In our May 2019 article, we explained that recent enforcement actions and speeches by senior officials strongly suggested that the U.S. Department of Justice's Antitrust Division would soon begin crediting generally effective corporate antitrust compliance programs when making charging and sentencing decisions in cartel investigations. Such a policy shift, we observed, would represent a dramatic break from the Division's longstanding “zero credit” approach toward compliance programs that, while perhaps robust and well-intentioned, failed to prevent the criminal antitrust violation in question.

On July 11, 2019, the Assistant Attorney General for the Division, Makan Delrahim, announced that the Division will “immediately” abandon its “all-or-nothing” approach toward compliance programs. AAG Makan Delrahim, DOJ Antitrust Division, Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs 3 (July 11, 2019) (hereinafter AAG Delrahim Speech). Instead, the Division will “reward” and “recognize the efforts of companies that invest significantly in robust compliance programs” by providing them charging and sentencing credit for implementing generally effective programs. Id. at 3, 5. Among other benefits, this new policy will allow companies to qualify for deferred prosecution agreements or otherwise mitigate their exposure (e.g., secure fine reductions and avoid the imposition of probation or an external monitor) even when they are not the first to self-report a criminal antitrust cartel.

In explaining this policy shift, AAG Delrahim indicated that “the time has now come” to “further incentivize antitrust compliance and good corporate citizenship” because “'strong compliance programs are the first line of defense' to … antitrust crimes … .” Id. at 2, 4-5. He also stated that this policy shift would “improve” the Division's approach to compliance programs because it better reflects the prosecutorial best practices set forth in a variety of DOJ-wide guidelines. Id. at 12. Moreover, he noted that the Division's new compliance program policy will provide in-house counsel with “a useful tool [when] lobbying internally for increased antitrust compliance resources.” Id.

By the same token, AAG Delrahim stressed that the Division's “new approach to compliance programs should not be construed as an automatic pass for corporate misconduct” and that companies seeking compliance credit must affirmatively establish that their programs meet the new and detailed guidance that the Division has issued. Id. at 5-11. He cautioned that companies will not receive compliance credit if they fail to promptly self-report an antitrust violation, fully cooperate with the Division's investigation, and implement appropriate remedial measures. Id. at 5.

This article discusses the principles and criteria that the Division has indicated will guide its determination of whether to credit a pre-existing compliance program in cartel investigations. This article also identifies key takeaways that companies and counsel should keep in mind when assessing the potential implications of this new policy.

New Guidance for Evaluating Corporate Compliance Programs in Criminal Antitrust Investigations. In announcing its new compliance program policy, the Division also issued detailed guidance for prosecutors to apply when evaluating the effectiveness of corporate antitrust compliance programs. This new guidance states that prosecutors should probe three key factors:

(1) “Does the company's compliance program address and prohibit criminal antitrust violations?”

(2) “Did the antitrust compliance program detect and facilitate prompt reporting of the violation?”

(3) “To what extent was a company's senior management involved in the violation?”

DOJ Antitrust Division, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations 3 (July 2019) (hereinafter, the Guidance). To assist with this inquiry, the Guidance identifies nine elements that effective antitrust compliance programs should possess—while being careful to insist that these “factors are not a checklist or formula,” id. at 2—and lists various questions that prosecutors should consider with respect to each element. These nine elements are:

• Design and Comprehensiveness: The Guidance sets forth questions intended to assess whether a company's compliance program is “merely a 'paper program' or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner.” The “key considerations” for this assessment include “the adequacy of the program's integration into the company's business and the accessibility of antitrust compliance resources to employees and agents.” Id. at 4-5.

• Culture of Compliance: Consistent with the Division's past practice, the Guidance instructs prosecutors to carefully “examine the extent to which corporate management has clearly articulated—and conducted themselves in accordance with—the company's commitment to good corporate citizenship” and has fostered a culture of antitrust compliance. Id. at 5-6.

• Responsibility for the Compliance Program: The Guidance sets forth criteria for probing whether “those with operational responsibility for the [compliance] program … have sufficient autonomy, authority, and seniority within the company's governance structure, as well as adequate resources for training, monitoring, auditing and periodic evaluation of the program.” Id. at 6-7.

• Risk Assessment: To ensure that companies implement thoughtful and effective compliance programs, rather than “cookie cutter” programs, the Guidance lists questions that seek to determine whether the program is “designed to detect the particular types of [antitrust] misconduct most likely to occur in [the] corporation's line of business.” Id. at 7-8.

• Training and Communication: Given that “[t]he goal of an effective antitrust compliance program” is to “prevent[ ] and detect[ ] wrongdoing by employees,” the Guidance states that companies should be required to show that their program “include[s] adequate training and communication so that employees understand their antitrust compliance obligations.” Id. at 8-9.

• Periodic Review, Monitoring and Auditing: In establishing the effectiveness of their compliance program, companies will be expected to detail their “effort[s] to [periodically] review the … program” in order to “ensure that it continues to address the company's antitrust risks,” as well as their use of appropriate “monitoring and auditing functions [intended] to ensure that employees follow the compliance program.” Id. at 10-11.

• Reporting: As in the past, the Division emphasizes in the Guidance that compliance programs must include “reporting mechanisms that employees can use to report potential antitrust violations anonymously or confidentially and without fear of retaliation.” Id. at 11.

• Incentives and Reporting: The Guidance instructs prosecutors to determine whether a company has promoted a culture of compliance by implementing appropriate “systems of incentives and discipline [ ] that ensure the compliance program is well-integrated into the company's operations and workforce.” Id. at 11-12.

• Remediation Methods: Companies will be expected to show that they learned their lessons from past criminal antitrust violations and have made a concerted effort to prevent future violations by “conduct[ing] a comprehensive review of [their] compliance training, monitoring, auditing, and risk control functions following the antitrust violation;” making appropriate “modifications and revisions [to their program];” and implementing “methods … to evaluate the effectiveness of [their] antitrust compliance program going forward.” Id. at 12-13.

The Guidance indicates that companies should receive compliance credit at the charging stage—including the possibility of a deferred prosecution agreement (assuming the other relevant considerations support such a resolution)—if the application of the above factors shows that the antitrust compliance program was “adequately designed [and administered] for maximum effectiveness in preventing and detecting wrongdoing” and that “corporate management is enforcing the program.” Id. at 3. The Guidance also indicates that prosecutors should consider the effectiveness of a pre-existing compliance program at the sentencing stage when calculating a company's culpability score under the Sentencing Guidelines, determining whether to seek corporate probation, and deciding whether to recommend a fine below the Guidelines range. Id. at 14-17.

Key Takeaways. The Division's decision to begin crediting robust pre-existing compliance programs is sure to ignite speculation about what the future will hold, including what additional policy changes—if any—may be forthcoming. Expect to see:

• A continued winnowing of the divide between the Division and the rest of DOJ writ large. Traditionally, the Division had certain ways of doing things, and other components of DOJ (such as the Criminal Division and U.S. Attorney's Offices) had others. That will not entirely change, and as prosecutorial approaches will remain sufficiently varied, companies and the counsel representing them will need to stay attune to the particularities of the DOJ component conducting an investigation. But on the margins, companies and their counsel should expect to see continued attempts at harmonizing practices across the various DOJ components and prosecutorial offices.

One possible area where such harmonization will take place is the extent to which prosecutors rely on the investigative work of outside counsel. In light of a May 2019 opinion from the Southern District of New York that roundly criticized prosecutors' “outsourcing” of a LIBOR-related investigation to counsel for a corporate target, prosecutors across the DOJ may need to discuss best practices to ensure that interactions with outside counsel for cooperating companies do not trigger similar scrutiny. Given the Division's involvement in this case, its prosecutors may begin exercising more proactive ownership of the early stages of cartel investigations—especially in matters involving leniency applicants –than they have in the past.

• The Division entering deferred prosecution agreements with companies, albeit not in large numbers. Corporate non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) were once frowned upon within the Division. The Division's Leniency Program, so the traditional position held, outlined a binary choice: Be the first of the pack to self-report and receive immunity from prosecution, or lose out in the race and have to plead guilty. The Division signaled that times were changing when, in June 2019, it entered a DPA with Heritage Pharmaceuticals to resolve the company's exposure in the Division's long-running cartel investigation into the generic drug market. AAG Delrahim's speech explicitly telegraphs to expect more DPAs, while making clear that the Division will continue to “disfavor” NPAs because “complete protection from prosecution for antitrust crimes is available only to the first company to self-report and meet the Corporate Leniency Policy's requirements.” Delrahim Speech at 8.

• Companies increasing their investment in antitrust compliance. The Division's new policy unquestionably increases the value of investing in robust corporate antitrust compliance programs. There is already evidence that companies are responding accordingly. Given the high bar that the Division's guidance sets out to receive credit, however, companies will have to be creative in differentiating themselves from others. Companies will position themselves well by thinking hard at the outset about how they would answer the following question on the back end: How would you say you did everything you possibly could have done to make sure you did not end up exactly where we are today? The Division's continued emphasis on “tone at the top” should also spur more thinking about how corporate leaders can proactively create the kind of corporate “culture of compliance” that the Division is seeking. Id. at 5-6, 16.

• Individual accountability continuing (and perhaps escalating). The Division has always stressed that individuals who perpetrate antitrust crimes should be held responsible, including with jail time. That position stands in some tension with the Division's Leniency Program, which provides immunity to current employees of the corporate leniency applicant, regardless of culpability, as long as they are cooperative. If less severe corporate dispositions (e.g., DPAs) escalate, expect to see the Division aggressively seeking guilty pleas and convictions of individuals, and pushing for weighty sentences and sanctions.

Juan A. Arteaga is a partner in Crowell & Moring's antitrust and white-collar groups. He is a former Deputy Assistant Attorney General for the U.S. Department of Justice's Antitrust Division, where he served between 2013 and 2017. Benjamin Sirota is a partner in Kobre & Kim's white-collar and antitrust groups. He is a former prosecutor with the U.S. Department of Justice's Antitrust Division.