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THE LATEST: DOJ’s Packaged Seafood Probe Yields Conditional Leniency Applicant

On Monday, September 11, Tri-Union Seafoods LLC, the US subsidiary of Thai Union Group, announced it blew the whistle on competitors in the US Department of Justice’s (DOJ) investigation of the packaged seafood industry. The “Chicken of the Sea” canned tuna manufacturer also said it received conditional leniency from DOJ in exchange for its cooperation.

  • In 2015, DOJ began investigating the packaged seafood industry for anticompetitive conduct, including price fixing. DOJ’s investigation followed a failed merger between Thai Union and Bumble Bee Foods LLC.
  • In June 2017, a former StarKist Co. sales executive pleaded guilty to price fixing.
  • Private plaintiffs filed class action complaints in October 2016 alleging antitrust violations in the packaged seafood industry. The private plaintiffs represent grocery retailers who sold packaged tuna to US consumers.
  • Despite the significant costs of participating in DOJ’s Corporate Leniency Program, leniency recipients continue to receive significant value for their cooperation. Conditional leniency recipients like Tri-Union and their employees will not face criminal fines, jail time or prosecution.
  • Full cooperation with DOJ’s program will place heavy demands on leniency applicants, including gathering and translating foreign documents, bringing foreign witnesses to the United States for interviews and testimony, and providing several attorney proffers.
  • It is critical to have a robust compliance program in place to detect any potential or actual violations of antitrust law. Such a program will allow a company to investigate any potential misconduct and, if necessary, report it to DOJ. Time is of the essence when seeking leniency with DOJ’s Corporate Leniency Program.
  • Companies contemplating acquisitions should consider whether any problematic antitrust conduct could arise during the merger review and result in a subsequent criminal investigation.

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The Importance of an Effective Compliance Program

On September 9, 2014, Brent Snyder, Deputy Assistant Attorney General of the U.S. Department of Justice Antitrust Division, provided prepared remarks on the subject of “Compliance is a Culture, Not Just a Policy,” before the International Chamber of Commerce/United States Council of International Business Joint Antitrust Compliance Workshop in New York City.  Snyder explained that an effective corporate compliance program is an important part of a company’s effort to prevent antitrust violations.

According to Snyder, compliance programs make good business and common sense.  He noted that compliance programs help prevent companies from committing crimes.  And, that even if a compliance program is not entirely successful, a partially successful compliance program may help a company qualify for leniency.  Snyder believes there is no one-size-fits-all compliance program. Instead, an effective compliance program should be designed to account for the markets a company operates in and the nature of a company’s business.  He also reviewed five things the Antitrust Division looks at when evaluating a company’s compliance program.

First, a company’s board of directors and senior executives must engage in and be fully supportive of the company’s compliance efforts.  This means that senior management must be fully knowledgeable about the company’s compliance efforts, including providing the necessary resources and having the appropriate personnel oversee the program.  Second, the entire company needs to be committed to executing the policy.   Companies show this by training all executives and managers, and most employees, especially the employees with pricing and sales responsibilities.  Third, the compliance policy should be proactive. To do so, companies should monitor and audit “risk activities.”  Fourth, a company should have an approach to individuals that break the antitrust laws, including being willing to discipline employees for any violations.  Finally, a company that uncovers criminal antitrust conduct should be equipped to prevent the conduct from happening again, which can mean making changes to its compliance program and being prepared to accept responsibility for that conduct.

Snyder also mentioned that having a compliance program may still benefit a company planning to plead guilty to an antitrust crime.  The examples he provided were companies with compliance policies possibly being able to avoid additional oversight by the court and the Division.  The Sentencing Guidelines require an effective compliance program.  If a company does not have one or can’t show it is updating its existing one, a company will most likely be on probation.  However, if a company can show that they adopted or strengthened an existing compliance program it may be able to avoid probation.  The Division is also considering possible ways to credit a company that proactively strengthens or adopts a compliance program after the commencement of an investigation.

In the end, however, Snyder was clear that the purpose of “having an effective compliance program is not so that the Division will cut you a break if your company commits a crime.”  Instead, the purpose of an effective compliance program, as described by Snyder, is to be a “good and responsible corporate citizen.”


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European Commission Publishes New Brochure on Compliance with EU Competition Rules

by Philipp Werner and Martina Maier

On November 23, 2011, the European Commission published a new brochure, “Compliance Matters – What Companies Can Do Better to Respect EU Competition Rules.”  Its stated purpose is to help companies that do business in the European Union "stay out of trouble" and to ensure their compliance with EU competition rules.  However, it does not cover the various practical and legal problems that companies face when developing and implementing compliance programs.

The first part the brochure focuses on the general obligation to comply, as well as the benefits of compliance, such as the enhancement of a company’s reputation and attractiveness for promotional and recruitment purposes.  The second part describes the costs of non-compliance: fines for companies, sanctions on individuals, nullity of illegal agreements and the possibility for damage claims before national courts, and bad press and collateral consequences. The third part gives an overview on the applicability of EU competition rules. The fourth part sets out the strategy that companies should follow to ensure compliance, including the basic steps for identifying the overall risk and individual exposure, as well as steps for implementing the compliance strategy, staff-training, keeping the compliance program current, and monitoring and auditing.

The European Commission makes clear that "although all compliance efforts are welcomed, the mere existence of a compliance programme is not enough to counter the finding of an infringement of competition rules."  With respect to setting the level of fines, the Commission reinforces its position that while a company’s specific situation is taken into account "the mere existence of a compliance programme will not be considered as an attenuating circumstance,” nor will it be a valid argument to justify a reduction of the fine.  Thus, the position of the European Commission stands in contrast with recent statements by the UK Office of Fair Trading (OFT) and France’s Autorité de la Concurrence, both of which stated their intention to take the existence of a compliance program into account when setting the amount of fines.

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European Developments: French Competition Authority Launches Public Consultation on Settlement and Compliance Programs and Italy’s Prime Minister Announces New Cabinet

Public Consultation on Settlement and Compliance Programs Launched by the French Competition Authority
by Louise-Astrid Aberg and Lionel Lesur

On October 14, the French Competition Authority (FCA) launched a two-month public consultation for guidelines on settlement and compliance programs.  Both these guidelines have been highly anticipated since they were first announced last May.

The draft settlement guidelines contain details on the FCA’s approach and decisional practices which were developed under the control of the French courts.  Among the guidelines, the FCA determined that settlement is possible in all cases where infringement on competition law has taken place, including cartels, vertical restraints and single firm conduct.  In the event of infringement, settlement becomes an option only after the parties have been formally charged.  Once parties fully acknowledge their participation in anticompetitive conduct, the casehandler in charge of the matter would decide whether to respond positively to their request for a settlement.  Parties retain the same procedural rights that they would in an ordinary procedure; in particular, they would be granted access to file.  The FCA would reward parties who wish to settle with a fine reduction of 10 percent.  In contrast to the settlement procedure of the European Commission (EC), it would not be possible to cumulate both a settlement reduction and a leniency reduction.  However, parties settling with the FCA may decide to adopt behavioral or structural remedies which would enable them to benefit from an additional reduction of 5-15 percent.  With regard to cartels, parties would benefit from a reduction up to 10 percent if they commit to changing their behavior in the future, in particular, by implementing a compliance program.

The draft guidelines elaborate further on the benefits of implementing a compliance program.  The FCA clarifies several instances in which a compliance program would enable a party to benefit from a reduction of its fine.  In the course of ordinary proceedings resulting in the imposition of a fine, the existence of a compliance program or the lack of it would not act as an attenuating or an aggravating circumstance.  However, in the case of a settlement procedure, the commitment to implement a compliance program would be considered a commitment by the company to change its behavior in the future and would, thus, enable the party to benefit from a reduction of its fine.  In this sense, the FCA and the EC agree that implementing compliance program would not have a significant effect on a fine that is set outside of a settlement procedure.  The FCA only differs with respect to the specific context of a settlement procedure.

A fine reduction of up to 10 percent may not be easy to obtain.  A compliance program would only be considered by the FCA if it includes the following characteristics: (i) the company’s top executives are strongly committed to the program, (ii) the company has designated persons to oversee the program and take charge of its implementation, (iii) the company has taken effective [...]

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