In July 2019, the Antitrust Division of the US Department of Justice (DOJ) announced a new policy to encourage the implementation of robust antitrust compliance programs by companies with any US business. The DOJ's new policy would reward companies that have developed a strong compliance and remediation program when deciding whether to bring criminal antitrust charges.

For Taiwanese businesses, the new US policy provides a compelling incentive to review your compliance programs and internal controls—and to adjust them, if necessary.

The high stakes of antitrust compliance

In the US—as in Taiwan and other countries—antitrust laws strictly prohibit agreements between competitors (or potential competitors) on pricing elements and other methods of competing for customers or markets. So-called price-fixing and market allocation or bid-rigging agreements can be prosecuted, even without any evidence of actual harm and without regard to a person's market share or harmful intent.

In the US, this risk is amplified by the possibility of criminal prosecution. Companies have paid hundreds of millions of dollars in fines. These criminal fines are in addition to civil liability that might be pursued by customers for alleged overcharges.

Individuals bear great personal risk for a criminal antitrust violation. The US government has charged many executives and employees over the last decade, with US law providing for up to ten years in prison.

Robust and effective compliance has therefore always been important to help mitigate company and employee risk. The recent changes to the US government's sentencing policy add an extra "sweetener" to incentivize companies to assess and update their policies.

New US criminal antitrust charging policy

As of July 2019, the DOJ had both revised its Justice Manual and released a new document on Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (the Guidance) to guide US federal prosecutors' assessments of companies' compliance programs in the context of criminal antitrust violations.¹ 

The DOJ deleted a statement in its Justice Manual that used to deny a company any credit for having an existing compliance program at the charging stage of an investigation and prosecution. Previously, the DOJ considered an antitrust violation to be evidence that a company's compliance program had failed to work effectively. And under its prior all-or-nothing self-reporting leniency program, only the first company to report criminal conduct could receive immunity from prosecution.

Now, the DOJ will evaluate each corporate compliance program on a case-by-case basis. The new compliance credit is not granted automatically. Instead, it may consider multiple factors affecting how specific compliance programs are designed, whether they are likely to prevent antitrust violations, and how they are implemented and operated.

The factors that determine compliance program effectiveness

The Guidance explains some of the essential components that a compliance program must demonstrate to qualify for DOJ credit and a deferred prosecution agreement (DPA).

The Guidance sets out nine factors:

1. The program's design and comprehensiveness
2. Culture of compliance within the company
3. Responsibility for antitrust compliance
4. Antitrust risk assessment techniques
5. Compliance training and communication to employees
6. Periodic review, monitoring and auditing
7. Reporting mechanisms
8. Compliance incentives and discipline
9. Remediation and role of the program in the case of violation

Among these, the reporting mechanisms are particularly important. The DOJ mentioned the need for "prompt" self-reporting by companies both in its July 2019 announcement of the new policy and throughout the Guidance. Although the definition of "prompt" remains unclear, the new policy appears to provide more flexibility in timing.

What to check for in your corporate compliance program

Taiwanese companies should consider whether they have a sufficiently practical, sophisticated reporting channel for any US antitrust violations.

This generally means creating a channel that enables all internal reports to move upwards efficiently and quickly while fully assessing every report before it leaves the company. In planning this type of program, it's important to make sure to take into account privilege implications.

The DOJ policy emphasis on robust compliance warrants careful adjustments for a company's business scope. According to the Guidance, "an effective antitrust compliance program should be appropriately tailored to account for antitrust risk."

It may not be possible to follow a one-size-fits-all approach if the goal is implementing an effective and adequate internal control and investigation mechanism to guard against all potential wrongdoings.

Instead, taking steps to demonstrate a compliance program for your unique business may be a consideration that significantly improves effectiveness at preventing specific antitrust risks while also enhancing the chance of winning compliance credit from the DOJ.

¹ https://www.justice.gov/atr/page/file/1181891/download

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