Antitrust compliance & enforcement: Prevention as the goal

1. Antitrust compliance & enforcement: Prevention as the goal Antitrust & Competition Law Compliance Network http://www.compliance-network.com

2. Compliance & Ethics Programs • Compliance and ethics programs have been recognized as a key tool in preventing corporate crime & misconduct • C&E programs consist of • management commitment to do the right thing, and • effective management steps to make that happen • USSGs – spell out 7 steps • US Attorneys Manual • OECD Good Practice Guidance and Recommendations • 12 steps for anti-corruption programs • Endorsed by 38 nations • Very similar steps would work to fight cartels

3. Government Has Been the Driver Of course, it has to start with real enforcement action, but that is not enough • USSGs – carrot & stick • US Attorneys Manual – programs matter when deciding how to proceed • Setting a practical standard • Making it count – recognition, not just words • The Morgan Stanley case example

4. USSG’s Policy • In US, USSGs state clear policy • Diligent programs count • Even diligent programs can have violations • But, one glaring exception in the USSGs: • Carve-outs in USSGs for antitrust

5. DojPolicy • In US, DOJ states clear policy recognizing diligent programs • But one exception • Carve-out in US Attorneys Manual only for antitrust • Odd assertion: only antitrust goes to the heart of the business • Is absolute exception, not consider anything about program’s diligence or other circumstances

6. TheAntitrust Division • USSGs – limited so no one can get a break • Not consider in deciding how to proceed • Not require in Leniency program • Oppose consideration in defense in cases • The Bridgestone case – FCPA program required, nothing re antitrust

7. Does Leniency Make the Difference? • DOJ’s view – leniency is enough • Rewarding those who don’t try, punishing those who do • Is it being gamed? see Sokolarticle* • Exceptions can make it impossible for those with diligent programs to qualify • Leniency is not an end in itself, just a tool • The Division’s goal should not be a full “pipeline” but to prevent crimes from happening *D. Daniel Sokol, Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement, 78 Antitrust Law Journal 201 (2012), http://www.americanbar.org/content/dam/aba/publishing/antitrust_law_journal/at_alj_ii_sokol.authcheckdam.pdf

8. Dg Comp • What could be even worse than the Antitrust Division? – DG Comp • First mistake: giving credit for mere promises • Then using programs against companies • Seeking out program evidence to use against companies • Undercutting in-house counsel, a prime tool in preventing and surfacing cartels • Following the US Antitrust Division: anything less than a perfect program is a “failed” program • Do not even require programs for leniency applicants

9. Undercutting Anti-cartel Programs • People wonder if the government is really serious about compliance programs • Why believe advice from agencies that have an official policy of ignoring programs? • Why make the effort when DG Comp will just use it against you? • Why bother, when all that matters is being first in the door • Antitrust compliance appears to have atrophied • See, e.g., SCCE survey, 64% of companies without effective antitrust auditing

10. Better Examples • UK OFT • France • Singapore • Canada • Chile

11. Uk oft • Studied C&E programs • Gives specific, informed guidance • Gives credit, but • Mistake in capping itself at 10%

12. France • Studied C&E programs • Gives specific, informed advice • Drew from OECD Good Practice Guidance • Even gives credit in non-cartel cases! • Mistake, in cartel cases, to only give credit for programs instituted after a company breaks the law • But if have existing program it can result in the same benefit • Mistake to limit credit to 10%

13. Singapore • Provides a practical definition • Lists 5 specific factors • Provides benefit in its official penalty policy

14. Canada • Studied C&E programs • Gives specific, informed advice • Urges programs for leniency applicants • Some benefit for programs, but unclear

15. Chile • Studied C&E programs • Floated draft for comment • Gives specific, informed advice, even including screening! • Gives credit for good programs in recommending penalties • Considers good programs in permitting negotiated settlements

16. Doing It Right • How the Antitrust Division, FTC & DG Comp could promote effective anti-cartel programs • Provide practical guidance, informed by public comment • Canadian & Chilean models compared to DG Comp • But government only has leverage to enhance programs IF it actually takes them into account • DG Comp/Antitrust Division forfeited all their leverage • Follow the approach in the US Attorney’s manual in investigations & deciding how to proceed when dealing with corporations

17. Doing It Right • Follow Singapore’s approach in penalties • Follow the World Bank’s approach in the leniency program – all those admitted must implement programs • Adopt an internal compliance program, just like the FBI did • Learn about programs

18. Doing It Right • Be very specific in assessing programs • Focus only on the real deal • Provide specifics, e.g., empowered & independent CECO, integration of C&E into incentives, real compliance audits, use of screening, etc. • This can drive anti-cartel programs to where they need to be.

19. Fighting Cartels • Cartels are a nasty business • The Antitrust Division should not be boasting about its “pipeline” being full • Governments should be working to prevent cartels, not harvesting them • The private sector is a key ally – we need businesses to join the fight • Government can drive this result by intelligent policy

20. What’s Next? • Contact: • Ted Banks, tbanks@scharfbanks.com • Joe Murphy, jemurphy@voicenet.com • Donna Boehme, dboehme@compliancestrategists.com • See our website at: • http://www.compliance-network.com