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An Effective Antitrust Compliance Program Can Mean Significant Savings Down the Road


03/05/13

Having an effective compliance program can greatly impact the fines a company faces if it is found guilty of violating the United States' antitrust laws. The fine range for a company found guilty of antitrust violations is calculated by increasing a base fine amount based on a company's culpability score.  A company is initially assigned a cuplability score of 5.  A company's final culpability score can range from 0 to 10, and is adjusted up or down based on mitigating and aggravating factors. 

A company can qualify for a three-points reduction in its culpability score if an "effective compliance and ethics program" was in place when the criminal activity occurred.  This culpability score reduction can have a tremendous effect in the fine imposed on the company. 

For example, consider a company convicted of violating U.S. antitrust laws.  Assume that the company did not have a compliance program in place at the time of illegal conduct and that the volume of commerce at stake was $1 billion.  Each company starts with a culpability score of 5.  The score is adjusted downward for mitigating factors (such as self-reporting, cooperating with the authorities, having a compliance program) and upward for aggravating factors (such as prior criminal history, tolerance of the illegal conduct, obstruction of justice).  If the company did not have a compliance program in place (and none of the other factors are applicable), the company's culpability score would remain at 5, resulting in a fine range of $200 million to $400 million.

Now, consider this same scenario but assume that the company had an effective compliance program in place.  The culpability score would be 2 (the effective compliance program reduces the score by 3 points).  This reduces the fine range to between $80 million and $160 million.

To have an effective compliance program, a company must implement the following measures:

  1. Investigate all employees' conduct through interviews and periodically review  employee emails to determine if potential antitrust violations are occurring;
  2. Provide an active training program about antitrust laws that includes in-person instruction by U.S. antitrust counsel;
  3. Assign a compliance officer who oversees program compliance and reports to the Board of Directors;
  4. Provide its employees' with a manual of business ethics and procedures, which includes the company's antitrust policy;
  5. Have a method by which employees can report possible antitrust violations; and
  6. Consistently discipline employees who violate the compliance program.

How Nossaman Can Help
Nossaman's Antitrust and Unfair Business Practices Group is comprised of a skilled team of attorneys with substantial experience navigating the complex issues clients face when charged with antitrust and unfair business practices violations.  Our expertise includes helping clients navigate U.S. antitrust laws and their ramifications, including creating and implementing an effective antitrust compliance program.  Many companies find false comfort in compliance programs that will not past muster if examined by the U.S. authorities.  The authorities will look at not only its mere existence, but whether it is well-designed, actually applied, and applied effectively.  Nossaman can ensure that your company creates a plan that is industry and company specific and is implemented and maintained in a way that its effectiveness can be demonstrated.  If your company would like to discuss the implementation of such a program, our attorneys can prepare a more detailed and tailored check list of both the required components of such a program and the process for establishing and implementing the program.

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