In an excellent piece in the June/July 2014 issue of Today's General Counsel, Jeffery Cross explains the rationale behind the Department of Justice's ("DOJ") current policy of refusing to consider the existence of a corporate compliance program when deciding whether to charge a business with an antitrust violation - and why this policy should be changed.
By way of background, the DOJ has established guidelines for determining when to charge a corporation with a crime. These guidelines provide that a mitigating factor the DOJ should consider is "the existence and adequacy of the corporation's pre-existing compliance program." However, this DOJ guideline contains a glaring exception: the DOJ will not consider a corporation's compliance program in making a decision to prosecute (or decline to prosecute) a corporation for antitrust violations. Cross says that several years ago he confronted Scott Hammond, then-Deputy Assistant Attorney General for Criminal Enforcement in the Antitrust Division of the Department of Justice, to press him about the DOJ's rationale for the antitrust exception. Hammond's response? He said that allowing antitrust prosecutors to consider the existence and effectiveness of a compliance program would weaken the Antitrust Division's leniency program. Under the leniency program, the first corporation to report the existence of illegal antitrust activity will, with some qualifications, receive immunity from prosecution for the corporation and its officers and executives. Additionally, the Antitrust Criminal Penalty Enhancement and Enforcement Act of 2004 provides that in a follow-on civil treble-damages action against a corporation that has received immunity, a plaintiff can receive only single damages from a corporation receiving government immunity - and in some cases a plaintiff would receive only the actual damages attributable by the corporation in the goods and services affected by the conspiracy. This essentially eliminates the joint and several liability to the company for the entire cartel's damages that would otherwise be the case.
Cross argues that Hammond's defense of the antitrust exception to the corporate charging guidelines is flawed because the most significant benefit of immunity to corporations in many cases is the single damages provision of the 2004 Act - not the freedom from criminal prosecution. And a company that uncovers an antitrust violation cannot be sure that prosecutors will find that the compliance program meets the criteria to avoid prosecution, while the first to report cartel activity is almost guaranteed the benefits of immunity. By reversing the antitrust exception, companies will be have an additional incentive to create robust antitrust compliance policies and programs.
In light of the record number of antitrust prosecutions in the past few years, it is surprising how many companies currently don't have such a program in place. While the existence of an antitrust policy will not save a corporation from prosecution, it may help a company qualify for sentence mitigation under the Sentencing Guidelines and avoid suspension and debarment from government contracts. If your company does not have an antitrust program and wants to know what the DOJ thinks it should contain, click here for a good overview.