Internal Communications: What Not to Say and How Not to Say It

• Pages: 127-138

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CHAPTER 13

INTERNAL COMMUNICATIONS:

WHAT NOT TO SAY AND HOW NOT TO SAY IT

Words matter. And in instances of antitrust enforcement, a company’s own written words as

expressed by its employees really matter. Whether it is a handwritten note as evidence of a

price-fixing cartel, an e-mail describing post-acquisition market power, or a strategic plan

indicating refusals to deal with particular distributors, company documents are often key

evidence of illegal conduct. As in other areas of law, intent is an element required to establish

many antitrust law violations. Company documents can go a long way towards determining the

intent of the company. For example, documents can add credence to company arguments about

the reasons for a proposed transaction. A seemingly innocent e-mail exchange can support an

accusation that a merger is intended to diminish competition. Conversely, documents can put

company conduct in the proper context, turning otherwise illegal-looking activity into justified

competitive action.

Liability under the antitrust laws is often a matter of intent. Actions that are legal by

themselves can be found illegal when accompanied by communications that indicate intent to

harm competition. Under Section 1 of the Sherman Act, all agreements in restraint of trade are

potentially illegal. Whether such agreements are reasonable or unreasonable is a matter of

interpretation. A company’s defense during an investigation or litigation could be seriously

damaged by evidence that could be interpreted that its employees acted with intent to harm

competition.

A company’s own contemporaneously written descriptions of events and plans carries

considerably more weight before a jury or antitrust regulators than a contradictory explanation

given after the fact, even if that explanation is entirely accurate. The tried and true “deranged

middle manager” defense, which generally involves a company employee writing an unrealistic

and inaccurate statement about competition in a relatively minor document, only goes so far.

The document with the problematic statement gets produced and the plaintiffs or government

antitrust enforcers seize on this particular statement as evidence of anticompetitive harm. A

company can try to argue that the writer was a low-level manager with no decision-making

authority who misused terms of art and is generally deranged. The facts may even fully support

the company’s defense that the statement at issue is entirely wrong, but the damage may prove

difficult to overcome. Perceptions can count as much as reality before skeptical regulators or a

dubious jury. Accordingly, it is in the best interests of any company to avoid the unnecessary

drama of the smoking gun document. A good dose of common sense and careful judgment is

needed when creating documents or communications.

As discussed at length later in the chapter, one need only review the facts of Whole Foods’

attempted acquisition of Wild Oats to find an example of how a company’s documents can come

back to haunt it. This example makes it clear that anticompetitive statements from company

documents can dramatically raise red flags for the agencies and create a public relations

nightmare for a company.