The Risks of Noncompliance

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CHAPTER 6

THE RISKS OF NONCOMPLIANCE

The risks associated with violating a corporate antitrust compliance policy are grave due to

the now global enforcement of antitrust laws. The Sherman Act’s prohibitions against hardcore

cartel activity (which includes price-fixing, bid rigging, and market and volume allocation) are

vigorously enforced, and the detection and prosecution of cartels remains a top priority of the

Antitrust Division of the United States Department of Justice.1 Anticompetitive agreements,

such as those to fix prices or volumes, are not tolerated, not only under U.S. law,2 but also under

the laws of a multitude of other jurisdictions.3 According to the Antitrust Division, “antitrust

enforcement agencies around the world have played a leading role in changing the business

culture toward cartel activity,” and such activity “is [now] viewed as tantamount to fraud or

theft.”4

Moreover, as discussed later in this Chapter, the penalties for a violation have grown

significantly more severe as antitrust crimes are treated akin to other white collar offenses and

investigations are frequently coordinated among multiple jurisdictions to ensure the swift

prosecution of multinational corporations and their culpable employees.5 In the United States,

1. Christine A. Varney, Antitrust Div., U.S. Dep’t of Justice, Vigorous Antitrust Enforcement in this

Challenging Era, Remarks Presented at the United States Chamber of Commerce, at 14-16 (May

12, 2009), available at http://www.usdoj.gov/atr/public/speeches/245777.pdf; Thomas O. Barnett,

Antitrust Div., U.S. Dep’t of Justice, Global Antitrust Enforcement, Presented at the Georgetown

Law Global Antitrust Enforcement Symposium, at 1-2 (Sept. 26, 2007) (“Barnett, Global Antitrust

Enforcement”), available at http://www.usdoj.gov/atr/public/speeches/226334.pdf; R. Hewitt Pate,

Antitrust Div., U.S. Dep’t of Justice, Securing the Benefits of Global Competition, Remarks

Presented at the Tokyo American Center, at 5 (Sept. 10, 2004) (“Pate, Securing the Benefits”),

available at http://www.usdoj.gov /atr/public/speeches/205389.pdf.

2. 15 U.S.C. § 1. Section 1 of the Sherman Act states that “[e]very contract, combination in the form

of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or

with foreign nations, is declared to be illegal.” Id. The Act has been interpreted to prohibit only

unreasonable restraints. See, e.g., Standard Oil Co. v. United States, 221 U.S. 1, 59-62 (1911);

Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958); Leegin Creative Leather Prods. v.

PSKS, Inc., 551 U.S. 877 (2007). However, some restraints, such as those involving price-fixing,

bid rigging, or market or volume allocation, “because of their pernicious effect on competition and

lack of any redeeming virtue” are per se illegal and thus, an inquiry into their reasonableness is

unnecessary. See Northern Pac. Ry. Co., 365 U.S. at 5; accord Leegin, 551 U.S. at 886.

3. See, e.g., Pate, Securing the Benefits,supra note 1, at 3 (“Looking at the global situation today, we

see a remarkable change in the global acceptance of antitrust law as a promoter of economic growth

and prosperity. More than 100 countries have adopted antitrust laws and there is unprecedented

cooperation among countries in acting against international cartels.”).

4. Barnett, Global Antitrust Enforcement,supra note 1, at 5.

5. See Thomas O. Barnett, Antitrust Div., U.S. Dep’t of Justice, Seven Steps to Better Cartel

Enforcement, Presentation to the 11th Annual Competition Law & Policy Workshop, at 5 (June 2,

48 Antitrust Compliance: Perspectives and Resources

fines for violating Section 1 of the Sherman Act can reach the hundreds of millions of dollars,

and individuals routinely serve jail time.6 The number of jail days imposed on individuals that

engage in antitrust and related crimes (including Title 18 offenses, such as wire fraud, that may

be charged with a Sherman Act offense or by itself in some cases) have reached record levels in

part due to the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA),7

which “more than tripled” the maximum jail sentence for antitrust crimes.8

In light of growing coordination among jurisdictions in cartel investigations, penalties can be

imposed by multiple competition authorities in countries whose citizens are harmed by the

cartel’s activities.9 Strictly domestic cartels are facing stiffer penalties as well. In 2005, the

Antitrust Division obtained its largest fine against a domestic cartel, in the amount of $29

million, from an Indiana company engaged in a regional cartel to fix the price of ready mix

concrete; four of the company’s executives also agreed to pay fines and serve jail time.10

Regardless of whether a company operates in a localized market or in a multinational one,

the costs of maintaining a sound antitrust compliance program are likely far less than the costs of

an antitrust violation. Depending on the violation, there may be significant criminal penalties,

including substantial jail time for culpable company executives and employees; civil

enforcement by the Antitrust Division or the Federal Trade Commission (FTC); state

enforcement; civil litigation, which can result in treble damages and attorneys’ fees; enforcement

actions in foreign jurisdictions; other penalties, such as suspension and debarment; and

intangible harms to the company, such as the loss of goodwill.11

2006) (“Barnett, Seven Steps”), available at http://www.usdoj.gov/atr/public/speeches/216453.pdf;

Scott D. Hammond, Antitrust Div., U.S. Dep’t of Justice, Recent Developments, Trends, and

Milestones in the Antitrust Division’s Criminal Enforcement Program, Remarks at the ABA

Section of Antitrust Law 56th Annual Spring Meeting (Mar. 26, 2008) (“Hammond, Recent

Developments”), available at http://www.usdoj.gov/atr/public /speeches/232716.pdf.

6. See generally Antitrust Div., U.S. Dep’t of Justice, Sherman Act Violations Yielding a Corporate

Fine of $10 Million or More (Feb. 16, 2010), available at http://www.justice.gov/

atr/public/criminal/sherman10.pdf; Scott D. Hammond, Antitrust Div., U.S. Dep’t of Justice,

Charting New Waters in International Cartel Prosecutions, Remarks Before the 20th Annual

National Institute on White Collar Crime (Mar. 2, 2006) (“Hammond, Charting New Waters”),

available at http://www.usdoj.gov/atr/public/speeches/214861.pdf.

7. Pub. L. No. 108-237, Title II §§ 201, 211-215, 118 Stat. 665-68 (2004) (codified in part at 15

U.S.C. §§ 1-3) (amended 2010).

8. Barnett, Seven Steps, supra note 5, at 5. Accord 118 Stat. 668 (codified at 15 U.S.C. §§ 1-3).

9. See Hammond, Recent Developments, supra note 5, at 18-20.

10. DOJ Press Release, Indiana Ready Mixed Concrete Producer and Four Executives Agree to Plead

Guilty to Price-Fixing Charge (June 29, 2005), available at http://www.usdoj.gov/atr/public/

press_releases/2005/209816.pdf.

11. See William J. Kolasky, Antitrust Div., U.S. Dep’t of Justice, Antitrust Compliance Programs: The

Government Perspective, Remarks Before the Corporate Compliance 2002 Conference, at 20 (July

12, 2002) (“Kolasky, The Government Perspective”), available at http://www.usdoj.gov/atr/public

/speeches/224389.pdf.