upholding the culture of compliance.
If an organization can prove the existence of an “effective” compliance program, they could be eligible for a 3-point reduction in their culpability score, a reduced fine, and can also be a determining factor as to whether the organization is sentenced to probation. If an organization swiftly identifies the potential antitrust violation, efficiently completes the investigation and notifies the government in a timely manner, it’s a much more positive possible outcome for the company. After identifying the issue, it’s up to the organization to make four significant changes:
- The organization’s top leadership make a dedicated effort to change the company culture by accepting accountability, demonstrating ethical leadership, and incentivizing the right behavior going forward.
- Dedicating resources to conduct a comprehensive review of the compliance program to identify improvements to prevent similar conduct in the future.
- Ensuring disciplinary procedures are in place for violations of the law or the compliance program.
- If no antitrust compliance program was in place at the time of the violation, the number one priority for the company is to create a robust program tailored to the company’s business and aimed at preventing antitrust violations.
Culture of Compliance
Building an effective antitrust compliance program is another building block of an overall robust ethics & compliance program. Ensuring tone at the top, creating a safe culture to speak up and providing the mechanisms to educate employees of their responsibilities, while enabling them to report confidential concerns without fear of retaliation, creates the foundation for a culture of compliance. While an organization can never truly eliminate the possibility of a violation, by instilling a culture of compliance into the DNA of the organization, you’re better equipped to navigate the challenge of a potential antitrust issue.