Antitrust Crimes & Corporate Compliance and Accountability

Mary:                                  Our next panel is one that I’m excited about. As you all know by now, we’re co-sponsoring with the Corporate Counsel Section, and we do get a lot of our programming ideas from the Antitrust Section and substantive committees. And so, this one is a real combination that we were able to put together with the Antitrust Section, Cartel and Criminal Practice Committee, and the Corporate Counsel Section had some similar ideas that we were able to put together into a pretty interesting panel here.

So this is Antitrust Crimes and Corporate Compliance and Accountability. And I hand it over to our program chair and moderator, Tee-St. Matthew-Daniel.

Tee St. Matthew…:          Thanks, Mary. Hi, everyone. Can you guys hear me okay? Sweet. All right, I thought we would get started with some introductions because we have a really amazing panel here. And then we’ll just jump right into the conversation. We’re going to try to hold time at the end of the discussion to take questions, but if you’ve got a burning question that can’t wait, just stick up your hand and if we see you we’ll call on you.

Sitting next to me is Emma Burnham. Emma is the Acting Director of Criminal Enforcement at the Antitrust Division at the U.S. Department of Justice. Emma has been at DOJ since 2014, and she has served in several roles, including Acting Chief, Assistant Chief, Counsel to the AG and trial attorney. So if you need a tour around the building, go to Emma.

Sitting next to Emma is Martin d’Halluin. Martin is Deputy General Counsel at News Corp for Global Competition Law and Policy. He’s been there since 2017. Prior to News Corp he was in private practice as an associate and then later a partner at Morgan Lewis here in New York. He’s dual qualified, and he’s a member of the Paris Bar and the New York Bar.

Next to Martin we have Peter Bernstein. Peter is Senior Managing Counsel at MasterCard, and he is responsible for competition law, compliance and policies, so he’s basically responsible for MasterCard’s Global Antitrust and Competition Law program. He has also been with MasterCard since 2017. Prior to that Peter served in various roles in-house, and then he was also with the New York State Attorney General in the Antitrust Bureau as an Assistant Attorney General. You see, I told you, we got a pretty sweet panelist.

All right, Catherine Stillman. I’m just thrilled to have Catherine here. She’s also the Vice Chair of our Cartel and Criminal Practice Committee. But in her day job she is a partner at Baker & McKenzie. She is the global co-lead of the firm’s Competition Litigation Taskforce, and she brings to this discussion extensive experience in representing companies in private litigation and government investigations, the full range: competition collaborations, monopolization, no-pledge actions, and of course — sort of the topic of the day — counseling clients on managing risks in their daily business activities.

So those are our panelists. I’m your moderator, Tee St. Matthew-Daniel. I was at DOJ until Halloween last year, and I recently joined Paul, Weiss, where I’m a partner in the Litigation Department and the Antitrust Practice Group.

So we have been looking forward to this conversation. Because of the nature of the topic we’re dealing with I thought it would be a good idea to give a general disclaimer for everybody. So we are not talking about any of our clients, current or former. We’re also not speaking about any specific defendants or subjects or targets of DOJ investigations. To the extent you hear us speak about current or past DOJ criminal prosecutions we are drawing on information that you can access in the public domain.

So with that disclaimer, let me get started with Emma. I thought it would make sense to just basically have Emma set the stage for us and identify what DOJ would consider to be conduct that warranted criminal investigation as an antitrust claim.

Emma Burnham:              Thank you. Before I get started I feel like you got shorted on the introductions. I didn’t realize yourself introduction.

Tee St. Matthew…:          All right.

Emma Burnham:              So Tee is not just a former Antitrust Division person. She was an Assistant Chief in our New York office. She was counsel to the Assistant Attorney General. She’s a trial attorney in our Washington Criminal II Section. And she is an incredible person, and I’m honored to be on this panel today with all of you, so thank you.

Tee St. Matthew…:          Thank you, Emma.

Emma Burnham:              I also apologize in advance because this part is, for sure, going to be the least interesting part of this panel, but Tee said I had and I think it will provide some kind of helpful framing for the rest of the discussion.

So to answer the question, the Antitrust Division’s mandate when it comes to criminal enforcement is to prosecute the full range of criminal violations that affect competition and the competitive process. That includes crimes under Title 18 and also obviously criminal violations of the Sherman Act, which I think is what Tee wants me to talk about, Section 1 and Section 2 of the Sherman Act.

What we prosecute criminally under Section 1 are horizontal agreements between our non-competitors to do a few different things; fix prices, rig bids and allocate the markets.

Price fixing comes in a number of different forms. It’s not just an agreement to fix set prices. It can also be an agreement to fix pricing levels, agree on a set formula or how prices are set, agree on surcharges, all of that range of conduct. It also includes wage fixing, which I think you might get into a little bit later, meaning agreements among employers to fix wages of their employees or other terms of employment.

Bid rigging is, I think, pretty straightforward; agreements of non-competitors on how to divide in advance who [inaudible 04:54:05] bid to be.

And then, market allocation, the third type, involves competitors agreeing to divide up either a geographic territory or product markets. That can also come in the form of conspiracies to allocate employees. It’s typically referred to a no poach agreement, which again I think we’ll talk about a little bit later.

Under Section 2 of the Sherman Act what we prosecute criminally, what we have historically prosecuted criminally and what we have recently prosecuted criminally are monopolization, attempted monopolization and conspiracies to monopolize. As some of you may know, this division historically prosecuted those cases sometimes alongside Section 1 and sometimes as standalone defenses.

Over the past 40-plus years we have not brought those cases criminally until last several months when we filed a few Section 2 cases that, I think, Catherine will describe shortly.

In terms of how to think about what we prosecute criminally in that space versus what might be a civil monopolization offense, we look toward what the intent is. Those crimes require a specific intent to monopolize a market, and we have long said that we reserve criminal prosecution for cases where the law is clear and where the facts reveal a flagrant offense and clean intent. So we’ll tease some of that out a little bit more later.

I think just a couple of things to [inaudible 04:56:03] and then let you move on: Section 2 is a little bit different from Section 1 in that it criminalizes not only conspiracies between competitors but also unilateral conduct, single-form conduct, and it also criminalizes attempts, which makes it a little bit different from Section 1, where an attempt to fix prices is not itself a violation of the Sherman Act. On the other hand, an attempt to monopolize a market is expressly a violation of Section 2.

Tee St. Matthew…:          Thanks, Emma. I think that’s helpful. We’ll definitely going to come back to some of those points. But before we move on, could you quickly give folks a sense of the types of investigative tools that the criminal program uses at the Antitrust Division. How do you all build these cases? Quick overview though.

Emma Burnham:              Okay, yeah. In short, the Criminal Enforcement Program at the NHS division is like any US Attorney’s Office or other criminal component of the Department of Justice. We’ve the full range of investigative tools. We work closely with the FBI and with other law enforcement partners. We generate a number of our cases proactively from leads that we have received from law enforcement or regulators, other agencies. Work extensively with our international counterparts.

Because of the inherently clandestine, secretive nature of many of the crimes that we investigate and prosecute it is frequently helpful to have cooperation from an insider, co-conspirator, who can open up the conspiracy to us. So many, some, not all of our cases, involve cooperators and covert investigative methods.

We also, and I think you will touch on this later, have a voluntary self-disclosure policy called the Leniency Policy that is then in place for 30 years, and encourages companies and individuals to come in, self-report their role in the conspiracy and cooperate. So that’s another way that we would generate cases and investigate them.

But that said, a lot of our cases also start from victims complaining about something that seems wrong in terms of pricing or a whistleblower or our own in-house economics group noticing odd pricing patterns and bringing them to our attention.

Tee St. Matthew…:          And final question before we move on from you, what are the consequences of a conviction for an antitrust [inaudible 04:59:07], for individuals and for the companies with our focus on corporate components?

Emma Burnham:              So for companies, per violation under the Section 1 or Section 2 of the Sherman Act, [inaudible 04:59:20] maximum penalty is $100 million. That’s not just a theoretical number. That is a number that we frequently seek and see courts impose, both in the context of litigative cases and ones that resolve through a negotiated resolution.

We can also seek fines in excess of $100 million if we can prove what the gain was to the co-conspirators or loss. We seek a fine that rights that [inaudible 04:59:53] loss number, which in some of our cases but be pretty astronomical.

And then, for individuals the statutory maximum is 10 years in prison. We often obtain prison sentences for individuals, especially senior level executives who manage those funds.

Tee St. Matthew…:          All right. So that’s your criminal antitrust 101 refresher. Now we’re going to start digging a little deeper. So Catherine, let me bring you into this conversation. What should folks know about the current enforcement environment, at least from the private practice perspective? What are the trends? What should people be thinking about in 2023?

Catherine Still…:              Sure. Thanks, Tee. I’m going to talk about the roles and I’m just going to talk about how it’s going to be [inaudible 05:00:51] recently in [inaudible 05:00:51]

So in broad strokes, our key focus, one is from Section 2 criminal enforcement. Then I’ll talk about [inaudible 05:00:57], and just talk through a legal [inaudible 05:01:01]

Yeah, there’s been a lot of talk about the resurrection of Section 2 criminal enforcement. It’s a really interesting, exciting [inaudible 05:01:12] time to in [inaudible 05:01:14] a lot going on, and things are changing and great progress has been made.

But [inaudible 05:01:22] the first time that she headlined in a speech [inaudible 05:01:27] frame criminal [inaudible 05:01:30] violation of 52, but [inaudible 05:01:32] that the DOJ kind of a more official announcement that law enforcement [inaudible 05:01:37] is coming. And of course it’s created these liberal [inaudible 05:01:41] and some questions about maybe [inaudible 05:01:44] possibly [inaudible 05:01:44]

Actual policy statement, there was actually in October 31st, which now makes sense that was the last day that Tee worked in the division. How can [inaudible 05:02:00] the division now [inaudible 05:02:02] by the president of the Montana Paving and Asphalt Contractor for attempted monopolization. And according to this one count [inaudible 05:02:12] charged filed by the District of Montana, the defendant, Mr. Vito, approached the Senator about a project partnership, whereby a competitor would stop competing for [inaudible 05:02:24] project [inaudible 05:02:26] and in exchange Vito’s company would stop competing for a similar project in South Dakota and Nebraska.

So it’s interesting here because there is a [inaudible 05:02:38] aspect to this, the [inaudible 05:02:43] to a competitor to collude. But the charge and [inaudible 05:02:48] is formally a Section 2 charge. So I guess the theory is that if the strategic partnership actually materialized [inaudible 05:03:02] this company would have [inaudible 05:03:03] power and [inaudible 05:03:05]

So what this case would [inaudible 05:03:09] is that invitation to collude is now also able to be prosecuted criminally under Section 2, which gives [inaudible 05:03:20] prosecutors an additional option when they make their [inaudible 05:03:24]. And they could still [inaudible 05:03:27]

And then, next stop is the United States versus Martinez [inaudible 05:03:35] agency. It’s in a border region in Texas. So here, all right, last [inaudible 05:03:44] December 10th the Division unsealed an 11 indictment for [inaudible 05:03:50] with Section 2 conspiracy to [inaudible 05:03:52] attempting [inaudible 05:03:53] industry in [inaudible 05:03:56], Texas. The other [inaudible 05:03:58] here were conspiracy [inaudible 05:04:01] Section 1 as well as obstruction and [inaudible 05:04:06]

So just to explain, and that’s up here, [inaudible 05:04:09] is to [inaudible 05:04:15] to transport [inaudible 05:04:17] to transport new vehicles and other goods from the US to Mexico [inaudible 05:04:47] help with [inaudible 05:04:47]

Anyway, I think [inaudible 05:04:47] is that [inaudible 05:04:47] to form a conspiracy that operated [inaudible 05:04:47] which [inaudible 05:04:47] operated in the most [inaudible 05:04:50]. So the conduct [inaudible 05:04:53] here is that this conspiracy forced non-inspiring competitors to pay essentially an extortion pass or participate in a revenue allocation program to [inaudible 05:05:29]

So [inaudible 05:05:29] role for [inaudible 05:05:29] partner who colluded in [inaudible 05:05:29] background stage [inaudible 05:05:29]. So as you see in both [inaudible 05:05:30] and [inaudible 05:05:32] to be a horizontal [inaudible 05:05:35] to the Section 2 [inaudible 05:05:39]. And it’ll be exciting to see how Section 2 criminal enforcement goes, particularly whether there will be standalone Section 2 cases either.

And the next topic we’re going to cover is [inaudible 05:05:55] a few minutes and [inaudible 05:05:59] force, knowing [inaudible 05:06:02] about [inaudible 05:06:02] better than Tee, who was one of the leaders who helped this effort.

But as [inaudible 05:06:11] the Division launched the PCSF in November 2019, and through inter-agency partnership [inaudible 05:06:19] in government procurement and program funding at all levels of government, the federal, state and local, that the PCSF comprised of the [inaudible 05:06:25] and the FBI and Inspector General for multiple [inaudible 05:06:36]

I just [inaudible 05:06:38] the Division first announced [inaudible 05:06:43] more than one-third of the Division, 100 [inaudible 05:06:46] agreement. So you can imagine how large these government contracts are [inaudible 05:06:54] criminal enforcement would also need to involve a lot of [inaudible 05:07:01]

So some of the [inaudible 05:07:07] here are since the 2019 launch the PCSF has opened more than [inaudible 05:07:13]. And it’s charged over 30 individuals or companies with crime, [inaudible 05:07:18]

This seem to happen on very [inaudible 05:07:44] ground, and based on this momentum [inaudible 05:07:44] we can see [inaudible 05:07:44] enforcement we’ve been [inaudible 05:07:44] about.

I see that out of the time [inaudible 05:07:44] to embarrass me so I just want to [inaudible 05:07:44]. I know there’s a whole section on [inaudible 05:07:44] the markets. I was just going to mention that very [inaudible 05:07:44] the beginning of 2022 there was the news of the acquittals [inaudible 05:08:04] and [inaudible 05:08:04], but the last few months [inaudible 05:08:04] to see that [inaudible 05:08:04] that DA, when [inaudible 05:08:06] agency today [inaudible 05:08:07] and that was really [inaudible 05:08:11] involve [inaudible 05:08:13] criminal labor agencies and also US [inaudible 05:08:15] like the Aerospace [inaudible 05:08:20]

And the reason why it was being [inaudible 05:08:25] is [inaudible 05:08:27] the Division had a really precise way to convince the court that [inaudible 05:08:34] in that case should be [inaudible 05:08:39]

Tee St. Matthew…:          All right. Thanks, Catherine. So I know we’ve had to go through quite a lot quickly but the CLE material sort of covered these cases in a little bit more depth, if you want to go into some detail into some of these cases you have that in your packet.

Catherine Still…:              Can I add one more thing?

Tee St. Matthew…:          Sure, go ahead.

Catherine Still…:              [inaudible 05:09:01] just one time.

Tee St. Matthew…:          I know. I will get there. Trust me. So here’s where we are now. From hearing Emma and Catherine, I hope that folks are starting to get the sense that criminal antitrust enforcement is certainly high activity but there’s also a lot of pushing boundaries, at least from the perspective of folks that are catching up with what the Division is trying to do.

And so, what we wanted to do next was turn to our in-house colleagues, Martin and Peter, and get their perspectives of how they are navigating, practical insights for navigating this evolving landscape. So I will quickly do that now. Martin, could you explain to us how one goes about navigating this landscape, and from a compliance perspective how does one develop a compliance culture that accounts for the or the height in enforcement?

Martin d’Hallui…:            Thank you, Tee, for an invitation. I would make three formal points about developing a compliance program, and then follow with an informal point.

Formally, I would say, I mean, in my experience at least, it’s working very closely with the compliance group. I mean, I have compliance colleagues who are related to legal but not in charge of legal questions and it’s their day-to-day job to deal with compliance. They have a lot of initiatives such as audit risk assessments, newsletters, meetings every three months. To get on their agenda and to use their tools has proven very useful, especially for training and for making sure antitrust is understood.

The second point is getting the ear of senior executives. So it’s been easier lately because of the big announcements and the media coverage, but making sure senior executives are on board with the antitrust compliance, and also the culture needs to come from them. And practically, it’s like getting them involved with training, whether it’s recorded or not. Also making sure the emails come from them, and making sure at the board, for example, there’s antitrust topics being discussed and stress compliance on the agenda.

And the last point is training and rules guidance. I mean, making sure documents are updated. It’s very important right now. An example is with HR. We mentioned there’s a lot of things to do right now with HR around non-competes, to the extent that the rule proposed by the FTC is ever going to pass. I mean, I would consider reviewing all the agreements to make sure we know where the non-competes are so we can address them.

The dream of the in-house counsel is to get compliance into labor agreements or policies. It can take two forms, like you can get an extra bonus if you do a good job, or you can get a claw back if there’s a problem later. But that’s kind of like I see that as the dream, but that’s obviously very hard to get.

The informal point that I want to make which, in my experience is key, is to develop very good relations with business colleagues; other lawyers, all those people; also mostly business colleagues, because the only way we can apply compliance program is by getting questions and the only way we get questions, especially in a fast-changing world where we are today, is by making sure they know where to find us and they have some sort of issue spotting experience, that they know there’s a problem, that they should ask a question. And that, I mean, no matter how many formal things we do, it’s really about developing these connections within the company.

Tee St. Matthew…:          Thanks, Martin.

Peter Bernstein:               [inaudible 05:13:08] get in on that. Having [inaudible 05:13:11] the right people, the senior executives [inaudible 05:13:13] to the issues, one, so that most… It’s reaching the rest of your employee base, which is really hard. We can [inaudible 05:13:21] the [inaudible 05:13:23] every two years, everybody gets online. Antitrust training is just a [inaudible 05:13:27] is what it is. It’s getting in front of them with the right message at the right time in the right way that’s going to be challenging.

And if they’re business leaders better we’re going to have you coming to their annual get together for everybody or give you 10 minutes on the agenda. It’s figuring out what that direct message is, what are the risks that they’re most likely to face, and not try to cover everything. You just can’t do that.

So if we can target those audiences in a way that matters it really is making that guidance more practical to them and it evolves nicely. That’s really where you start to truly change the culture.

Tee St. Matthew…:          Right. And sort of picking up on that point, it just can’t be generic guidance. So the compliance guidance you’re giving people in this environment is tailored to that business and then their particular risks. So can you talk to us a little bit about some of the practical implications when you’re thinking through information exchanges, for example, that run the gamut from, “Okay, this is fine,” to, “This is a crime.”

Peter Bernstein:               Yeah, some information you can’t just completely [inaudible 05:14:31]. Some not so much, specifically for [inaudible 05:14:35] for them. So every one of these exchanges needs to be one of [inaudible 05:14:38] and looking at the context with the intents. So it’s going to lead to questions. One, I ask the business, which is why, right? This is a really hard question sometimes, the business, why you want to do this. And if they don’t have a ready made answer, chances are it’s not going to be a good one [inaudible 05:14:55] when they come up with it. If they explain to you that customers want this, they want to see this data, I happened to work for a company where we release our sales data-

PART 9 OF 12 ENDS [05:15:04]

Speaker 23:                       You know, I happen to work for a company where we [inaudible 05:15:03] our sales data. Well, we do that after the fact [inaudible 05:15:06] but that he gets that. That’s a good thing. Well, what happens [inaudible 05:15:10] take that data and use it a different way. The other question is, is the DOJ going to look at this as some kind of an agreement with our competitors [inaudible 05:15:19] Right, and that’s really something that I think about.

I don’t ask the business to think about that. But how would this be viewed if we actually carried this out? If they’re looking to share price information or [inaudible 05:15:33] information, sales [inaudible 05:15:34] depending what the business is, if they can’t justify it, that could be indicative of an issue, right? And sometimes this could be cartel activity that shared the information and prices getting changed immediately could be problematic.

So we want to see whether there’s going to be some kind of effect from it. We also take into account what’s going on, what type of market is this, who are the competitors. And then, what is the nature of that information that’s going to be shared? And then, if you’re in a really concentrated market, I always get scared in concentrated markets [inaudible 05:16:07] approach. But if you look at the kind of information being exchanged, like how competitively sensitive is it? Are you looking at price, costs, types and sizes of customers. Is there data aggregation? Is there historic data or is it, basically, this month’s sales figures?

How [inaudible 05:16:25] is the exchange? Is it accessible to everybody? Is it published in our website somewhere? Or is it only a certain a number of competitors or members of the Trade Association? [inaudible 05:16:36] are we going to do this with a third party [inaudible 05:16:43] exchanging information [inaudible 05:16:43] and [inaudible 05:16:43] it all together. Some of those [inaudible 05:16:43] should sound really familiar. One of the guidelines of the [inaudible 05:16:47] healthcare guidelines. That’s actually the best practice for information sharing. It’s as old as I am [inaudible 05:16:54]

But it’s been around for a really long time. And that’s sort of your safety zone is your starting point. The 5/25 rule always compounds people, right? You’re looking for at least [inaudible 05:17:07] market share is not more than 25%. And then you have created a business people that want to push the boundaries on that. So it’s something to pay attention to. That’s going to be the start of your analysis. That’s not the be all and end all. And then, obviously, if there’s any potential for restricted [inaudible 05:17:23] what are the pro competitive aspects of doing this, right?

And it goes back to the why. Look at the business to explain to me what it is they want to do, why they want to do it, [inaudible 05:17:33] Why this might be good. What is this information [inaudible 05:17:36] How are people going to use? And we look at it that way. And I think we’re going to talk about sustainability. That’s an area information exchange, this has been coming into. We’ve seen some letters coming [inaudible 05:17:50] powers in Washington to organizations that have signed on sustainability standards, saying any information sharing there, in that context, might be [inaudible 05:17:59] I don’t think that’s always the case but I do see where that argument’s going to get fully blown out.

Speaker 24:                       Yeah. I mean, just to underline a point that I think Peter is making is essentially if you do not do your due diligence and if you don’t ask these questions, none of us want to be the attorney that didn’t scratch enough of the surface. And that might have, essentially, in this person’s mind, signed off on people engaging in criminal conduct, right? Because that is part of the risk analysis in this environment is that they are telling you only about a particular discreet information exchange that’s part of a broader agreement.

And because you didn’t ask the questions, couple years later DOJ is at the door and they say, “Well, I talked to so-and-so. And they said it was fine.” That’s not the position you want to be in. So I think that’s some of just the knowing the business and asking the questions. But yeah, let’s talk sustainability, right? Because we’ve all seen these headlines, climate cartels and climate collusion. And thinking, well, wait, what’s that about? So, in this context, right, I don’t know if Peter or Martin, which of you want to jump on this first. But how are you managing those risks so you don’t actually become DOJ’s first climate cartel? How are you trying to avoid that?

Speaker 25:                       The key lesson is there’s no pass. The climate cartel is a cartel. So, it’s not an excuse. It’s also not going to be, right now, according to Lina Khan who published an op-ed two weeks ago, it’s not going to be considered as a benefit in a merger review. So it’s important when we are looking at companies dealing or trying to make progress. And trying to make positive things around ESG. It’s important to remember. So there’s really two things that I wanted to distinguish. The first one is, well obviously, you cannot use the ESG as an excuse for illegal cartels on prices or volumes.

Cannot be also an excuse for group boycotts or refusals to deal. Although I have not seen that yet. And information sharing, I think it’s very interesting because, really, information is essential if people want to make progress on emissions for example. And there are ways to exchange information. The key is always, often, educating people that they cannot share competitive sensitive information. And they always ask what is “competitively sensitive information”. And we all say that’s the information that would make you change your mind when you price or set volumes if you knew about it. And most of them nod, they still don’t understand what it means.

The other point that I wanted to make which are things that could be okay to achieve ESG goals is to work on industry-wide best practices. Where everybody would agree in a public and open manner on certain goals. But again, make it public, not share information and you make sure counsel is involved. Work on codes of conducts. Codes that are optional and not exclusive are always a good way to achieve goals without creating liability.

Or working to petition the government together, which is exempt-

Speaker 24:                       [inaudible 05:21:52]

Speaker 23:                       And the follow up of that is we do this [inaudible 05:21:57] with the best practices, really it’s up to each company to make their own independent unilateral decision is probably going to, or even if they are going to implement it. I think, really, the ultimate concern that we hear about this is concerted action. These companies are working together to do something. Well, it’s one thing for people to talk in general goals, it’s another thing for them to be collectively agreeing. And so, I think there’s that distinction in the companies, [inaudible 05:22:24] sort of like standards setting, right? Organization set, joint organizations having standards. Any digital companies have to decide how to apply their standards. And I think [inaudible 05:22:34] works in that same vein.

Speaker 24:                       Okay. So let’s just quickly talk about managing criminal risks in the context of a civil investigation or a merger investigation. And, I don’t know, Peter, you wanted to talk a little bit about that. I know Emma too has some thoughts about even though she’s not in house so-

Speaker 23:                       Yeah, our thoughts are going to be different and Emma’s going to cover hers right now. Okay, so, in any case you’re involved in with a government agency, right. It could be my friends [inaudible 05:23:03] in the New York [inaudible 05:23:04] office, it could be [inaudible 05:23:06] DOJ. In any context, company has a turnover over which means there’s information. I mean, I used to joke about millions of pages. Now it’s billions of bits of data. Right, when you get a subpoena from DOJ or the FTC, they are broadly drafted. Not just in terms of the specific types of documents [inaudible 05:23:26] but where they might dip, email, PowerPoints, Excel. If you’ve ever done anything on the [inaudible 05:23:32] side, it’s the text messages and chats that are not easily readily available for the companies.

All of this is subject to these requests for information from the agencies. And as you turn it over, regardless of what the context might be, those documents are very telling. And they may tell a story about, let’s say it’s a merger. They tell a story of your merger but they may tell something else. [inaudible 05:23:55] If you look at [inaudible 05:23:56] the second line of the [inaudible 05:24:01] says, “[inaudible 05:24:02] is a monopolistic [inaudible 05:24:04] market.” I love that. [inaudible 05:24:06] that they want to be more monopolous. That’s not me. But it was [inaudible 05:24:09] of all the documents [inaudible 05:24:11] that started a DOJ [inaudible 05:24:15] practices in the US, separate investigation for [inaudible 05:24:18] enjoy their little secrets.

But basically, the documents they turned over, in any merger, might cause them to request it. I say any merger because if you look at [inaudible 05:24:28] years ago started as a merger [inaudible 05:24:32] 2014. 2015, DOJ said no to the merger. And the quote from it was, “The market is not functioning competitively today. And further consolidation would only make things worse.” So, there were two parties to the merger. One of those parties, when it was done, ran in for leniency. Right, so ultimately, if you look at the documents played out, the way documents played out, we had one company [inaudible 05:24:58]

You had Bumble Bee pay a 25 million fine and their CEO was sentenced to 40 months in jail. Basically based on information that resulted from the merger [inaudible 05:25:13] So I like to think about this in terms of what are employees doing? What are they writing? How are they writing it? I call it careful communication. I do not try to ever tell employees in any of the companies I’ve worked for don’t write anything down, right, this isn’t a mob boss movie. You know, where the mob boss [inaudible 05:25:30] years ago, we would never figure out what he is doing.

I don’t tell employees not to write things down. I want them to be thoughtful, right. A lot of the work that the companies do [inaudible 05:25:44] competitive, great for customers, great for consumers. All that good stuff. But when I look at their analysis and it starts with a reckoning projection, it probably isn’t the right way to talk [inaudible 05:25:53] And so those documents that employees are creating at companies, surely this [inaudible 05:26:00] of telling a story that’s different from what’s actually happening. Or different from the reality down the road. And those are the documents that the prosecutor, guilty as charged, might use to build a case.

So what are the investigations that might have worked on once upon a time is a hand written note that says, “Get to the right number or we’ll kill you.” Okay, not only now, not a PowerPoint, [inaudible 05:26:26] That’s it. So, all of this information that you turn over for your clients as your private practice or if you’re in a company end up becoming the basis of these cases. And it is helpful to talk to your employees about being thoughtful. [inaudible 05:26:46] really doing. What is the reason? What is the purpose? Sticking to facts. Joking emails and text exchanges and chats are not a great thing always because they lack context about how do you talk about it is just as important.

So the reason I told [inaudible 05:27:01] New York Times story about a large tech company who told their employees, “Don’t use the word [inaudible 05:27:19] in their emails, right. They don’t talk about competition in their internal documents [inaudible 05:27:19] privileged. But that’s a different story for another day. So, anyway. What goes into this is very indicative of what might come out, where these investigations might [inaudible 05:27:26]

Speaker 24:                       Right, so what are the document based risks, right, in terms of DOJ having lead generation? But Emma is ready to talk so [inaudible 05:27:34]

Speaker 26:                       Well now I want to respond-

Speaker 23:                       [inaudible 05:27:37]

Speaker 26:                       Yeah, I forgot to compliment yours. And so, yeah, that’s one version, right. That people are having legitimate business communications over email, chats or whatever and it gets misconstrued or taken out of context. But I think there’s another reality that people are committing criminal conspiracies over email or chats and it’s not a joke, right. People always says it’s a joke after. It’s not a joke. So, in those situations, I guess my advice to in house council and the people working on compliance is you should look at those documents real hard and maybe talk to some of the people who wrote them before we would go disclosing them to one part of the government.

Because if you give the civil part of the NHS division documents, for example, the [inaudible 05:28:27] case that you mentioned, the criminal people are going to get it too eventually. Our civil side knows what to look out for and they will refer things over. That is also true of other enforcers. That’s true of the FTC. We all talk to each other. I think people know that but I just want to make that clear. I don’t want to discourage people from inadvertently giving [inaudible 05:28:51] criminal [inaudible 05:28:53]

[inaudible 05:28:55] right now. But I just want to make sure-

Speaker 24:                       Yeah, I think you’re underlining how seriously you take these criminal referrals from your sister agency.

Speaker 26:                       We do indeed. And I also want to [inaudible 05:29:07] talk about is the risk of an investigation [inaudible 05:29:14] and a trust issue but also on obstruction or other efforts to conceal or not disclose to the government evidence of a conspiracy. So, for one example, the [inaudible 05:29:31] case that Catherine mentioned earlier, as an acquittal was actually, so it was an acquittal on the wage fixing charge. But we did obtain a conviction on the more serious charge in terms of [inaudible 05:29:45] sentence was against the lead defendant in that case.

Who, not only was charged with fixing wages for his employees, but also with obstructing and FTC investigation into that set of conduct. So I guess my other advice would be you don’t only worry about obstructing a criminal investigation. There is also similar risks that attach to work that is being done in the FTC or with the civil part of the NHS division.

Speaker 24:                       Yeah, that’s a good point. And I think just to wrap up this discussion because I do want to save time to talk leniency and some of the recent compliance policy statement that are coming out of the department. But, really quickly, Martin, I know you had thoughts on what is missing from DOJ’s compliance guidance document, right? Or what you would want to see from the department in the anti-trust division. So-

Speaker 25:                       Well, first I wanted to thank the people who worked on this guidance document. It’s been a pleasure reading your document, Tee.

Speaker 24:                       All right, I’m just going to interrupt this panel to say everybody should have a hype team like this [inaudible 05:30:55] they are clearly awesome. Carry on.

Speaker 25:                       It has been very useful in order to get awareness within corporate organizations. What is missing, I mean I guess, from my perspective it’s clarity on the discounts because that’s always the most important point for senior management. It’s like what exactly do I need to do to get a discount?

Speaker 24:                       [inaudible 05:31:20]

Speaker 25:                       The answer is don’t commit a crime. But after that, well, what exactly would qualify as a good compliance program? And I think we’ll get more details as we see cases like this. Clarity on programs that work. I mean, there’s a lot of elements in the guidance. But in the day to day how do you build your body of evidence to show that you have a program in place so, not only training but communications, meetings, awareness. And the kind of program where you make people aware of the potential risk.

And also, how do you show that the program works? I’m trying to keep my own privileged database of questions and answers. Thinking what if, one day, someone asks. You can show. These are all good questions. I got all the answers. I provided but is there anything else we should be doing? Maybe there is some best practices on keeping records.

Speaker 24:                       Yeah.

Speaker 23:                       I guess if I could add to the wish list. There are some places within the guidelines that are almost [inaudible 05:32:35] monitoring is one where I feel like I’d want to know more. What were they thinking when they wrote that? What does a good program look like? There hasn’t been a whole lot of cases that have resolved giving anybody credit yet. And even those cases that have resolved where they haven’t been credited, there’s not a lot of guidance in them as to what was missing. So I actually pulled out a 20 [inaudible 05:32:57] press release [inaudible 05:33:00] side that, basically, was a deformation for Morgan Stanley.

They had been [inaudible 05:33:05] Garth Peterson who went and, according to the press release, okay, you can read all about what he did. He violated internal [inaudible 05:33:12] violated their policy. They trained him 40 something times. They must have come in with binders. [inaudible 05:33:17] binders. Dumped it on DOJ’s desk and said, “This is what our program looked like and this is what this person did.” I would love to see similar information on the NHS side because it helps us build our program. It helps us get resources by the way. We don’t have a statute that gets us more resources like that. [inaudible 05:33:38]

But it helps us decide what is practical advice that we can give to employees that we basically learn from. Not all the settlements that come out of DHA affect our business in the way it would affect [inaudible 05:33:55] information from that. And so, the more information, the more color we get from the settlements, from speeches that DOJ gives, that actually helps us, really. We’re looking for best practices, things that we can implement. What is it I should be telling my business [inaudible 05:34:14] When I talk about information exchange, there’s not a lot [inaudible 05:34:17] out there, right.

And these healthcare guidelines have been out there for 25 years. [inaudible 05:34:23] And so, somebody who’s really [inaudible 05:34:28] says, “Well, 5/25 seems like a crazy rule. What about 8/40 or…” Seriously. And so, we don’t get enough guidance, like real life guidance. And I’m dealing with [inaudible 05:34:38] First thing she does every day is scans the news, scans the agency stuff. Yeah, we’re always looking for tidbits that we can use to make our program look better. So to the extent you can give us more tidbits though.

Speaker 24:                       [inaudible 05:34:52] the call for tidbits. Folks have questions or things they too want to see updated in DOJ guidance. This is your chance. Let us know.

Speaker 26:                       Yeah, I’m not making any promises but I will take requests and keep things about the guidance [inaudible 05:35:08]

Speaker 24:                       Yes, there is a question there for you. Does DOJ intend to update the guidance to address some of these requests, I guess, for more certainty or more clarity as to the structure of credit? Like the real world. Like now, it’s been out there since 2019. People want a little more meat on the bones.

Speaker 26:                       Yeah, I think, to answer your question directly, I think that there is certainly always work that we can do to look at the compliance guidance. And some of the recent department wide guidance from the Deputy Attorney General might give us a reason to take a look at our compliance guidance to see what other updates we can make. In terms of providing more nuts and bolts details, I think that these points are interesting. But I think it’s a little bit in tension with the way our guidance is drafted, which is not really providing, it definitely does not provide [inaudible 05:36:14] this is how a program should be structured in terms of what types of training we need to do.

What types of performing mechanisms we need. Because the whole concept, right, is that it depends on the business, the type of business, the industry it’s in, what the best profile is. And so, it seems problematic to have it too prescriptive. In terms of whether there’s additional guidance to provide, in terms of clarity on X type of program we did, Y type of discount. I think the nature of NHS enforcement makes that a little bit different from, for example, FCK, for a couple reasons. One is we have a leniency program. So the first company to self report which it often isn’t able to do by the existent and effective clients program, right.

That’s not public. There are confidentiality attachments there and so the world does not know about [inaudible 05:37:21] compliance program [inaudible 05:37:25] So, I think my answer to why invest in NHS compliance, step one, you don’t commit a crime in the first place. Step two, you are eligible for leniency, which will get you [inaudible 05:37:39] for your company and for its executives as well. And so, then, stage three is [inaudible 05:37:48] best option which is some sort of resolution that does not involve conviction, meaning in the form of a deferred prosecution which is when our 2019 policy update described.

So, you’re right, there is no example of a strictly compliance based deferred prosecution agreement since we issued this guidance and made the policy change in 2019. But I think that it is evident that it’s kind of working as independent. We get pitches all the time from companies [inaudible 05:38:26] compliance program and [inaudible 05:38:28] follow up questions and very helpful and detailed presentation that indicate, at least to me, that people have taken this seriously.

The other point I wanted to make about why NHS I think is a little bit different from something like [inaudible 05:38:45] is NHS [inaudible 05:38:47] I almost don’t know how to answer the question of why do I need to invest in NHS compliance. If you don’t train your people on how to not cheat and compete robustly the way you’re supposed to in our country, that’s just fundamental to the way a company is supposed to work in a way that, I think, a lot of other [inaudible 05:39:11] Not that those are not important but some things are more [inaudible 05:39:14] So I understand that companies have a very complex set of decisions to make about how to invest in compliance and where to put the time and effort in.

[inaudible 05:39:20] fairly fundamental to me.

Speaker 24:                       You’re not at all biased too so-

Speaker 26:                       No, I’m not biased.

Speaker 24:                       All right. Very quickly, let me ask you this. This is a rapid fire question. So the compliance guidance document, as drafted in 2019 is focused on section one crimes. And it says that pretty explicitly. Now that people are being asked to consider their exposure for section two and self reporting and compliance and all of that. Will you be providing some updates to the guidance document that accounts for evaluating the compliance program in the context of section two? Is it effective for that crime?

Speaker 26:                       Yeah, well, and I would also take feedback on that if people think that it needs something different, she can come back and fix it. But I think the way that the compliance guidance is written, it says something like, “For example, [inaudible 05:40:20] But it’s not in terms of the way it lays out the framework of questions that prosecutors look at when assessing a compliance program [inaudible 05:40:30] expected. That’s not specific, really, to any particular crime. The types of things that we’re looking at doesn’t change based on whether it’s section one or section two.

So I don’t see-

Speaker 24:                       So we’re running short on time. So sorry. Go ahead-

Speaker 26:                       [inaudible 05:40:46]

Speaker 24:                       … oh, okay. Fair enough, I think we got some clarity on that. Really quickly, I wanted to talk about leniency. Emma, high level, could you explain to folk that aren’t familiar with the leniency policy what it is, what it offers and what are the recent changes that people should be aware of, including changes as recent as January 2023 for the people that are nerds and have refreshed the page this month. So…

Speaker 26:                       Okay, so the leniency policy, I will try to do [inaudible 05:41:16] It is a tool that, as I mentioned, we have had in place for 30 years. It is an important tool for us, in terms of stabilizing and detecting and prosecuting NHS conspiracies specifically under section one of the Sherman Act. Under the policy, first company or first individual that self discloses its role in a section one crime will not be charged for that offense if it provides timely, continuing, complete [inaudible 05:41:54] I think that’s all. There might be one more. Cooperation in our investigation and prosecution for conspirators.

And meets a set of requirements that is laid out in the policy, which is found in the Justice Manual. So the company avoids a criminal fine, it avoids prosecution for it’s executives under type A of the policy which I will explain in a second. And if there are follow on civil actions, the company will, if it cooperates, be plaintiffs in the civil cases [inaudible 05:42:34] So, under type A, the policy companies report to us before we have any indication of what’s going on. And they are guaranteed coverage for all of their employees, full stop, that cooperate in the investigation.

Under type B of the policy, we already have some sort of indication of the wrong doing. A company comes to us a little bit later, they still get coverage for the company if they meet all the criteria. But their executives are covered only if they’re able to meet the standard for our individual non prosecution agreement. So basically, we don’t cover the employees unless we need them to be covered, unless their cooperation is important to our being able to prosecute the conspirators.

So that, obviously, is designed to encourage companies to come in at the first indication of wrong doing. One of the requirements is that the company promptly reports when it first discovers the misconduct. That’s obviously an important piece of it for us because it allows us to conduct covert investigative steps and get a window into the conspiracy while it’s still ongoing, potentially. Other important conditions, the company must make best efforts to pay restitution to the victims, which sometimes can be done through the civil actions. It must undergo best efforts to improve its compliance program or create one if it’s [inaudible 05:44:22] particular remedial measures as appropriate.

The FAQs are an explanatory document that describe a number of frequently asked questions that we have received over the years. That is intended as a living document that addresses real world situations that we’ve seen. The most recent updates to that FAQ document were made in early January and those address some of the [inaudible 05:45:03] guidance on corporate accountability and specifically their [inaudible 05:45:12] one addresses situations where companies come to us and say, “We want to cooperate but all this evidence is located overseas and there are blocking statutes or privacy issues that prohibit us from giving you the information that you need.”

In those situations, that they can tell me clear that [inaudible 05:45:33] company’s obligations therefore need to explain to us what that issue is. And come up with a workaround so that we can get that [inaudible 05:45:42] prosecute the conspirators. The other changes to the FAQs are designed to make clear that cooperation obligation not only includes producing documents to us but also preserving them in the first place [inaudible 05:45:59] can have them produced to us. And I think these are fairly minor changes but it’s just a good example of how things are, this really is [inaudible 05:46:09] document [inaudible 05:46:10] update as things come up.

Speaker 24:                       All right. Thanks Emma. So we are down to our last minute, literally. So I’m going to use that minute to see if we’ve got any questions [inaudible 05:46:22] And if we do, I’ll take it and if we don’t, I will pose a final question to Catherine. And then we will wrap up and thank you all for hanging out with us. All right. Catherine, let’s talk about leniency and cooperation. And can you even just quickly sort of talk about some of the practical considerations for a company thinking about cooperating with a DOJ investigation. Pros and cons, cost, benefits.

Speaker 27:                       Sure. [inaudible 05:46:50] and so, [inaudible 05:46:56] first, if you guys want to assess the evidence that you have. I would suggest that there has been a violation [inaudible 05:47:05] frequently [inaudible 05:47:18] And I [inaudible 05:47:24] that maybe [inaudible 05:47:26] with the ADP [inaudible 05:47:29] there’s one [inaudible 05:47:36]

[inaudible 05:47:43] whether there’s an obligation to cooperate. [inaudible 05:47:48] non cooperation [inaudible 05:47:52]

[inaudible 05:48:18] providing council [inaudible 05:48:20] and there’s just a lot of other [inaudible 05:48:24] the time and from the business reputation, EA coverage. [inaudible 05:48:31] impact on customers, [inaudible 05:48:36] inspiration as we approach [inaudible 05:48:39] And [inaudible 05:48:42]

Speaker 24:                       Especially for the individuals. [inaudible 05:48:52]

Speaker 27:                       [inaudible 05:48:55]

Speaker 24:                       All right, on that note. Thank you to [inaudible 05:49:02] and the panel.

Speaker 26:        Thank you.