DOJ Antitrust Division Announces Policy Changes Incentivizing Corporate Compliance Programs
On July 11, 2019, Assistant Attorney General Makan Delrahim announced changes to the Justice Manual designed to incentivize the implementation and use of antitrust compliance programs.1 Chief among these changes is a reversal of the Antitrust Division’s longstanding policy of refusing to consider compliance programs in charging decisions. At the same time, the DOJ published new guidance on the “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations” (the “Criminal Division Compliance Guidance” to assist Division prosecutors in evaluating compliance programs at the charging and sentencing stage of investigations.)
Historically, the Antitrust Division’s Corporate Leniency Policy has granted amnesty to the first – and only the first – corporation to self-report an antitrust violation. Any other early self-reporters were generally left to plead guilty, with no credit given for compliance programs. Instead, the DOJ tried to induce plea agreements by crediting a party’s cooperation.
The new changes announced this month open up a potential middle ground for early reporters, allowing prosecutors to proceed by way of a deferred prosecution agreement (DPA) when the relevant factors weigh in favor of doing so. 2 One such deferred prosecution agreement was reached last month.
In remarks delivered at the New York University of School of Law Program on Corporate Compliance and Enforcement, AAG Delrahim cited former Deputy Attorney General Rod Rosenstein’s view that “’strong corporate compliance programs are the first line of defense’ to white-collar crime, including antitrust crimes and cartel ‘fires.’" 3 Acknowledging that recognition of “efforts to institute, strengthen, and improve compliance programs” yields stronger incentives to invest in compliance, AAG Delrahim announced that the Justice Manual has been updated to remove language stating “that credit should not be given at the charging stage for a compliance program." 4 Instead, when deciding how to resolve criminal charges against a corporation, Division prosecutors must now 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." 5
Under the new Criminal Division Compliance Guidance, there is no formal checklist or set of requirements for compliance programs. Instead, the DOJ will consider three “fundamental” questions:
- Is the corporation’s compliance program well designed?
- Is the program being applied earnestly and in good faith?
- Does the corporation’s compliance program work? 6
In order to answer these questions, prosecutors will examine whether the compliance program specifically addresses (and bars) criminal antitrust violations, whether it led to the detection and prompt reporting of the violation they are assessing, and whether the company’s senior management was involved in the violation. To this end, the Criminal Division Compliance Guidance sets out nine factors for consideration. Each factor is accompanied by detailed questions that prosecutors – and counsel seeking to design effective compliance programs – should consider: 7
- Design and Comprehensiveness: “Key considerations” for this factor are “the adequacy of the programs’ integration into the company’s business and the accessibility of antitrust compliance resources to employees and agents.”
- Culture of Compliance: This factor examines “the extent to which corporate management has clearly articulated” the company’s commitment to good corporate citizenship and a culture “that encourages ethical conduct and a commitment to compliance with the law.”
- Responsibility for the Compliance Program: An effective compliance program must be operated by employees with “sufficient autonomy, authority, and seniority within the company’s governance structure,” as well as adequate resources to operate the program.
- Risk Assessment: The program should be “appropriately tailored to account for antitrust risk,” considering the company’s industry and business lines.
- Training and Communication: Employees should understand their antitrust compliance obligations, with training that “empowers employees to do business confidently” and also addresses what an employee should do when they think activity is potentially unlawful.
- Periodic Review, Monitoring, and Auditing: Periodic assessment of compliance with antitrust laws can help gauge progress towards compliance objectives while ensuring a “continued, clear, and unambiguous commitment to antitrust compliance from the top down.”
- Reporting: Confidential or anonymous reporting mechanisms “are an integral element of an effective compliance program.”
- Incentives and Discipline: These can ensure that a compliance program is “well-integrated into the company’s operations and workforce.”
- Remediation and Role of the Compliance Program in the Discovery of the Violation: The Criminal Division Compliance Guidance recognizes that a compliance program “may not detect every antitrust violation in the first instance,” but that “remedial efforts and improvements to the company’s compliance program may prevent recurrence of an antitrust violation.” Remedial efforts can be relevant to whether a compliance program was effective at the time of the antitrust violation, charging decision, or sentencing recommendation.
The Guidance also sets out three ways that a corporation may receive credit for its compliance program. 8 First, the U.S. Sentencing Guidelines provide for a three-point reduction in a corporate defendant’s culpability score if the company has an “effective” compliance program. Second, a compliance program may be relevant to determining the appropriate corporate fine to recommend within the range of the Sentencing Guidelines (or in extraordinary circumstances, a fine below the range). Finally, the existence and effectiveness of a compliance program may be relevant to whether the company should be sentenced to probation. AAG Delrahim’s remarks previewed that the Antitrust Division Manual will provide “additional clarity” on how compliance programs are considered at sentencing.
With this announcement and the accompanying publication, the Division has clearly signaled that corporate compliance programs should be taken seriously and designed carefully. Although AAG Delrahim clarified that the Division’s new approach should not be misconstrued as granting “an automatic pass for corporate misconduct," 9 corporations with robust and effective compliance programs could see significant potential gains in future DOJ investigations.
While the specific benefits of an “effective” compliance program have yet to be defined, the current DOJ administration is likely to look for a “poster child” to reinforce its commitment to the new policy. How the policy will be treated by future administrations is less certain.
1 Makan Delrahim, Assistant Attorney General, U.S. Dep’t Justice, “Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs,” Remarks at the New York University School of Law Program on Corporate Compliance and Enforcement (July 11, 2019), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-new-york-university-school-l-0 (hereinafter “Delrahim Speech”).
2 AAG Delrahim also noted that the Division will continue to disfavor non-prosecution agreements with companies that do not receive leniency, maintaining complete protection only to the first company to report. Later in his remarks, he stated, “Nothing about today’s compliance announcement changes the Antitrust Division’s commitment to leniency.” Id.
3 Delrahim Speech.
5 U.S. Dep’t of Justice, Justice Manual §9-28.300.
6 U.S. Dep’t of Justice, Criminal Division, Evaluation of Corporate Compliance Programs Guidance Document (July 2019) at 2, https://www.justice.gov/atr/page/file/1182001/download (hereinafter “Criminal Division Compliance Guidance”).
7 Criminal Division Compliance Guidance at 4 – 13.
8 Id. at 14.
9 Delrahim Speech.
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