Unlike anti-corruption compliance, companies have long had antitrust compliance programs. It has long been recognized that collusion between and among companies on prices, territories, and other market factors has a negative impact on consumers. A price-fixing conspiracy which results in a modest price increase in popular products can quickly add up to billions of dollars in damages, far outpacing some of the largest fraud schemes in US history. Criminal cases against companies and officers are a real risk, along with substantial civil damage follow-on class actions.
Given the increased focus on compliance, companies need to take a fresh look at their antitrust compliance programs. It is surprising how many improvements to existing compliance programs can be made to add an extra measure of protection.
Antitrust compliance depends on communications and education, along with close monitoring and supervision by legal and compliance staff. Many employees do not understand the antitrust laws and have only a vague familiarity with what is permitted and what is prohibited. Training and communication of basic rules is important.
Employees need to have easy access to compliance and legal staff to resolve questions and highlight potential risks. An easy rule of thumb needs to be created – if a situation arises with potential joint activity with competitors, legal and compliance staff have to be consulted to review the matter.
Antitrust concerns may involve several aspects of a company’s operations, including mergers and joint ventures; distribution policies; pricing policies and interactions with customers and suppliers. Criminal antitrust compliance focuses on joint activity – meaning joint conduct with competitor or potential competitors. The focus of a criminal antitrust compliance program is on risks related to potential joint conduct, or the appearance of joint conduct.
Prohibited joint agreements among competitors can involve pricing, bid-rigging, non-competition, market or customer allocations, and agreements not to enter a market with a potential competitor. The risks for illegal agreements are greater when products are more homogenous, the market is highly concentrated, and there are opportunities for competitors to meet and/or communicate through joint ventures, trade associations or other organizations. Prohibited agreements do not have to be successful, for any period of time,nor do they have to be reduced to writing.
But not all joint conduct or company-to-company communications are illegal – joint conduct among market competitors regularly occurs at trade associations. Drawing lines between permitted and prohibited conduct can be difficult. As a result, antitrust compliance requires significant involvement of legal and compliance staff.
Any joint meetings to discuss business arrangements such as merger or joint venture have to be supervised by legal staff. Trade association meetings are a high risk for unlawful agreements. Legal approval should be obtained for high-risk meetings, and should include only those officials needed to conduct business. Discussions should stick to non-competitive sensitive information and no statements should be made of future actions on price, products and competitive factors. It is important to emphasize that trade association attendees should assume the government and competitors are watching every action.
Company officers have to commit that, if no legal counsel present and a competitively sensitive topic is raised, they should object and leave the meeting if the discussion does not stop. Sitting in silence while others discuss competitively-sensitive topics may implicate the company in illegal conduct.
Also, antitrust cases have been brought based on “competitive signaling,” meaning that companies try and reach agreements through public statements about competitive plans – e.g. “Company X supports industry efforts to reduce supply of product Y.”
Every antitrust compliance program has to underscore one important point – communications with competitors carry significant risks. In the event that such communications are going to occur, compliance and legal staff have to be involved. If such communications already have occurred, it is even more imperative that compliance and legal staff be consulted.