Justice Department Issues New Guidance for Antitrust Compliance Programs in Criminal Antitrust Investigations

The U.S. Department of Justice Antitrust Division (Antitrust Division) recently issued a revised version of its “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations” (Guidance). Earlier this year, the Department of Justice also updated its “Evaluation of Corporate Compliance Programs” as well as the Justice Manual, which both cover criminal prosecutions.

Having an effective antitrust compliance program is important because it may impact the Antitrust Division’s decision on whether to charge a company criminally with violating the antitrust laws and when making criminal sentencing recommendations. A boilerplate antitrust presentation may not be sufficient to meet these updated requirements.

In evaluating the effectiveness of antitrust compliance programs, the Antitrust Division will examine a number of factors, including the design and comprehensiveness of the program; the company’s “culture of compliance;” responsibility for and resources dedicated to compliance; risk assessment techniques; training and communication of the program; monitoring and auditing techniques; reporting mechanisms; employee incentives/discipline; and remediation.

Here are some of the most important new takeaways from the Guidance.

• The Guidance applies to civil investigations, not just criminal prosecutions. Although this Guidance (like an earlier 2019 version) focuses on criminal risk, it explains that “a well-designed antitrust compliance program should also minimize the risk of civil antitrust violations.” Besides helping to reduce the risk of violations, an antitrust compliance program can also help resolve civil investigations more favorably. For instance, when considering whether a company should be subject to ongoing and potentially expensive monitoring or reporting requirements for a civil antitrust violation, the Antitrust Division’s civil team will evaluate the effectiveness of an antitrust compliance program as criminal prosecutors do.
• A comprehensive antitrust compliance program should address electronic communications, especially ephemeral and non-company messaging. An antitrust compliance program should be designed to operate in “an effective manner” and be more than a mere “paper program.” The effectiveness of an antitrust compliance program includes whether it has guidelines for the usage of and preservation of “ephemeral messaging communications,” including collaborative communication channels, such as Slack, Microsoft Teams, and Signal. Both the Antitrust Division and the Federal Trade Commission, noting that companies have increased their use of these programs, have expressed concerns that these programs may enable immediate or automatic deletion of messages. The Antitrust Division will also evaluate how companies treat and preserve any “non-company methods of communications” such as personal emails and texts. Because companies may be asked to produce these types of communications in a civil or criminal investigation, a comprehensive antitrust compliance program should ensure that there are appropriate guidelines and procedures related to these types of communications.
• Companies should effectively monitor and audit compliance programs. Antitrust compliance programs should, among other things, certify employee attendance at compliance training presentations and conformity with antitrust compliance, audit and monitor compliance (including using software and possibly AI to detect potential violations), and require reporting by compliance personnel on detection of potential violations and adjustments to the program if violations occur.
• A company’s risk assessment should account for Artificial Intelligence. Companies that use AI and algorithmic revenue management software to conduct company business should monitor those programs for antitrust risks. This includes deploying compliance personnel who understand and can evaluate antitrust risks posed by AI and algorithmic tools, as well as having the ability to detect and correct decisions (particularly pricing decisions) these tools make.
• Employees should be able to report potential antitrust violation issues without fear of retaliation. An effective antitrust compliance program must afford employees the opportunity to report potential violations “anonymously or confidentially and without fear of retaliation.” The Guidance identifies factors for evaluating effectiveness, such as whether employees, managers, and supervisors are trained regarding anti-retaliation policies and protections under the Criminal Antitrust Anti-Retaliation Act (CAARA), a law prohibiting employers from retaliating against certain individuals who report criminal antitrust violations. The Guidance also indicates that the Antitrust Division takes a dim view of companies using non-disclosure agreements or other restrictions in a manner that could deter current or former employees from reporting potential antitrust violations.
• Companies should promptly remediate violations. The Antitrust Division may look at the existing antitrust compliance program at the time of the offense and whether the company subsequently improved the program after the violation to prevent similar violations in the future.
• Antitrust compliance programs should be tailored to the specific risks faced by companies and instill a “culture of compliance.” An effective compliance program must have the support of the highest level of management, who are held accountable for compliance failures. The program should train all relevant personnel (including human resources, sales and other personnel who interact with competitors) on antitrust compliance procedures and policies that are specifically tailored to the industries in which the organization operates. Companies should account for any “emerging risks as the company’s business environment changes.” Part of the Antitrust Division’s evaluation of an antitrust compliance program will include whether a company has dedicated an “appropriate level of resources” to compliance, including deploying senior personnel with compliance experience and who have access to the board and its committees. Larger companies should consider having dedicated compliance personnel.

Having an effective antitrust compliance program is critical to prevent and mitigate the impact of antitrust violations, which could involve criminal penalties (including hefty corporate and individual fines and imprisonment of involved personnel) and civil antitrust exposure (including treble damages in private actions, injunctive relief, and civil penalties). Companies should review their existing antitrust compliance programs to determine whether they incorporate the Antitrust Division’s recent Guidance. If you do not have an effective antitrust compliance program that is tailored to the specific circumstances of your company and addresses the Antitrust Division’s Guidance, there is no time better than the present to implement one.

For more information about antitrust compliance programs, please contact Howard Iwrey, Mark Chutkow, Cody Rockey, Joe Duffy, or your Dykema relationship attorney.