Managing Antitrust Risk and Staying Compliant in an Evolving

Report
Managing Antitrust Risk and
Staying Compliant in an Evolving
Competition Law Landscape
C&E Practice Group CLE
Geralyn Trujillo – New York State Attorney General’s Office
Jonathan Streeter – Dechert LLP
Michael Weiner – Dechert LLP
12 June 2013
© 2012 Dechert LLP
Global Antitrust Enforcement Update
Jurisdiction
Australia
Recent Activity
Imposed its largest antitrust fine ever (USD68m) in a single investigation against airline cartel members
in 2012
China
Imposed its largest antitrust fine ever in January 2013 (USD57m) against six LCD manufacturers
Europe
Imposed EUR1.47 billion fine on CRT makers – the largest EU fine ever in a single investigation
India
Imposed USD1.1 billion fine on cement cartel members in 2012
Amended competition laws to increase maximum fines, extend statute of limitations, and increase
incentives for cartel recipients to come forward
United States
Imposed its largest antitrust fine ever ($500m) against AU Optronics, a Taiwanese LCD maker, in 2012
U.S. - Total Criminal
Cases Filed
90
72
54
32
2
34
40
60
Average Annual Fine by
Time Period (€* Millions)
South Korea
European Commission Cartel Fines
€ 2,679
€ 2,107
€ 789
€ 86
€ 68
Vigorous Criminal Enforcement in U.S.
• U.S. DOJ sets new record in 2012 for highest criminal antitrust fine total
• Individuals are sentenced to prison more often and given longer sentences
• Foreign nationals are sentenced to prison for participation in conspiracies affecting
U.S.
3
Recent and Notable NYC-Based
Antitrust Cases
• e-Books Litigation
– Alleged conspiracy among publishers to change the model of ebooks distribution to an agency model
– Characterized as per se unlawful price fixing
• Twin America Joint Venture
– Non-reportable transaction in $100 million “hop-on-hop-off bus tours
in NYC” market.
• Christie’s/Sotheby’s
– Price-fixing conspiracy; sudden change in behavior, response to
downturn
– Criminal convictions, prison sentences, high profile public trial
– Immunity for Christie’s CEO
4
Financial Sector Antitrust Cases
• Bid-Rigging Cases
– Private equity bidding consortia
– Municipal bonds investment contract auctions
– Real estate foreclosure auctions
– Municipal tax lien auctions
• Price-Fixing Cases
– LIBOR
– Payment Cards Interchange Fees
• Morgan Stanley / KeySpan
5
Update on NY Attorney General’s Office
Enforcement
• Litigations
– Actively litigating the case to enjoin the Twin America Joint
Venture
– NY is a plaintiff in the eBooks case against Apple
• Settlements
– LCDs price fixing case
– Municipal bonds derivatives bid rigging investigation
• Confidential investigations of mergers and a variety of
conduct, including bid-rigging, price-fixing, IP issues
6
Managing Antitrust Risk
• Designing an Effective Compliance Program
• Responding to Actual and Suspected Violations
• Privilege Issues
7
Compliance Objectives
• Prevention
• Detection
• Qualification as an Effective Compliance Program
for Prosecutorial Discretion / Mitigation / Leniency
Purposes
8
What’s Effective? Ten Commandments…
1. Empower a Chief Ethics and Compliance Officer
– Independent, but a participant in senior management
decision-making
– Appointed by and reporting directly to the Board or a
committee
– Supported with necessary resources and infrastructure
2. Senior Management Support
– Active participation and support
– Not just tone: Action
9
Commandments…
3. Standards and training
– Clear articulation of standards and policies
– Ongoing, practical, memorable training
– Tailored to the company – and to the types of
employees (and third parties)
– Local / regional differences in law
4. Reporting systems
– Ability to obtain advice and report suspicions without
going directly to supervisors
– Protection from retaliation
– Privilege issues
10
Commandments…
5. Respond to reports – and violations – promptly
and thoroughly; establish protocols for handling
reports
6. Risk assessment: Where (geographically and
sectorally) are issues likely to arise?
7. Institute controls to make cartel conduct difficult,
e.g.,
– Price change justifications
– Trade association controls
.
11
Commandments…
8. Incentives and discipline
– Reward compliance / integrate into employee evaluation
– Discipline managers who fail to prevent / detect
violations or who do not support compliance efforts. Do
it publicly
9.Measure effectiveness, evaluate practices,
benchmark techniques, and document diligence
Commandments…
10. Audit and monitor to detect cartel activity, using
appropriate screens based on:
– Improbable events
– Control groups
– Price and cost information
– Market share
– Mathematical laws
13
Responding to Actual and Suspected
Violations
• When to conduct an internal investigation
• Benefits of self-reporting
– DOJ leniency program
– Preserving priority with a “marker”
– Leniency requirements
– Limitations
• Dealing with enforcer show-ups, dawn raids
14
Privilege Issues
• Representing individuals vs. the company
– Appropriate warnings
– When to recommend separate counsel
– Dealing with enforcer requests that the company
appoint separate counsel
• Waiver
– Productions to DOJ/FTC
– Productions to DGComp
• Keeping compliance advice privileged
15

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