Articles Posted in Criminal Antitrust Issues

Author: Luis Blanquez

If you read our articles regularly, you know an antitrust compliance policy is a strong tool to educate directors and employees to avoid risks of anticompetitive conduct. Companies articulating such programs are in a better position to detect and report the existence of unlawful anticompetitive activities, and if necessary, be the first ones to secure corporate leniency from antitrust authorities.

Antitrust Compliance Programs in the US and the European Union

But make no mistake––not any antitrust compliance policy is sufficient to convince the Antitrust Division of the Department of Justice (DOJ) that you are a good corporate citizen. You must show the authorities how your compliance program is truly effective and meets the purpose of preventing and detecting antitrust violations.

And how do you do that? As a start, you should get familiar with the following key documents.

• The DOJ’s new Policy for incentivizing antitrust compliance;
• S. Dep’t of Justice, Antitrust Div., Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (July 2019);
• S. Dep’t of Justice, Criminal Div., Evaluation of Corporate Compliance Programs (June 2020);
• DOJ updated Justice Manual.

Make sure you read them carefully because they have significantly changed the way DOJ credits compliance programs at the charging stage; and how it evaluates them at the sentencing stage. But that’s not all. For the first time, they also provide public guidance on how DOJ analyzes compliance programs in criminal antitrust investigations.

In this article, we focus on the new DOJ Policy for incentivizing antitrust compliance, as well as the 2019 and 2020 Guidance Documents. We also provide an overview of the most recent Deferred Prosecution Agreements (DPAs) and indictments from DOJ.

If you also want to review the new changes to the Justice Manual, you can see them here. In a nutshell, the new revisions impact the evaluation of compliance programs at the charging and sentencing stage. In the past the Justice Manual stated that “credit should not be given at the charging stage for a compliance program.” That text has now been deleted. The new additions also impact DOJ processes for recommending indictments, plea agreements, and the selection of monitors.

If you discover or suspect your company is under investigation for antitrust violations, you should, of course, consider hiring your own antitrust attorney.

The 2019 DOJ New Policy for Incentivizing Antitrust Compliance

In the past, if a company did not win the race for leniency, the DOJ’s approach was to insist that it plead guilty to a criminal charge with the opportunity to be an early-in cooperator, and potentially receive a substantial penalty reduction for timely, significant, and useful cooperation. This all-or-nothing philosophy highlighted the value of winning the race for leniency. The new Policy departs from this approach.

In July 2019, the DOJ announced the new policy to incentivize antitrust compliance.

Antitrust News: The Department of Justice Wants You to Have a Strong Antitrust Compliance Policy

The new policy was presented by AAG Makan Delrahim on July 11, 2019, at the Program on Corporate Compliance and Enforcement at the New York University School of Law: Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs. Delrahim explained that, unlike in the past, corporate antitrust compliance programs will now factor into prosecutors’ charging and sentencing decisions and may allow companies to qualify for deferred prosecution agreements (DPAs) or otherwise mitigate exposure, even when they are not the first to self-report criminal conduct.

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Author: Jon Cieslak

The United States Department of Justice Antitrust Division recently announced changes to its Civil Investigative Demand (CID) forms and deposition process.  While these changes are cosmetic—the Antitrust Division acknowledges that the changes “are consistent with long-standing division policies”—they serve as a good reminder of risks that always exist when communicating with the government.

Background on Civil Investigative Demands

Author: Jon Cieslak

When a law enforcement or regulatory agency—such as the Department of Justice (DOJ) or the Securities and Exchange Commission (SEC)—investigates potentially illegal business conduct, it may not be targeting just the company under investigation. Oftentimes, authorities are also targeting the company’s employees who engaged in the illegal conduct, and corporate officers and other employees are frequently indicted alongside their employers in antitrust and other cases. See, e.g., United States v. Hsiung, 778 F.3d 738 (9th Cir. 2014). Indeed, in 2015, U.S. Attorney General Sally Yates issued the so-called “Yates Memo” that reaffirmed DOJ’s commitment to seek “accountability from the individuals who perpetrated the wrongdoing.”

While the company typically hires outside counsel with experience defending the potential claims, one area that is sometimes overlooked is whether the employees involved in the investigation need their own lawyers. Employees may think the company’s lawyer represents them as well, but that is rarely the case and employees should be quickly disabused of the notion. Both the Supreme Court in Upjohn v. United States, 449 U.S. 383 (1981), and legal ethics rules compel corporate lawyers to clarify when they do not represent individual employees when conducting internal investigations. See, e.g., Model Rules of Prof’l Conduct R. 1.13(f).

So when does an employee need her own lawyer?

While there is no bright-line rule, considering some key questions can help you make the right decision.

First, is the employee a target of the investigation, or merely a witness? During an investigation, investigators will talk to many potential witnesses in addition to the individuals whom they suspect of illegal conduct. When confident that investigators believe an employee is only a witness to the potentially illegal conduct, the need for separate counsel is significantly reduced.

Second, does the employee face personal consequences as a result of her conduct? Consequences may include criminal penalties such as imprisonment or fines, suspension or loss of professional licenses, personal liability for civil damages awards, or employment consequences such as demotion or termination. While even a small chance of criminal penalties merits separate counsel, as the likelihood of any of these consequences grows, so too does the importance for an employee to have her own lawyer. Keep in mind, too, that individuals involved in some illegal conduct—such as an antitrust conspiracy—can be jointly and severally liable for all the harm caused by the conspiracy, so could face an enormous civil damages award even if their role was minimal. See Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 646 (1981).

Third, was the investigation initiated by a law enforcement or regulatory agency, or is it purely an internal investigation by the company itself? In general, separate counsel is less important in internal investigations. On the other hand, when the government is investigating, separate counsel can benefit both the employee and the company. Not only will the employee’s interests be better protected, separate counsel will also help insulate the company’s lawyers from potential disqualification and allegations of obstruction. Separate counsel is particularly important when an employee will be interviewed directly by law enforcement agents, who are more likely to trust a witness’s independent attorney.

Fourth, and most importantly, does the employee have any actual or potential conflicts of interest with the company and, if so, how severe are they? When both the company and the employee are targets of a government investigation, there will almost always be at least a potential conflict between them. A company usually has substantial incentives to cooperate with a government investigation, such as the potential for amnesty under the DOJ’s Leniency Program and credit for cooperating under the Sentencing Guidelines. To fully cooperate, however, the Yates Memo requires companies to “completely disclose . . . all relevant facts about individual misconduct.” Meanwhile, an employee involved in the conduct may want to seek immunity in exchange for testifying against the company or other individuals. Even less severe conflicts, however, can warrant separate counsel. If an employee disagrees with the company’s view of the facts or feels pressure to testify in a certain way, separate counsel may be needed to protect the employee’s interests.

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