Antitrust Compliance For Associations

• Pages: 213-234

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CHAPTER XI

ANTITRUST COMPLIANCE FOR

ASSOCIATIONS

This cha pter disc usses the elements of an effective association

antitrust compliance program, including appropriate standards,

management responsibilities, tra ining, oversight, disciplinary action, and

document control.

A. Elements of an Effective Antitrust Compli ance Program

An association’s antitrust compliance program should have two

chief goals: prevention of law violations and detection of potential

wrongdoing.

1

The benefit s of prevention should be obvious. Liability

may attach to an association if an employee or member, acting within the

scope of his or her employment or agency, engages in an antitrust

violation.

2

An antitrust compliance program enabl es an association to

evaluate its current practices and take corrective steps to ensure

compliance with the antitrust laws by associ ation staff and members. An

effective antitr ust compliance program helps create and reinforce a

culture of compliance within the association.

The benef its of detection may seem less apparent, given t he human

and instit utional reluctance to “go looking for t rouble” when none is in

sight. But the potential value of e arly detection of antitrust violations

1. William J. Kolasky, Deputy Ass’t Att’y General, Antitrust Div., U.S.

Dep’t of Justice, Antitrust Compliance Programs: The Government

Perspective, Remarks Before the Corporate Compliance 2 002

Conference, at 8 (July 12, 2002), available at http://www.

usdoj.gov/atr/public/speeches/224389.pdf. For additional materials on

antitrust compliance programs, including essays exploring specific

compliance issues and examples of compliance manuals and training

materials, see generally ABA SECTION OF ANTITRUST LAW, ANTITRUST

COMPLIANCE: PERSPECTIVES AND RESOURCES FOR CORPORATE

COUNSELORS (2005) [hereinafter COMPLIANCE PERSPECTIVES].

2. Am. Soc’y of Mech. Eng’rs v. Hydrolevel Corp., 456 U. S. 556, 565-70

(1982). For a more detailed discussion of circumstances in which a trade

association may have antitrust liability b ecause of the conduct of its

members acting with apparent authority, see Chapter III.A.

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Antitrust and Associations Handbook

significantly increased with the adoption of the Federal Organizational

Sentencing Guidelines (Sentencing Guidelines),

3

which apply to

nonprofit entities as well as for-profit corporations, and recent changes

to the leniency program of the Antitrust Division of the U.S. Department

of Justice (DOJ or the Division).

4

Under the Sentencing Guidelines, t he

criminal fine of a convicted organization can be mitigated if it can

demonstrate that it had an “effective compliance and et hics pr ogram.”

5

This mitigation credit is contingent on prompt reporting of the violation

to the government and, e xcept in limited circumstances, the

noninvolvement of high-level personnel of the organization in the

unlawful conduc t.

6

Given the harshness of potential antitrust fines, the

availability of sentence mitigation creates a powerful incentive for

associations t o implement proactive compliance programs and resist the

temptation to “let sleeping dogs lie.”

3. U.S. SENTENCING COMM’N, FEDERAL SENTENCING GUIDELINES MANUAL

AND APPENDICES (2005), Chapter 8, Sentencing of Organizations,

available at www.ussc.gov/2005guid/tabconchapt8.htm [hereinafter

U.S.S.G.].

4. See Paula J. Desio, Deputy Gen. Counsel, U.S. Sentencing Comm’n,

Introduction to Organ izational Sentencing and the U.S. Sentencing

Commission, 39 WAKE FOREST L. REV. 559 (2004). Federal judges are

required to consult, but are not bound to adhere to, the Sentencing

Guidelines in calc ulating the criminal fine of a corporation or other

organization.

5. U.S.S.G. § 8B2.1.

6. U.S.S.G. § 8C2.5(f) and (g). Prior to an amendment to the Sentencing

Guidelines that took effect in November 2 004, compliance program credit

was unavailable if high-level personnel in the o rganization were involved

in the unlawful conduct. As amended in 2004, § 8C2.5(f) p rovides that if

a high-level employee of a “small organization”—defined as an

organization having fewer than 200 employees—was involved in the

violation, there is a rebuttable pr esumption that the organization did not

have an effective compliance program; however, “[t]he small organization

. . . can rebut that p resumption by demonstrating that it had an effective

program, despite the involvement in the offense of a person high in the

organization’s structure.” U.S.S.G., Reason for 2004 Amendments to

Chapter Eight (Amendment 673 fro m the Supplement to Appendix C,

Guidelines Manual), available at http://www.ussc.gov/corp/amend-

673.pdf. Most trade associations are likely to have fewer than 20

employees and thus fall within the definition of “small organization.”