Antitrust Compliance Lawyers
Civil and criminal investigations and severe penalties can result from federal antitrust violations. The Antitrust Division of The U.S. Department of Justice (DOJ) publicized a new policy in 2019 that includes incentives for companies that demonstrate proactive compliance efforts. It also provides targeted guidance on what companies can do to evade prosecution.
Maintaining compliance with federal antitrust laws is a critical aspect of initiating an effective corporate compliance program. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) enforce the Antitrust Compliance laws. Both of these agencies commit substantial resources to investigating, targeting, and prosecuting corporations who they suspected of a wide range of antitrust violations. With the potential for civil and criminal enforcement alike, corporations and their executive leaders could face monumental penalties for non-compliance.
Antitrust Compliance: Keeping Away From the Scrutiny of the DOJ’s Antitrust Division and the FTC
In 2019, a new policy designed to incentivize corporate compliance in the antitrust realm was announced by the Department of Justice’s Antitrust Division. This novel policy offers companies “credit” for “invest[ing] in and instill[ing] a culture of compliance.” Along with the announcement of the new policy, the DOJ’s Antitrust Division made an 18-page guidance document available. The document is entitled “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations”. It explains what the Antitrust Division looks for when determining whether (and to what extent) to bring charges and sentencing against a company in non-compliance cases.
Although the Antitrust Division’s guidance is aimed at assisting companies in evading criminal sanctions for antitrust violations, the fact that the guidance was published also says that businesses now have little excuse for not meeting the DOJ’s expectations. While companies that meet the guidance requirements get credit for their good conduct, those that fail to adhere may now deal with even greater admonition for not taking advantage of the resources that are publicly available.
Additionally, according to the FTC’s website, the commission’s antitrust enforcement efforts mostly target divergent issues from those monitored by the DOJ’s Antitrust Division: “In some respects [the FTC’s and Antitrust Division’s] authorities overlap, but in practice the two agencies complement each other.” While the Antitrust Division generally focuses its enforcement efforts on anti competitive practices and general corporate compliance with criminal implications, the FTC, “devotes most of its resources to certain segments of the economy, including those where consumer spending is high.” This encompasses the following:
- Energy and utilities
- Food and drugs
- High technology
- Professional services
The DOJ’s Antitrust Division also carries out its enforcement efforts in these and other industries; and, while investigations into such situations as large-scale mergers and intentional price-fixing schemes get press coverage, there are multiple aspects of companies’ day-to-day functions that can carry antitrust implications.
Antitrust Compliance Guidance from The Antitrust Division
Instead of explaining what companies need to include in their antitrust compliance programs, the DOJ’s Antitrust Division’s guidance details how companies should structure and implement their programs so as to effectively mitigate the risk of their staff engaging in anticompetitive conduct and pursuing relationships with competitors and other entities that trigger the Sherman Antitrust Act and other antitrust liability. Figuring out the substantive scope of a company’s necessary antitrust compliance efforts will require a critical look at the risks exposed by the company’s operations, and at Spodek Law Group we work in tandem with our clients to identify the particular issues that must be addressed.
As soon as we are aware of what issues we will have to cover, then we can help your company take the steps necessary to come in line with the Antitrust Division that it has undertaken and os sustaining good-faith efforts to comply with all related federal antitrust laws. In so doing, these are the nine specific factors we will focus on that are identified in the Antitrust Division’s guidance:
- The Program’s Design and Comprehensiveness – To properly assess the validity and value of an antitrust compliance program, the Antitrust Division will examine, “the design, form, and comprehensiveness,” of the program, with specific focus on the program’s ability to be initiated in a practical manner on a company-wide scale.
- The Company’s Internal Culture of Compliance – The Antitrust Division says that, “Support of the program from the company’s top management is critical to the success of an antitrust compliance program. . . . [E]mployees should be ‘convinced of the corporation’s commitment to [the compliance program].’” Companies must not simply establish a compliance program. They also ned to foster a culture of compliance in their workforce.
- Who is Responsible for Antitrust Compliance and what Resources Are Dedicated to It – Operational responsibility for a company’s antitrust compliance program must be assigned to appropriate senior personnel. Also, the program should definitely establish adequate measures to ensure their accountability. The program also must make certain that these senior personnel have access to “adequate resources” to fulfill their duties.
- Risk Assessment Techniques fo Antitrust Compliance – Although the unique aspects of a company’s business are an important consideration in all aspects of antitrust compliance, the Antitrust Division literature explicitly discusses appropriate tailoring of company’s compliance efforts with regard to risk assessment: “A well-designed corporate compliance program is ‘designed to detect the particular types of misconduct most likely to occur in a particular corporation’s line of business.’”
- Training and Communication to Employees About Compliance – As with other aspects of corporate compliance, staff training and consistent and clear communication are key aspects of demonstrating good-faith efforts to comply in the antitrust genre: “An effective antitrust compliance program will include adequate training and communication so that employees understand their antitrust compliance obligations.”
- Techniques for Monitoring and Auditing – A companies’ monitoring and auditing efforts must be designed to make certain that their compliance regiments, “continue to address the company’s antitrust risks . . . [and] ensure that employees follow the compliance program.” Companies are advised to conduct periodic audits and ad hoc assessments as needed, and they need to implement procedures for effectively monitoring compliance and determining when alternate, additional, or remedial measures might be required.
- Mechanisms for Reporting – Connected to nurturing a culture of compliance, companies need to implement and make known to the employees mechanisms for staff members to report potential or suspected federal antitrust violations. Workers should have the choice to report this information confidentially, and companies need to, “periodically analyze reports . . . for patterns or other red flags of a potential antitrust violation.”
- Incentives and Discipline Connected to Compliance – Advice from the Antitrust Division dictates that companies should adopt “systems of incentives and discipline” designed to promote compliance. It also advises that such systems should be “well-integrated” into companies’ operations and corporate culture.
- Remediation Methods – Last but not least, the Antitrust Division’s guidance says that companies must have appropriate mechanisms in place to resolve identified antitrust violations that may be discovered. In the course of an investigation, the Antitrust Division will take into account both (i) if the company’s remedial efforts are well timed and adequate, and (ii) if they indicate an inadequacy in the company’s overall antitrust compliance program that should be addressed.
How to Structure Transactions and Commercial Relationships to FTC Specifications
Within the industries listed above and others we didn’t list here, the FTC focuses its antitrust enforcement efforts principally in five specific areas. On top of developing an internal compliance program that is designed to bring and keep the company in line with the Antitrust Division’s requirements with regard to the company’s general operations, companies also need to proactively address possible antitrust implications of the specific types of transactions and commercial relationships that the FTC can question:
- Dealings with Competitors
Although there are numerous legitimate reasons why companies may opt to transact business agreements with a competitor, this act will almost invariably raise a red flag at the FTC. Since it may be impossible to avoid FTC scrutiny under such circumstances, particularly in scenarios where reporting is an obligation, companies have to structure their transactions with the goal of satisfying the FTC at its heart. Here are some of the types of agreements that may fit this category:
Market division and customer allocation
- Supply Chain Dealings
Manufacturer restrictions, vertical price fixing (or “resale contract maintenance”), refusals to deal, exclusive dealing clauses, and other terms of trade in the supply chain can raise antitrust implications as well. Supply chain dealings are frequently not as straightforward as issues involved in agreements between competitors. This can mean that companies often need to place particular emphasis on structuring relationships with specific federal antitrust law provisions in mind.
- Monopolization (Single Firm Conduct)
Companies that grow enough enough to dominate their markets may quickly find themselves facing challenges connected to monopolization. According to federal antitrust laws, if a company’s success relieves it from subjection to competitive pressures, then it is required to adopt affirmative measures designed to make certain (and to convince the FTC) that its pricing and purchase terms are reasonable and not targeted to suppressing competition.
- Discrimination in Pricing
As the FTC puts it, “Price discriminations are generally lawful, particularly if they reflect the different costs of dealing with different buyers or are the result of a seller’s attempts to meet a competitor’s offering.” Nonetheless, there remain various situations under which disparate price offerings can carry antitrust implications.
- Mergers and Acquisitions
Depending on the unique circumstances involved, some corporate mergers and acquisitions can come along with a host of antitrust compliance implications. When businesses are preparing to execute these kinds of transactions, they must affirmatively address these implications, potentially operating in conjunction with the FTC.
Our attorneys have a great deal of experience in all aspects of transactional antitrust compliance. We are well equipped to assist your company in working independently or with the FTC to meet the requirements of the Sherman Act and other applicable laws.