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 firstname.lastname@example.org .