Antitrust Law Daily Wrap Up, ANTITRUST NEWS: No dramatic change in Antitrust Division policy on individual liability for corporate wrongdoing, official says, (Oct 1, 2015)

By Jeffrey May, J.D.

Antitrust practitioners should not expect to see a dramatic change in how the Department of Justice Antitrust Division does business as a result of the Justice Department's recently announced policy to crack down on individuals who perpetrate corporate wrongdoing, Renata B. Hesse, Deputy Assistant Attorney General at the Antitrust Division, told attendees of Fordham Law’s 42nd Annual Conference on International Antitrust Law and Policy today. Hesse said that the Antitrust Division is currently assessing its policies on both the civil and criminal sides to ensure that the guidance will be applied.

In September, Deputy Attorney General Sally Quillian Yates sent a memorandum to the heads of the agencies within the Justice Department, announcing a new policy of seeking accountability from the individuals who perpetrate corporate wrongdoing. “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing,” the memo states. The focus on individual accountability is intended to deter future illegal activity, incentivize changes in corporate behavior, ensure that the proper parties are held responsible for their actions, and promote the public’s confidence in the justice system.

The announcement has raised concerns for antitrust practitioners, particularly on the civil side. The memo specifically states that it applies to civil corporate matters. While the Antitrust Division has prosecuted individuals for their roles in cartel behavior, even where their company has pleaded guilty, it has not been the practice of the agency to pursue individuals who were involved in conduct challenged as a civil antitrust violation. The memo raises the prospect that company executives could be named in civil actions brought by the Antitrust Division and be parties to consent decrees settling the allegations.

In her remarks, Hesse reiterated the six key steps to strengthen enforcement against company executives who engage in wrongdoing. Those six principles are: (1) only corporations that provide all relevant facts relating to the individuals responsible for the misconduct will qualify for any cooperation credit; (2) criminal and civil corporate investigations will focus on individuals from the inception of the investigation; (3) criminal and civil attorneys handling corporate investigations will talk routinely; (4) the Justice Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation, absent extraordinary circumstances; (5) Justice Department attorneys will not resolve matters with a corporation without a clear plan to resolve related individual cases; and (6) civil attorneys will focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

Hesse would not predict how the Antitrust Division would handle individual liability in civil corporate investigations as the agency looks into how to incorporate the guidance into its work. However, she noted that the memo does not necessarily change current agency practice. On the criminal enforcement side, the Antitrust Division has “carved out” from corporate plea agreements employees believed to be culpable.

Best practices for advocating before the Antitrust Division. Hesse touched on the Antitrust Division's efforts to implement the memo on individual accountability in a speech focused on effective advocacy before competition agencies. In her remarks, the deputy assistant attorney general offered a few tips for persuasively presenting a client's case.

First, practitioners should master the facts of the case or transaction, because facts almost always make a difference in the outcome. Hesse suggested that advocates should assume that the facts that they do not know are unfavorable and confirm that your story or theory fits with the worst possible facts. Lawyers who do not have a command of the facts will lack credibility, which raises the second point. Establish and maintain credibility. Once credibility is lost, it is hard to get it back, Hesse warned. Third, counsel should directly address bad facts and bad documents early in the process. “Take them head on and explain why they don't create an issue,” the official said. Fourth, attorneys should support arguments with robust economic analysis that bolsters factual and legal arguments. Lastly, because a settlement offer that does not fix the problem will not be accepted by the government, lawyers should start early with staff and not “dribble out” what will be offered in a settlement. Hesse suggested that if parties know that a deal has issues that they are willing to address, “don't try to make it on the cheap.” She added that the tactic “is only going to annoy Bill [Baer, Assistant Attorney General in charge of the Antitrust Division].”

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