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Updating Your Antitrust Compliance Policy – A "Must Do" New Year’s Resolution for In-House Counsel

January 04, 2015


It’s that time of year again—New Year’s resolutions. While the new year provides a time to start anew or a second chance to revisit goals set aside, it also is an opportunity for reflection and planning. For in-house counsel, one resolution to add to your list is reviewing and updating your company’s antitrust compliance policy.

I know what you’re thinking—your company hasn’t had antitrust problems, so your compliance policy works just fine, right? Maybe, but maybe not .... Unfortunately, many companies, even those with antitrust compliance policies, often come to the realization only too late that their compliance policies could have been more robust. And, as times have changed, your company’s risk profile likely has as well. Assessing risk and having a coherent ongoing strategy to manage it is prudent planning for all organizations.

Antitrust law governs the rules of competition, so it is an area of law that companies face on a daily basis. Moreover, the consequences of violating antitrust laws can be devastating, and the risks of detecting an antitrust violation and punishment have never been higher. Criminal sanctions and fines by U.S. and foreign antitrust authorities, as well as potential jail time for individuals, can severely damage and even ruin a company’s reputation. There are also the looming risks of costly class action lawsuits, which bring potential exposure to treble damages or costly settlements. And even if your company ultimately is not charged or found liable, investigations and litigation can still cost the company millions of dollars in attorneys’ fees and years of disruption to the organization.

An effective compliance policy is critical to help companies avoid antitrust violations in the first place or to detect and swiftly address any violation, reducing potential company exposure. The new year provides the perfect time to review and update your company’s antitrust compliance policy.

The New Environment

Antitrust enforcement, both domestically and internationally, is at an all-time high, and coordination and information sharing between international enforcement agencies is now routine. With more and more antitrust investigations arising out of investigations involving suspected violations of other laws (e.g., anti-bribery, including FCPA), the risk to multinational companies that an enforcement agency will uncover an antitrust violation has increased.

Your business and the competitive environment your company operates in may have changed, raising the antitrust risk profile of your business. For example:

  • Has your company’s market share increased over the years, either through acquisitions or otherwise?

  • Has your company changed the way it distributes its products?

  • Has the industry you compete in experienced consolidation?

  • Is your company involved in new joint ventures or increasing participation in trade associations?

Your company’s risk profile may also have changed based on developments in antitrust law. Activities that may previously have raised only minor antitrust risk to companies might now present significant antitrust risks and exposure to the company and individuals. In the employment context, for example, the past 18 months have seen the successful certification of classes of employees alleging anticompetitive wage suppression,

demonstrating the heightened risk to companies engaging in (even) informal exchanges of employee wage information or participating in compensation benchmarking—activities that, historically, raised less antitrust risk. Because of this, executives and HR managers may be less sensitive to the antitrust issues posed by such conduct.

The foregoing examples are just some of the ways in which your company’s antitrust risk profile may have changed since the antitrust compliance program was last updated and demonstrate why the new year is an opportune time to review and update the policy to reflect current risks.

Resolution Step 1: Identify and Assess Your Risks as a Company

Companies should first identify and evaluate company activities that carry particular antitrust risk. In doing so, you should consider both external and internal factors. External factors are those aspects of the market that make the environment more or less susceptible to illegal conduct. These include, for example, the supply and demand economics of your industry, geopolitical as well as technological developments in the market, and whether authorities have opened antitrust investigations in your company’s market or an adjacent one. Internal factors also shape your risk profile. Such factors can include the nature and effectiveness of the compliance mechanisms that the company has in place, as well as the company’s culture of compliance.

Resolution Step 2: Developing or Updating a Policy

The next step is to develop or update a policy that fits with the company’s global compliance policy. An effective antitrust policy should not only manage antitrust risk—preventing hardcore criminal offenses from being committed—but should also mitigate risk by providing practical guidance to employees in dealing with so-called “gray” areas of antitrust law. In structuring your company’s policy, it’s important to understand that there is no “one size fits all” policy. Your company’s antitrust compliance policy should be structured to fit your company’s overall compliance culture and business model, and tailored to your company’s risk profile based on the industry and regions in which you compete.

An effective antitrust compliance program should have, at a minimum, the following four goals embedded in the policy:

  1. Prevention. A written policy should clearly establish the standards for behavior in the company that form the company’s culture of compliance. Employee guidelines should be included that offer practical advice, simple “Do’s and Don’ts” when dealing with competitors, and concrete examples to employees as to what they can and cannot do based on everyday situations that they are likely to encounter. The policy should also provide a structure and clear requirements for seeking legal counsel’s advice prior to engaging in certain activities, such as information exchanges with competitors through trade associations, for example.

  2. Detection. The policy should include a mechanism for detecting violations. This requires internal monitoring and enforcement systems to detect and identify potential misconduct. Such systems can include anonymous company hotlines for employees to report anticompetitive behavior, online surveys requiring employees to certify adherence with the compliance program and, depending on your company’s risk profile, periodic antitrust audits to assess compliance and identify risks.

  3. Reaction. The policy should include a plan for responding if an antitrust violation is detected. This can include a mechanism for a prompt and thorough internal investigation, the immediate cessation of any illegal activity and effective disciplinary action against individuals responsible for the violations.

  4. Commitment from the Top. Most importantly, an effective compliance program requires commitment from the entire organization, supported by top management, which fosters a continuous effort and culture of compliance. This requires not only ensuring that employees understand the rules through education and training, but also the message from management that violations will not be tolerated by anyone.

Resolution Step 3: Stick to It – Monitoring Compliance and Adjustments

Your company should monitor the effectiveness of its antitrust compliance policy and make adjustments when necessary. Such assessments may involve educating employees, through antitrust training, or assessing the effectiveness of structural elements of the policy, such as data from a hotline or other reporting mechanism. From this, you may gain information as to whether the system in place is working as it should, or whether adjustments are necessary. Finally, periodic antitrust audits can also be effective tests, particularly for companies with an increased risk profile.

Developing an antitrust compliance program tailored to your company’s specific structure and risk profile will provide your company with increased flexibility in doing business and pursuing opportunities while reducing risk of antitrust liability. Experienced antitrust counsel can assist with assessing your company’s risk and preparing a sound and cost-effective program to strategically manage this risk. The new year provides no better time to start.


[1] See, e.g., In re High-Tech Employee Antitrust Litig., No. 11-cv-02509, 2013 U.S. Dist. LEXIS 153752 (N.D. Cal. Oct. 24, 2013); Cason-Merenda v. VHS of Michigan, No. 06-15601, 2014 U.S. Dist. LEXIS 29447 (E.D. Mich. Mar. 7, 2014).

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