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The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Presenting a live 90-minute webinar with interactive Q&A
Designing and Implementing
Competition Law Policy and Training Minimizing Cost of Noncompliance, Drafting Compliant Contracts,
Training Business Clients on Commercial Communications
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, APRIL 21, 2016
Paula W. Render, Partner, Jones Day, Chicago
Theodore L. Banks, Scharf Banks Marmor, Chicago
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Designing and Implementing Competition Law Policy and Training April 21, 2016
Agenda
• Business communications that pose risk
• Government enforcement and private actions
arising out of unlawful business
communications
• Best practices for minimizing risk
6
TYPES OF BUSINESS
COMMUNICATIONS THAT POSE RISK
7
Risks of competitive intelligence
•Examples: information about a competitor’s
upcoming pricing action or capacity reduction
•Can be pro- or anticompetitive, depending on the
source and venue:
8
• Public sources
• Customers
• Suppliers
• Competitors
• Joint venture
partners
• Trade associations
• Agents
Example: Signaling
•United Airlines CEO to investors in Jan. 2015:
“We will absolutely not lose our capacity discipline.
It's very healthy for us and
very healthy for the industry.”
• In June 2015, airline execu-
tives publicly discussed
“capacity discipline” at a
meeting of the airlines’ trade
association in Miami.
9
•A third party can get you in trouble (e.g.,
collusion, unfair methods of competition)
• Implement behavioral rules
• No deception
• No theft
• No improper use of technology
(“web scraping”)
Example: Using a Competitive Intelligence
Firm
10
•Agreements to raise price, allocate markets, or
rig bids
•Benchmarking
•Comparisons of one
company’s wages/benefit
offering vs. another’s
•Warnings (I’ll do X if you do Y)
Risks of other communications
11
Example
• The FTC sued U-Haul for invitations to collude stemming from
conduct in 2006. In an internal memo, for example, U-Haul’s
regional managers were instructed to raise prices above
Budget’s rate, and then to “let Budget know” to get Budget to
match.
• Another memo offered a “script” for managers to use when
contacting their counterpart at Budget: “Try ‘Are you tired of
renting 500 miles for $149 and $28 commission? Then, tell
your Budget/Penske rep that U-Haul is up and they should be
too.’”
• In the Matter of U-Haul Int’l Inc. and AMERCO, FTC File No. 081-0157
12
GOVERNMENT ENFORCEMENT AND
PRIVATE ACTIONS
13
Prison for price-fixers: a top DOJ priority
14
Prison for price-fixers: a top DOJ priority
15
“It is indisputable that the
most effective deterrent to
cartel offenses is to impose
jail sentences on the
individuals who commit
them.”
Prison for price-fixers
16
https://www.justice.gov/atr/criminal-enforcement-fine-and-jail-charts
Substantial fines: another DOJ priority
17
https://www.justice.gov/atr/criminal-enforcement-fine-and-jail-charts
DOJ’s Amnesty Program
18
Consequence: Individual Liability
•Yates Memo (9/9/15)
•To be eligible for any cooperation
credit, corporations must provide
to the Department all relevant facts
about the individuals involved in
corporate misconduct.
•Both criminal and civil corporate investigations
should focus on individuals from the inception of
the investigation.
19
20
Another consequence: Private cases
DOJ announces
investigation of three
corporate defendants
21
Another consequence: Private cases
DOJ announces
investigation of three
corporate defendants
80+ class action cases filed in US
courts alleging
nationwide conspiracy
Two class actions filed in Canada
22
Another consequence: Private cases
DOJ announces
investigation of three
corporate defendants
80+ class action cases filed in US
courts alleging
nationwide conspiracy
Two class actions filed in Canada
Securities cases in US and Canada
23
Guilty pleas by two corporate
defendants and three
employees, to conduct in one
part of one state
Another consequence: Private cases
DOJ announces
investigation of three
corporate defendants
80+ class action cases filed in US
courts alleging
nationwide conspiracy
Two class actions filed in Canada
Securities cases in US and Canada
24
Guilty pleas by two corporate
defendants and three
employees, to conduct in one
part of one state
Another consequence: Private cases
Class actions alleging
conspiracy affecting
prices in US and Canada by all three corporate
defendants continue
DOJ announces
investigation of three
corporate defendants
80+ class action cases filed in US
courts alleging
nationwide conspiracy
Two class actions filed in Canada
Securities cases in US and Canada
25
Guilty pleas by two corporate
defendants and three
employees, to conduct in one
part of one state
Another consequence: Private cases
Class actions alleging
conspiracy affecting
prices in US and Canada by all three corporate
defendants continue
B A N K R U P T C Y
DOJ announces
investigation of three
corporate defendants
80+ class action cases filed in US
courts alleging
nationwide conspiracy
Two class actions filed in Canada
Securities cases in US and Canada
Effect on stock price
26
0
2
4
6
8
10
12
14
Stock price
BEST PRACTICES FOR MINIMIZING
BUSINESS COMMUNICATIONS RISK
27
BEST PRACTICE: KNOW THE AUDIENCE.
28
Get their attention.
• Not just jail and fines. Also:
• Termination of employment
• Lost promotions and opportunities
• Loss of savings and 401(k) to legal costs
• Civil lawsuits against individuals
• Lost workdays to assisting with litigation
• Loss in value of stock
29
They don’t believe a problem will happen.
30
“This antitrust thing will blow over.” -Bill Gates, 1995
They aren’t lawyers or economists.
.
31
What do they care about?
• They do not care about the Sherman Act.
• Senior management cares about the stock
price.
• The rest of the employees care about their
jobs.
• Show them how compliance relates to their
concerns.
32
Tailor Compliance Training
Don’t . . .
• . . . lecture about the antitrust statutes.
• . . . give materials for further study.
• . . . assume one size fits all.
33
Do . . . • . . . explain risks
specific to their areas: pricing, sales, etc.
• . . . provide real-time training and tests.
• . . . focus training on each group’s area.
Assign Risks to
Jobs
• Think about what
each business unit
does, what each job
does
• How does their
activity implicate
antitrust risk?
34
Alignment of risks and functions
•Sales > collusion
•Marketing > discrimination
•Strategy > acquisitions
•Management > punishment
35
Illustrate with Examples & Images from
Each Business Unit
Hey,
that’s our
plant!
36
BEST PRACTICE: KEEP IT SIMPLE . . .
USUALLY.
37
For most employees:
• Don’t fix prices.
• Don’t talk to anyone outside the company about how you compete.
• Call if you have questions.
38
Some functions require more.
• Pricing
• Purchasing
• Standards setting
• Trade associations
• Human resources
39
40
Study the rules . . .
. . . or stay away from the edge.
Depending on the function:
Consider NOT creating a comprehensive
compliance manual.
41
BEST PRACTICE: CHOOSE THE
RIGHT METHOD.
42
Is live training optimal? Maybe . . .
43
Maybe not.
44
Computer Based Training?
45
Yes, but it must be:
• Interesting
•Short
•Relevant
•Customization
always
needed
46
Slides? That’s so 20th Century!
•How do employees communicate?
•Work from home, office, client location?
•What did they hear on the first day of their job?
•Goal: make information flow painless
47
BEST PRACTICE: CONTINUOUS
SUPPORT.
48
Frequent messaging
• Compliance seminars - interactive
• Sales/department meetings
• Ad hoc (i.e., refresher prior to trade association meeting)
• Online compliance training
• Website support
• Periodic bulletins
49
Invite calls for help.
• Designate someone in the Legal Dept. to answer questions.
• Have a back-up.
• Track questions to improve training.
• Be a crossing guard, not a cop.
50
BEST PRACTICE: FREQUENT
AUDITS.
51
The Antitrust Audit: Why?
• Identify actual or potential violations before an investigation or suit.
• Determine the extent of known or suspected violations.
• Identify risky business practices.
• Assess the effectiveness of antitrust compliance and training.
• Keep employees on their toes.
52
The Antitrust Audit: Who?
• By counsel, to preserve privilege
• Inside counsel, for knowledge of company and familiarity to employees
• Outside counsel, for fresh perspective, audit experience
53
The Antitrust Audit: When?
•Before there’s a problem
•Periodic
•Announced or random
•When employees call for assistance
54
The Antitrust Audit: How?
• Review email with competitors or others who pose potential problems
• Review trade association meeting minutes, emails
• Review expense reports
• Review pricing, contracting and purchasing practices
• Interview employees
55
Reprinted with permission of eWeek 56
PANELISTS
Paula Render is an antitrust litigator. She was part of the
leadership teams for the Electrolux/GE merger case in 2015 and
the US Airways/American Airlines merger case in 2013. She
defends clients in class actions and other cases against claims of
price-fixing, market allocation, boycotts, refusals to deal, price
discrimination, tying, and other antitrust claims. In addition, Paula
counsels clients on compliance and other antitrust issues.
[email protected] | 312-269-1555
57
Ted Banks focuses his practice on general corporate matters,
antitrust counseling and transactions, and corporate compliance.
He serves as a compliance monitor for the Federal Trade
Commission and Competition Bureau of Canada, and is an
adjunct professor at Loyola (Chicago) Law School, teaching
Corporate Compliance. He is the editor of the Corporate Legal
Compliance Handbook, published by Wolters-Kluwer..
[email protected] | 312-662-4897