Getting Control of a Situation Not in Your Control: Steps You Should Take in the Interim Period Before You Go to the Feds or the Feds Come to You With Evidence of Cartel Activity.


In a perfect world, you are sitting at your desk one day and a client’s in-house counsel calls and tells you that, as a result of the “vigorous and robust” compliance program you helped put in place a few years ago, the company has uncovered a scheme where employees are engaged in collusion with one or more competitors in the sale of the company’s products. Obviously, this would not be good news for the client. But, looking on the bright side, this sequence of events is proving to be good news for you because you can now control the timing of the actions you take, including — in all likelihood — when and in what manner you approach the Department of Justice Antitrust Division (“the Division”) to take full advantage of incentives offered by the Division’s Leniency Program.

Unfortunately, the world is not perfect. The news that the Division may have your client in its gun sites will come to you in other ways, which will not allow you to control the situation. For example, your client may have been the subject of a “dawn raid” in a foreign country (which begs the question of whether or not your client is being looked at by the Division here in the U.S.). Or, perhaps, your client’s major competitor may have made an SEC filing revealing a subpoena issued by the Division (which could lead one to conclude there may be a widespread investigation being conducted in your client’s industry). Another possibility could be that an employee of a competitor tips off one of your client’s employees that the competitor’s management had uncovered their cartel activity and is rumored to be “going to the feds with the information.” In all of these situations, you are not in control; you are playing “catch up,” and you have to react quickly. Obviously, the first priority is to determine whether your client’s company was involved in the collusive activity, and if so, work through the strategic pro’s and con’s of going to the feds yourself. However, while you are conducting that investigation and/or your client is weighing those strategic moves, there are several “best practices” steps that you need to take immediately to assist your client.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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