FCPA Best Practices for Fashion and Beauty Companies

As recent headlines suggest, antibribery enforcement by U.S. authorities remains focused on the fashion and beauty industries. Avon Products Inc. recently disclosed that it will spend $135 million to settle U.S. Foreign Corrupt Practices Act charges with the U.S. Department of Justice and U.S. Securities and Exchange Commission, and Ralph Lauren Corporation agreed last year to pay $882,000 in penalties and $734,846 in disgorgement and prejudgment interest when it entered into nonprosecution agreements with the DOJ and SEC to resolve bribery allegations under the FCPA. U.S. enforcement authorities commonly pursue additional investigations and prosecutions in industries where large settlements have recently been entered into. Accordingly, companies in the fashion and beauty industries should consider thoroughly reviewing and updating their anticorruption policies and procedures to ensure that they reflect current best practices.

Recent Cases

Avon’s and Ralph Lauren’s large settlements demonstrate the continued attention of U.S. enforcement authorities on the fashion and beauty industries. Avon’s anticipated $135 million agreement with the DOJ and SEC was disclosed in its recent Form 10-Q filing with the SEC. According to the filing, Avon has reached an understanding with the DOJ and SEC on the settlement terms, which will split the payment of fines, disgorgement and prejudgment interest between the DOJ ($68 million) and SEC ($67 million), and will, among other things, involve the entry of a guilty plea by an Avon subsidiary in China. The settlement will also contain a three-year deferred prosecution agreement with the DOJ, including the retention of a compliance monitor for at least 18 months.