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Guidelines for Antitrust Compliance Programs: A Beginner's Guide

Antitrust compliance is one of the most challenging aspects of corporate compliance. Antitrust law has been part of the legal fabric legal teams deal with for over a century. However, the enforcement and interpretation of these laws has varied over time. In days past, antitrust laws were the reason for the breaking up of monopolistic companies such as Standard Oil and AT&T.

Nowadays, if found guilty, a company that violates antitrust laws is more likely to be fined and/or be obligated to change its policies. What’s more, antitrust cases are nearly always high-profile affairs that damage an organization’s reputation with the public.

In order to avoid running afoul of antitrust laws, it is vital for businesses to remain compliant as decisions are made regarding pricing, product offering, acquisitions, and general business practices.
For international businesses, the complexity is compounded since different countries have different rules regarding antitrust. For example, Amazon was recently fined $1.3 billion in Italy for abuse of market dominance (subject to appeal). In this article, we have a look at Antitrust Compliance Programs: what they look like, what they try to achieve, and how they seek to achieve those goals. 

Contents

What is antitrust, and why do we care?
Antitrust Law in the United States & the EU
Antitrust Compliance: what it is & why it matters
What does an Antitrust Compliance program look like?
1. Risk Assessment
2. Policies & Procedures
3. Training & Communications
4. Confidential Reporting & Investigation Process
5. Third-Party Management
6. Mergers & Acquisitions 

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What is antitrust, and why do we care? 

At their core, antitrust laws seek to promote competitive markets. When sellers of goods and/or services compete with each other, the customers typically benefit. This applies to all the links in the supply chain, which means that it protects consumers buying products, but also businesses from other businesses if need be. Modern antitrust law is mostly concerned with so-called per se violations: price-fixing, market allocations by direct competitors and other explicit actions that obstruct competition.

The reason antitrust matters should be obvious. Competition breeds excellence and capitalism does not function properly without a market. Without markets, the incentive to provide competitive prices and innovative services disappears.

As mentioned above, the enforcement of antitrust law tends to focus on per se violations. In other words, simply being a monopoly isn’t necessarily a problem, acting in nakedly anti-competitive ways does. It’s the reason some monopolies were never broken up (U.S. Steel, for example) and why some modern monopolies continue to exist (Microsoft, Amazon, Facebook). In practice, a company is only broken up very rarely (see: Standard Oil), such consequences are usually due to the monopoly company acting like a monopoly, not being one. 

Antitrust Law in the United States & the EU 

In the United States, the three main statutes of antitrust law are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts outlaw monopolies, anticompetitive behavior, and other unnecessary restraint of trade. It should be noted that since the rise of the Chicago School in the 1970s, the interpretation of these laws has changed significantly: “Chicago School proponents contrast their approach with that of the government’s antitrust policies (...) which, they argue, was an incoherent mess that confused the vigorous competition that shuttered inefficient businesses with broader harms to the competitive process. The Chicago School (...) espouses faith in efficient markets and suspicion regarding the merits of judicial intervention to correct anti-competitive practices.”

This line of thinking is why companies such as Amazon, Facebook, and Microsoft are able to exist even when they are quite clearly monopolies, which the Sherman Act of 1890 outlaws.

In the European Union, EU Antitrust Policy is the basis of the EU’s antitrust efforts, focusing mostly on anti-competitive actions. The EU’s efforts to combat such practices have been quite vigorous. In the US, the Department of Justice also keeps a list of notable antitrust cases for interested parties to read. 

Antitrust Compliance: what it is & why it matters 

An antitrust compliance program is exactly what it says on the tin: a set of policies, procedures, practices, and internal controls that help a company remain compliant with its obligations under antitrust law. A robust antitrust program protects your organization from acting in ways that would trigger an antitrust investigation. Avoiding such investigations matters because the consequences for antitrust violations can be very significant, with high fines for organizations and imprisonment for individuals. 

What does an Antitrust Compliance program look like? 

In its evaluation of corporate compliance programs, the Department of Justice lays out what a corporate compliance program regarding antitrust should look like. It outlines six critical factors: 

1. Antitrust Risk Assessment 

The antitrust compliance program must be able to assess how the company’s operations might violate antitrust law. This assessment must be in-depth; from business strategy to casual conversations with competitors. The risk assessment has to be continuous, and include the efficacy of the existing policies and protocols. 

2. Antitrust Policies & Procedures 

To quote the DoJ: “Any well-designed compliance program entails policies and procedures that give both content and effect to ethical norms and that address and aim to reduce risks identified by the company as part of its risk assessment process.” In addition to having these policies in place, the antitrust compliance program needs to be in a near-constant feedback loop with risk assessment to ensure they are comprehensive. Finally, accessibility and integration practices need to be in place, meaning the company needs to be able to show that the antitrust compliance program is clearly communicated and reinforced across the organization.

3. Antitrust Compliance Training & Communications 

Part of the communication obligation mentioned in point 2 is compliance training and reinforcement. The company should ensure the compliance program is communicated to and understood by employees. This includes risk-based training, a clear company position on misconduct, and a way for employees to seek guidance and advice when needed. 

4. Confidential Reporting & Investigation Process 

In addition to written policy and a training program, a company should provide a mechanism for questionable behavior to be reported and investigated. This reporting system should be anonymous, accessible, and regularly audited for effectiveness. 

5. Third-Party Management 

For antitrust purposes, third-party management should primarily focus on payments (financial or otherwise) to third parties. Simply put, is your organization able to perform due diligence on third parties? 

6. Mergers & Acquisitions 

Describing a well-designed compliance program, the DoJ writes: “[It] should include comprehensive due diligence of any acquisition targets, as well as a process for timely and orderly integration of the acquired entity into existing compliance program structures and internal controls.” The description continues to state: “Flawed or incomplete pre- or post-acquisition due diligence and integration can allow misconduct to continue at the target company (...) risking civil and criminal liability.” In practice, this means that any misconduct of the acquired party becomes the acquiring party’s problem. Such issues thus need to be found and remediated. 

Finally, harkening back to the Clayton Antitrust Act of 1914, companies need to be aware of the potential impact of the merger on the market. Per the Hart-Scott-Rodino Act of 1976, mergers have to be reported to the Federal Trade Commission for approval. Any merger or acquisition should thus be reviewed in terms of future market share, pricing power, and disclosure requirements.