Katie Owens, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.
According to the Antitrust Division of the U.S. Department of Justice, no corporate compliance program is worthy of credit when considering punishment of corporations. The U.S. Sentencing Commission should correct this outlier policy.
At the Department of Justice (“DOJ”), corporate compliance programs are not treated equally among the agencies various divisions. The U.S. Attorney’s Manual expressly “recognizes that no compliance program can ever prevent all criminal activity by a corporation’s employees.” All but one of DOJ’s divisions applies this principle. The Antitrust Division believes that an antitrust violation directly correlates to a “failed” compliance program, one not deserving of credit under the Federal Sentencing Guidelines (“Guidelines”).
DOJ-Antitrust reserved a carve-out from the Guidelines specifically for antitrust violations based on its stance that these violations go to “the heart” of a company’s activities. Note that this carve out applies to antitrust violations only, meaning that all other crimes, including fraud, bribery, and environmental harm, may receive credit for maintaining an effective compliance program. Furthermore, this antitrust rule is an absolute with no exceptions. No compliance program, no matter how diligent, will be considered, because the program is deemed a “failure” by the Division if there is any antitrust law violation.
Rather than rewarding compliance efforts as a means of overall prevention of antitrust violations, the Division focuses instead on amnesty as a means of enforcement. Under this idiosyncratic approach, the first member of a cartel to admit wrongdoing receives amnesty from prosecution, regardless of guilt. The reporting company is then required to do nothing, while in other contexts, violations reported to the Criminal Division of the DOJ require violators to implement compliance programs or to improve existing ones. As commentator Joe Murphy observed, this policy could potentially lead a company to not “worry about compliance, but instead to devote its attention to making sure that it was always the first one to confess to the government if a cartel was about to be discovered. It could then keep most of its excess cartel profits, since it would not be responsible for large fines, and its plea would limit its civil exposure to single damages.”
On June 1, 2012, the Washington Legal Foundation (WLF) submitted comments in response to the U.S. Sentencing Commission’s (Commission) Commission Priorities for the Upcoming Year. WLF urged the Commission to reconsider the important role that antitrust compliance programs should play in sentencing determinations for antitrust violations and correct this inconsistent approach to sentencing under the Guidelines. WLF believes that by not providing companies with an opportunity to receive credit for antitrust compliance programs, the current Guidelines actually create a disincentive for companies to implement such programs all together. This existing procedure could potentially result in more antitrust violations than if companies were given the opportunity to receive reduced sentences for their efforts to maintain compliance strategies.
Simply put, a business organization that proactively seeks to prevent and detect violations of law through a robust compliance program furthers the public interest and deserves credit when it comes to enforcement and sentencing. The Division’s refusal to allow credit for effective compliance programs contradicts the emphasis the rest of the DOJ places on organizational compliance, and it is time for the Commission to recognize and correct this inconsistency by amending Chapter Eight of the Guidelines and affording corporate antitrust violators the opportunity to receive credit if they satisfy the necessary criteria. This new policy will no doubt serve to encourage the implementation of effective compliance programs throughout corporate America.