Antitrust Law Daily Wrap Up, TOP STORY: Apple’s relationship with antitrust compliance monitor “more productive and constructive”, (Oct 16, 2014)

By Linda O’Brien, J.D., LL.M.

The External Compliance Monitor (ECM) appointed in the federal and state antitrust action against Apple Inc. for orchestrating a conspiracy to fix retail prices for electronic books has reported to the federal district court in New York City that during the past six months, “we were able to perform our work uninterrupted by the legal challenges and other sustained disruptions that characterized the period covered in the First Report” (U.S. v. Apple Inc., Case 1:12-cv-02826-DLC-MHD, October 15, 2014)

Yesterday, Monitor Michael Bromwich filed the second in a series of semiannual reports with the court, providing an assessment of Apple’s revised Antitrust Compliance Program and recommendations for improvement. The ECM explained that, while “[o]ur relationship with Apple during this period has been more productive and constructive than it was during the first few months of the monitorship . . . by no means were we at all times satisfied with Apple’s level of cooperation and responsiveness.”

The court appointed the monitor to oversee the company’s antitrust compliance policies as part of a final judgment which was imposed on Apple after the company was found to have organized a conspiracy among publishers to fix retail prices for electronic books or e-books.

According to the ECM, the assessment and recommendations set forth in the First Report were very preliminary due to substantial delays in efforts to obtain relevant documents and interview relevant personnel. Despite impediments of Apple’s continued resistance to the monitoring work, the ECM was able to report significant progress in fulfilling his responsibilities.

The report noted that the elements of Apple’s revised program include: (1) an antitrust and competition law policy; (2) a new online antitrust compliance training course; (3) a revised competition and trade practices section in Apple’s Business Conduct e-book; and (4) live training provided to various personnel. Based on a review of those elements, the report concluded that, while Apple has developed and implemented the basic elements of a sound antitrust compliance program, aspects of the program have not yet been explored and there are deficiencies to be addressed before the program is comprehensive and effective.

The ECM report recommended that Apple develop a procedure for reporting antitrust risk assessment results to relevant groups within the company and that Apple expand coverage in its Antitrust and Competition Law Policy to address concerns related to employee hiring agreements and service of directors on other companies’ boards. It also was recommended that Apple establish more formal procedures governing communications, helpline, record keeping, detection, disciplinary procedures, formal feedback procedures, identification of critical employees, and audits.

Live antitrust compliance training could be substantially improved by incorporating more Apple-specific examples and discussions and providing appropriately-tailored training to additional business groups. The report further recommended that Apple senior management take an active role in monitoring the Antitrust Compliance Program and specifically articulate a commitment to antitrust compliance. Finally, there was insufficient evidence to determine whether Apple’s Board or the Audit and Finance Committee adequately oversaw the company’s Antitrust Compliance Program.

While the Antitrust Compliance Program that currently exists is undeniably an improvement on what existed before the final judgment and reflects an investment of substantial time, effort, and resources, the ECM noted that the program remains “very much a work in progress.” However, the ECM appeared hopeful in working with Apple as it continues to advance, extend, and improve its Antitrust Compliance Program.

Companies: Apple Inc.

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