Editor: What do in-house counsel need to be aware of with respect to antitrust compliance programs and issues?
Fenton: Two recent developments affecting antitrust compliance merit particular attention from in-house counsel, particularly if it has been a while since your company reviewed and updated its antitrust compliance programs.
First, the need for such programs and other efforts to prevent antitrust violations, if not already clear to every company, has been heightened by recent legislation significantly increasing the fines and penalties for both corporations and individuals that violate the antitrust laws. The corporate fine was increased from $10 million to $100 million for each violation. The maximum fine for individuals similarly was increased from $350,000 to $1 million, and maximum jail sentence from three years to ten years.
This increase assumed particular significance given the Supreme Court's action at the end of this term striking down aspects of the Sentencing Guidelines in Blakely and leaving their overall status unclear. Although the alternative penalty calculation of twice the gain or twice the loss is still available to produce significant corporate fines (the current record for an individual company is $500 million), this new legislation leaves no doubt that the penalties for any antitrust violations will be severe. This is a message all businesses and their employees need to hear.
Second, antitrust compliance programs remain a central focus of amendments to the Organizational Sentencing Guidelines that will become effective November 1, 2004 (assuming Congress does not act to change the amendments). The amendments will heighten the steps companies must take to qualify for downward reductions in criminal sentences, and make effective compliance efforts a key element. After November 1, in order to qualify as an effective compliance program a company now will have to show active participation and oversight on the part of senior management and the Board of Directors in compliance efforts. In addition, companies must demonstrate that they have taken affirmative steps to monitor and assess the effectiveness of their compliance efforts through audits or similar risk assessment initiatives.
While no one is sure just what is required to satisfy the new amendments, it is clear that simply preparing an antitrust policy statement and distributing a written antitrust guide will no longer suffice. As a result, a number of companies are upgrading their compliance efforts, with many turning to Internet-based or other on-line training as a way to document effectiveness and monitor ongoing issues. There also is renewed interest in outside audits to detect potential risk areas and suggest remedial steps.
Published October 1, 2004.
