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Managing Antitrust Risk and Staying Compliant in an Evolving Competition Law Landscape

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. Global Antitrust Enforcement Update.

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Managing Antitrust Risk and Staying Compliant in an Evolving Competition Law Landscape

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  1. 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

  2. Global Antitrust Enforcement Update

  3. 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.

  4. Recent and Notable NYC-Based Antitrust Cases • e-Books Litigation • Alleged conspiracy among publishers to change the model of e-books 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

  5. 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

  6. 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

  7. Managing Antitrust Risk • Designing an Effective Compliance Program • Responding to Actual and Suspected Violations • Privilege Issues

  8. Compliance Objectives • Prevention • Detection • Qualification as an Effective Compliance Program for Prosecutorial Discretion / Mitigation / Leniency Purposes

  9. 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

  10. 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

  11. 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 .

  12. 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

  13. 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

  14. 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

  15. 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

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