We’ve heard the news – the Antitrust Division took AU Optronics to trial for criminal charges and won. The company has been sentenced to a $500 million fine. But overlooked in the reporting on the case are the details of the corporate antitrust compliance program (CACP) proposed by the Division as part of the sentence. In this note we look at some of these provisions, perhaps gaining insight into the Division’s views on such programs.
First, a reminder that while the Division’s views may be interesting, it remains the case that the Antitrust Division, unlike the rest of the Justice Department, says it does not consider compliance programs in its enforcement decisions. So this odd policy takes away from the urgency of any message from the Division about programs. But let’s proceed to look at some of the program elements.
Among other points, the CACP calls for a compliance officer:
“c. The assignment of one or more senior corporate officials of AUO/AUOA, who shall report directly to the Audit Committee of the AUO Board of Directors, with responsibility for the implementation and oversight of compliance with policies and procedures established in accordance with the antitrust compliance program of AUO/AUOA;”
Note that the compliance officer must be a senior official, and report directly to the board’s audit committee. In the compliance field this is part of a growing recognition that it is essential, if a program is to be effective, for the compliance officer to be high level and have a direct relationship with the board.
The program also requires the appointment of a monitor who is to be someone with “extensive expertise in developing, implementing, and overseeing antitrust compliance programs on behalf of multinational business entities.” The Division here recognizes that compliance and ethics is itself a field, and that mere expertise as a prosecutor, trial lawyer, or antitrust guru is different from what is needed to run or monitor an effective program.
At numerous points in the CACP there is reference to extending compliance efforts, as appropriate, to third parties, including “agents, consultants, representatives, teaming partners, joint venture partners, and other parties acting on behalf of” the company. This appears to be a bit unusual, since third parties do not generally tend to play a prominent role in antitrust collusion. This reference seems to be borrowed from terms used by the Criminal Division in FCPA cases, where agents and third parties do play a central role.
The company is to have an anonymous hotline and procedures to prevent retaliation. This is to be accessible by directors, officers, employees, and third parties. Many readers will not realize the importance of the Division’s use of the word “procedures” here, and assume a passive policy statement with words such as “retaliation is not tolerated” would be enough. But as used in the Sentencing Guidelines standards for compliance programs, “procedures” means internal controls. So it would appear that the company will need to do more than just issue the usual talismanic policy words, and should back them up with concrete preventive steps.
There is to be discipline, including for failure to follow the compliance program. Recall that the Sentencing Guidelines only require discipline for violations of the law. Naturally enough, any program that is not enforced is likely to be considerably less than effective.
There is to be training, and, of course, periodic certifications. When it comes to imposed programs, certification seems to be viewed by government as a magic formula. Enforcement people apparently believe that if you just have people sign a scrap of paper (or perhaps, click a box online), you have somehow taken a giant leap toward compliance (or at least proving that someone was told what to do). When I was in-house my experience with these certifications left me less than impressed, but the government loves them.
Perhaps more interesting is the requirement for “periodic communications by senior management of AUO/AUOA that provide strong, explicit, and visible support and commitment to its corporate policy against violations of the antitrust laws and in support of its antitrust compliance program”. Here it is useful to remember how angered the Division was that the senior people at Optronics never acknowledged that they had done something wrong, so it would be essential to extract this from them. Nevertheless, the Division’s emphasis on senior management sending the right message does make sense in setting tone at the top. In the future, however, the Division might also consider that the strongest messages in the corporate world are not sent by words and statements; they are sent by actions. See Murphy, How the CEO Can Make the Difference in Compliance and Ethics, 20 ethikos 9 (May/June 2007), offering a list of actions an executive can take to get the compliance message across. Company employees typically know that those high-sounding policy statements are written by the lawyers and subject matter experts, so the executive signatures are not necessarily convincing. But when the executives show their intent by actions, such as being the first to take the antitrust training, and denying another senior officer her bonus because her people missed the training, that begins to send a message.
A more detailed analysis of this CACP is available from the author, at jemurphy@voicenet.com .
Joe Murphy, of counsel to Compliance Systems Legal Group, and co-founder of Integrity Interactive Corporation (now part of SAI Global), has worked in the organizational compliance and ethics area for over thirty years. Before working with Compliance Systems Legal Group, Joe was Senior Attorney, Corporate Compliance, at Bell Atlantic Corporation, where he was architect and lawyer for Bell Atlantic's worldwide corporate compliance program.
Joe is a contributing editor to ethikos, a bi-monthly publication on corporate compliance and ethics. He was previously vice-chairman of the board of Integrity Interactive Corporation. He has worked on compliance and ethics matters on six continents, and assisted government agencies, NGOs and companies across a broad range of industries.
Joe has lectured and written extensively on corporate compliance and ethics issues, is on the board of the Society of Corporate Compliance and Ethics (SCCE), is editor-in-chief of SCCE’s magazine, Compliance and Ethics Professional, and is the SCCE’s director of public policy (pro bono). He has represented SCCE as a consultative partner to the OECD’s Working Group on Bribery in Paris, and testified before the U.S. Sentencing Commission on the proposed revisions to the Sentencing Guidelines. He currently serves as chair of the advisory board of the Rutgers Center for Government Compliance and Ethics.
Joe’s work with governments on compliance and ethics programs has included presentations to the Australian Competition and Consumer Commission staff and the Australian Tax Office, assistance to a U.S. Attorney’s office in assessing a corporate defendant’s program, training for federal prosecutors at the National Advocacy Center, and training at the SEC’s FCPA boot camp for SEC, FBI and DOJ enforcement officials.
He also works on an ongoing basis with the OECD Working Group on Bribery to promote anticorruption compliance programs. Through SCCE and individually he has provided written comments and input on compliance program standards to the SEC, U.S. Sentencing Commission, U.K. Office of Fair Trading, U.K. Serious Fraud Office, Standards Australia, drafters of the King III report in South Africa and Canadian Competition Bureau. He also served as a witness for the U.S. Department of Justice during the OECD Working Group on Bribery’s Phase II review of U.S. implementation of the OECD Convention on Bribery of Foreign Public Officials.
With his mentor, Jay Sigler, Joe wrote the first book on compliance programs, Interactive Corporate Compliance in 1988, three years before the Organizational Sentencing Guidelines were issued. Together with Jeff Kaplan and Win Swenson he wrote the leading legal text on compliance programs, Compliance Programs and the Corporate Sentencing Guidelines (Thomson/West; 1993 & Ann. Supp.). He is also the author of 501 Ideas for Your Compliance & Ethics Program (SCCE; 2008) and co-author of Building a Career in Compliance and Ethics (SCCE; 2007).
