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September 2021

Effective Antitrust Compliance Programs Protect Against Corporate Prosecutions in Criminal Antitrust Investigations

Recent events since the 2020 Presidential election appear to signal a renewed energy and focus on both civil and criminal antitrust enforcement.  Shortly after the Presidential inauguration, President Biden named new leadership for the Federal Trade Commission (“FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”), and he appointed an antitrust guru to provide the White House with personal antitrust coaching.  Further, in 2021, a bipartisan congressional coalition initiated multiple pieces of legislation to combat alleged monopolistic practices and consolidations by big-tech and similar firms. To further these initiatives, the Biden administration has proposed an 11% increase in funding for the two enforcement agencies.

Most recently, President Biden issued an Executive Order that purports to encourage increased competition and opportunity across a myriad of industries. In the Order, the President also encourages the antitrust agencies to focus enforcement efforts on problems in key markets, and coordinates the agencies’ ongoing response to corporate consolidation.  The Order calls on the DOJ and FTC to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past administrations did not previously challenge.  The President encouraged the DOJ and FTC to focus in particular on labor markets, agricultural markets, healthcare markets (prescription drugs, hospital consolidation, and health insurance), and the high-tech sector.  The Order also establishes a White House Competition Council, led by the Director of the National Economic Council, to monitor progress on finalizing the initiatives in the Order and to coordinate the federal government’s response to the rising power of large corporations in the economy. 

Aside from trendy populist concerns about civil mega-mergers and acquisitions under the Section 4 of the Clayton Act and Section 2 of the Sherman Act, the majority of American companies should feel the alarm of renewed focus under Section 1 of the Sherman Act on criminal investigations into price-fixing and other horizontal arrangements that stifle lawful competition.  These new initiatives, plus the Biden administration’s pledge of additional funding and resources, demand that American companies exercise renewed and increasing vigilance in the creation, implementation and maintenance of corporate antitrust compliance programs.  This alarm to action comes amid a 2020 backdrop wherein the DOJ reported $526 million in fines and an average of 18-month prison terms for individuals resulting from antitrust investigations and prosecutions.

The reality of today’s enforcement landscape is that American corporations may face criminal investigations and indictments, separate and apart from the woes of their wayward employees.  To avoid such harsh treatment by the enforcement agencies, corporations should heed the ample advice, guidance and warnings from Washington.  Traditional thinking was that the mere existence of a firm’s antitrust policy statement or a program of antitrust law compliance would shield a corporation from criminal liability and substantial fines in the event of a miscue by its employees.  However, the agencies have made it clear that they will no longer accept “form over substance,” but, rather, the agencies will focus on the “effectiveness of implementation” and maintenance of a company’s antitrust compliance program to justify avoidance of criminal indictment.

Fortunately, there is antitrust guidance through several pronouncements of the enforcement agencies.  On April 30, 2019, the Criminal Division of the DOJ released updated guidance to its attorneys on how to evaluate the design, implementation, and effective operation of corporate compliance programs in determining whether, and to what extent, the DOJ considers a corporation’s compliance program to have been effective at the time of the offense and to be effective at the time of a charging decision or resolution.

DOJ policy and the U.S. Sentencing Guidelines have for years directed federal prosecutors and sentencing judges to evaluate corporate compliance programs.  Most notably, DOJ prosecutors, in deciding whether to bring criminal charges against a corporation, are directed to consider the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision, and the corporation’s remedial efforts to implement an adequate and effective corporate compliance program or to improve an existing one.  In addition, criminal prosecutors, are directed to consider whether the corporation has made significant investments in, and improvements to, its corporate compliance program and internal control systems, and whether remedial improvements to the compliance program and internal controls have been tested to demonstrate that they would prevent or detect similar misconduct in the future.   Further, in determining potential criminal fines against corporations under the U.S. Sentencing Guidelines, prosecutors are directed to consider whether the corporation had an effective compliance program at the time of the misconduct as a mitigating factor in calculating a corporation’s culpability score.

In particular, prosecutors are directed to consider three fundamental questions in evaluating corporate antitrust compliance programs:

  1.  Is the corporation’s antitrust compliance program well designed?’
  2.  Is the program being applied earnestly and in good faith?
  3.  Does the corporation’s antitrust compliance program work in practice?

In summary, coupled with the Biden administration’s increasing the focus on competition issues, these factors reaffirm the DOJ and FTC’s increasingly focused interest in the design, implementation, and effective operation of corporate antitrust compliance programs.  Clearly, having merely a policy statement of corporate antitrust compliance in a company’s minutes or employee manual will not insure against corporate indictment in the event of antitrust violations.   Indeed, the DOJ will make it a priority to evaluate the design, implementation and effectiveness of a company’s antitrust compliance program as it determines the nature and form of any corporate criminal resolution and associated penalties.  Therefore, companies should carefully review their internal policies and procedures with renewed vigilance to guard against unwarranted distractions and costs associated with antitrust investigations and possible prosecutions. 


Robin Vinson

Commercial Litigation