Theodore L. Banks
Compliance & Competition Consultants, LLC
Scharf Banks Marmor LLC
Chicago, IL

1.Antitrust compliance in court in the United States

a.aInstructions to the jury in the Corrugated Container case: “. . . the mere existence of an antitrust compliance policy does not automatically mean that a corporation did not have the necessary intent. If, however, you find that a corporation acted diligently in the promulgation, dissemination, and enforcement of an antitrust compliance program in an active good faith effort to ensure that the employees would abide by the law, you may take this fact into account in determining whether or not the corporation had the required intent.” See ABA Sample Jury Instructions at 52 (1984)
b.The Department of Justice Reaction: “[T]he existence of a corporate compliance program is, as a matter of law, irrelevant. That was why we disagreed so strongly with the instruction given by Judge Singleton during the recently concluded trial of the Corrugated Container case in Houston. . . . We believe that this was an erroneous instruction and contrary to settled law…. Carrying the Corrugated instruction to its logical conclusion would make it virtually impossible to convict a corporation of criminal antitrust violation, a result that is self-evidently nonsensical. The effect of the instruction is to give the corporation an identity independent of the sum of its parts. Thus, regardless of the intent of its agents and employees, the corporation could absolve itself of all liability by virtue of the existence of a compliance program. This imbues thecorporation with anthropomorphic qualities that clearly are contrary to settled legal principles.”
c.United States v. Hilton Hotels Corp., 467 F.2d 1000 (9th Cir. 1972), cert. denied sub nom., Western Int’l Hotel Co. v. United States, 409 U.S. 1125 (1973): Purchasing agent threatens to boycott suppliers who did not contribute to a fund whose purpose was to bring conventions to Portland. Company president testifies that it would be contrary to Hilton’s policyfor the manager of one of its hotels to condition purchases upon the payment of contributions to a local association. Hotel manager testifies that it was the hotel’s policy to purchase supplies strictly on the basis of price, quality, and service, and that on two occasions he told the hotel’s purchasing agent not to participate in the boycott. The purchasing agent admitted that he had been so instructed, but violated those instructionsbecause of “anger and personal pique toward the individual representing the supplier.”

i.Trial court instructs the jury: “A corporation is responsiblefor acts and statements of its agents, done or made within the scope of their employment, even though their conduct may be contrary to their actual instructionsor contrary to the corporation’s stated policies.”
ii.The court also found that the Sherman Act focuses on commercial offenses that are often the result of pressures, either directly or in the form of a corporate culture, to maximize profits. In that regard, it found that generalized directions to obey the Sherman Act are the least likely to be taken seriously in the face of such corporate pressures. Consequently, the court concluded that general policystatementsof the hotel’s president not to violate the law, or even of the hotel’s manager not to participate in the boycott, were no defenseand the corporation would be liable for the acts of its agents even though contrary to the corporation’s instruction.

d.United States v. Koppers Co., Inc., Criminal No. 79-85 (D. Conn.,
New Haven Div.), Jury Instructions (June 12, 1980): “One of the factors, among others, that you may consider in determining the intent imputed to Koppers Company through its [managerial] agents or employees is whether or not that corporation had an antitrust compliancepolicy. In this regard, you are instructed that the mere existence of an antitrust compliance policy does not automatically mean that a corporation did not have the necessary imputed intent. If, however, you find that Koppers Company acted diligentlyin the promulgation, dissemination, and enforcement of an antitrust compliance program in an active good faith effort to ensure that the employees would abide by the law, you may take this fact into account in determining whether or not to impute an agent or employee’s intentto the Koppers Company.”
e.United States v. Basic Construction Co., 711 F.2d 570 (4th Cir.), cert. denied, 464 U.S. 956 (1983): Relatively low-level employees were involved in bid-rigging, without the knowledge of high-level corporate officers. The company had a long-standing, well-known, and strictly enforced policyagainst bid- rigging. Nevertheless: “A corporation may be responsiblefor the action of its agents done or made within the scope of their authority, even though the conduct of the agents may be contrary to the corporation’s actual instructions, or contrary to the corporation’s stated position. However, the existence of such instructions and policies, if any be shown, may be considered by you in determining whether the agents, in fact, were acting to benefit the corporation.”
f.U.S. Attorney’s Manual: It is entirely proper in many investigations for a prosecutor to consider the corporation’s pre-indictment conduct, e.g., voluntary disclosure, cooperation, remediation or restitution, in determining whether to seek an indictment. However, this would not necessarily be appropriate in an antitrust investigation, in which antitrust violations, by definition, go to the heart of the corporation’s business. With this in mind, the Antitrust Division has established a firm policy, understood in the business community, that credit should not be given at the charging stage for a compliance program, and that amnesty is available only to the first corporation to make full disclosure to the government.

2.Elsewhere in the World

a.EU: “[I]f we are discussing a fine, then you have been involved in a cartel; why should I reward a compliance programme that has failed? The benefit of a compliance programme is that your company reduces the risk that it is involved in a cartel in the first place. That is where you earn your reward.” Commissioner Joaquin Almunia, Businesseurope & US Chamber of Commerce Competition Conference, Brussels, Oct. 25, 2010.


i.Competition Authority released guidance on Feb. 10, 2012 on what an effective antitrust compliance program should include:

1.a clear, firm and public position adopted by the company’ management bodies and, more broadly, by all managers and corporate officers;
2.the designation of one or more persons empowered to develop or monitor all aspects of the program within the company;
3.the implementation of information and training measures;
4.the implementation of effective control, audit and whistle-blowing mechanisms;
5.the setting of an effective oversight system

ii.Not appropriate to consider compliance programs as aggravating or mitigating circumstance when determining a company’s fine, unless leniency not available (i.e., non-cartel case).
iii.To settle a case without litigation, the Authority can give up to a 25% fine reduction for a variety of reasons, including if the company agrees to adopt a compliance program. (For example: 20% reduction in Flour case (March 2012) for confession + compliance program)

c.UK: up to 10% reduction for a compliance program
d.Italy: On March 6, 2012, the members of the Italian Antitrust Association met with the new Chair of the Italian Competition Authority (ICA), Giovanni Pitruzella. During the meeting, Pitruzella stated that ad hoc qualitative compliance programs will continue to be considered as an effective mitigating factor. However, participation in general online compliance training sessions is unlikely to be considered as a mitigating factor because such sessions are not specifically tailored to a company’s needs. [M]ultinational groups with operations in Italy should consider
developing ad hoc antitrust compliance programs in their Italian subsidiaries.

e.US Federal Sentencing Guidelines, Chapter 8

i.Due diligence to prevent/detect
ii.Culture of compliance
iii.Standards and procedure
iv.Board knows the program
v.High level personnel responsible for compliance
vi.Adequate resources to get job done
vii.Training related to jobs
viii.Monitoring & auditing
ix.Periodic evaluation
x.Reporting system
xi.Incentives & punishments
xii.Response to violations
xiii.Risk assessment

f.But the Antitrust Division of the Department of Justice doesn’t care about the Sentencing Guidelines, and places its emphasis on the amnesty (leniency) program: first one in the door to confess gets a pass.

3.Implementing an Effective Antitrust Compliance Program

a.Do it since it is the right thing to do

i.Obey the law
ii.Improve corporate performance
iii.It doesn’t matter if the government doesn’t give credit, you still need to obey the law

b.Tone at the top: management must make it clear that they are strong believers in competition.

c.Focus on employees


d.On size does not fit all: recognize the diversity of employees

i.Know the demographic
ii.Know the business
iii.Assign (“Align”)antitrust risks to specific jobs

1.Sales – collusion
2.Strategy – acquisitions
3.Marketing – discrimination, etc.

iv.Use the right communications method.

1.How do employees communicate?
2.Where do they work?
3.Make information flow painless

v.Illustrate with examples from each business unit