1

ADOPTING AN EFFECTIVE ANTITRUST COMPLIANCE PROGRAM!

(A Corplaw Commentary)
by Barry J. Lipson
An Antitrust Compliance Program to be EFFECTIVE must be all-inclusive, must be ongoing,
and must satisfy these six essential criteria: 1) Commitment; 2) Education; 3) Confidential Consultation;
4) Aggressive Counseling; 5) Monitoring; and 6) Trade Association Supervision. This is the only practical
and workable way to afford meaningful protection from antitrust attack, and is very much in all clients
best interests. It is the SIX STEP program that must be taken seriously and seriously applied!
By far, the most essential of these steps is commitment. Without commitment from top
management on down, at the most all you will be able to obtain is a false sense of security. This then is
the antitrust attorney's and the CEOs most challenging objective -- to obtain company-wide
commitment.

Step One - Commitment

Management must be convincingly sold on the absolute necessity of establishing an antitrust
compliance program. A clear and understandable explanation of the actual civil and criminal risks
associated with ignorance of, or non-compliance with these laws would be an excellent place to start.
It should be explained that even though, over the short run, the risk of getting caught for a single
isolated violation may seen slight, and the potential profits may in some instances seem to exceed the
possible $10 million corporate criminal fine for each and every violation, the overall potential liability
from private treble damage individual and class actions, not to mention imprisonment of key
employees and such multiple criminal fines, can bankrupt most companies and ruin the lives of the
personnel involved.

Once business executives understand these facts of life, it is unlikely that they would "fix a
price" on their freedom; or stake their freedom on the hope that their "friendly" competitors, or
current or past associates, would not "rat" on them in exchange for reduced fines, immunity from
prosecution, reduced jail sentences, and/or no jail time. From the company's viewpoint, the criminal
sanctions and fines, while significant, pale in light of the potential civil treble damage individual and
class action liability to which each violation leaves them open. Verdicts in the $100 million range or
higher, are not uncommon in private antitrust litigation, and we have entered the era of the multi-billion
dollar antitrust fines.
The best "eye opener" for top management in this regard would unquestionably be for several
of their number to go to jail for pricing activities; or for a $100 million treble damage antitrust verdict
to be handed down against them personally, as well as against the company, for participation in an
unlawful group boycott. Barring such fortuitous, but decidedly unpleasant and undesirable events, the
best ways to get top management's attention, in descending order, is to:
A) Expose top management to actual examples of:
Criminal penalties that have been levied against specific other executives and other
companies, including reports of the actual time spent in jail, of the actual heavy personal
and company fines paid, and the serious disruptions of personal lives;
The performance of unattractive alternative community service required of their convicted
counterparts;
The stiff civil individual and class action monetary judgments being handed down, which
were, as required by law, automatically trebled;
Injunctive relief that has been imposed that removed important aspects of the business
from the control of management; and
The loss of the fruits of the unlawful conduct, particularly where these same fruits could
have been obtained and/or maintained lawfully, such as loss of a significant portion of your
company through a divestiture Order.

B) In plain and simple language explain to top management why the specific business they
are engaged in poses greater than normal dangers. For example, because it:
Is in a monopoly position;
Is blessed with few competitors;
Is in a position to enjoy superior technological and/or other strengths.
Is a business with a history of price fixing or other antitrust violations;
Is in an industry where there is considerable opportunity for contact with competitors'
personnel;
Is in an industry that is prone to private or class action antitrust suits;
Is in an industry in which the government enforcers have shown particular interest;
Is acquisition or joint venture oriented;
Is in a business involving dealer or distributors;
In a business with attentive and/or activist consumer customers; and/or
Is involved in government work (Did you know Government regularly and systematically
reviews bids for anticompetitive patterns!).
C) Hold educational seminars for top management where, in clear and plain business
(and not legal) jargon, the requirements of the antitrust laws and the real possible
consequences for violating or not understanding these laws are explained. To aid in this
endeavor, utilization of video and electronic presentations can prove most effective.
Moreover, in advance of such seminars, it should prove most helpful to provide each
attendee with general source materials on practical antitrust counseling and practical
antitrust compliance counseling.
D) Distribute a series of memoranda to top management explaining the requirements of
the antitrust laws and the real possible consequences for violating or not understanding
these laws. As part of this educational program, it should prove helpful to enclose with
one of these memoranda, general source materials on practical antitrust counseling and
practical antitrust compliance counseling, showing that the problems being brought to
their attention are not just merely the imaginings of their own staff or their own in-house
or outside counselor, but are serious "real world" problems.

Step Two - Education

Antitrust Counsel
As soon as top management is committed to establishing an effective antitrust compliance program,
outside or in-house antitrust counsel must be assigned on an on going basis the specific tasks of
establishing, implementing and administrating this program. To aid antitrust counsel in becoming
thoroughly familiar with the company's business operations, methods of doing business, and problems
areas, a series of meetings must be held in which company personnel brief antitrust counsel on the
company and its operations, and bring potential problem areas to antitrust counsel's attention. General
antitrust source materials containing antitrust information can be supplied in advance as a guide to help
managers identify possible problems areas.
Once familiar with the company, antitrust counsel must conduct an "antitrust audit" of all facets of
the company's business. The audit must include private interviews with company personnel at all levels
and a random independent review of company business files throughout the organization to independently
ascertain the strengths and weaknesses of the company from an antitrust standpoint.
Compliance Guidebook
With antitrust counsel thoroughly briefed, the company is now ready to adopt its formal antitrust
compliance program. First, antitrust counsel must prepare an "Antitrust Compliance Guidebook" the
addresses the company's and the industrys particular needs, concerns and methods of doing business.
Tailored to the needs of the company, it must be aimed at sensitizing company personnel to potential
antitrust problems areas that may be of particular relevance and/or concern. Furthermore, the Guidebook
must encourage and require all company personnel to confidentially consult with and be guided by the
advice of antitrust counsel whenever there appears to be a possible question under the antitrust laws.
Endorsing and Announcing the Program
The new antitrust compliance program must then be endorsed and announced by the Board of
Directors or other governing body of the organization. All personnel must be issued: (a) an "Antitrust

Compliance Policy Statement" clearly mandating compliance with the antitrust laws; (b) a strongly
worded Chief Executive Officer Letter to all company personnel, personally endorsing the antitrust
compliance program and confirming his or her serious commitment to compliance with this program and
these laws; and (c) the company own custom tailored "Antitrust Compliance Guidebook," with an
accompanying certificate of receipt.
Signed certificates of receipt of the Guidebook, which include personal acknowledgements that
participation in conduct violative of the antitrust laws will subject the employee to disciplinary measures
up to, and including dismissal, must be returned to Antitrust Counsel by all compliance program
participants, that is all executive, managerial, legal, human resources, research and development, sales,
marketing, advertising, public relations, environmental, communications, transportation, financial,
insurance and compliance personnel and all personnel who have contact with customers, suppliers of
products and/or services, competitors, industry members, trade associations, governmental personnel,
investor, financers, shareholder, owners, partners, joint venturers and/or members of the public. This
procedure will help instill in company personnel the importance of compliance with this program and
these laws.
Note that caution must be taken in drafting the company's Antitrust Compliance Guidebook and
any other memoranda and documents associated with this program, as their wording may be critical in
determining whether the attorney-client privilege attaches to communications with antitrust counsel by all
levels of company personnel. To maximize the applicability of the attorney-client privilege, the policy
statement, C.E.O. letter, and Guidebook must specifically direct all levels of employees to consult directly
and confidentially with antitrust counsel on all matters relating to antitrust laws. As an example, the
following "Management Instructions" may be used for this purpose:
All employees of the company are authorized and instructed to consult directly and
confidentially with Antitrust Counsel about compliance with the antitrust laws, all matters
relating to these laws, and any questions that may arise about the applicability of these laws
to any course of conduct or action. Furthermore, Antitrust Counsel is to be consulted
immediately, directly, and confidentially about any known or suspected deviation from, or
violation of, these laws, or if there is any reason to suspect or believe that the Company or
any employee, officer, director, or agent is, may be, or may become involved in any way in
6

any investigation, grand jury proceeding, lawsuit, or legal administrative proceeding relating
in any way to these laws.
Seminars and Workshops
After the Guidebook, policy statement, and C.E.O. letter have been distributed, an initial series of
antitrust seminars and workshops must be conducted by antitrust counsel, covering all parts of the
company. A continuing series of refresher seminars must also be held on a regular basis.
The purpose of these seminars is to answer questions and expand on the Guidebook; to discuss and
update recent developments and new problems; to review the company's and its personnel's performance
under this program generally; to determine if any employee may require individual antitrust counseling;
and to demonstrate on an ongoing basis that the company remains seriously committed to its
antitrust compliance policy.
Seminar attendance sign-in sheets must be maintained in the permanent compliance program files.
Additionally, seminar reminders must be sent out on a regular basis to encourage all parts of the company
to hold such antitrust compliance seminars periodically and remind them that it is mandatory to do so.
Most important, these reminders must be followed through on to assure that these seminars are actually
being held.
It cannot be reiterated too strongly that this series of antitrust compliance seminars must be
conscientiously continued on a regular periodic basis; and must continue to reach all levels of company
personnel from the C.E.0 to telephone order takers, from executive vice presidents to purchasing clerks,
and from advertising, sales, marketing, industrial relations and research and development vice presidents
to credit and collection clerks. In other words, these seminars must reach and include all personnel who
have any contacts with customers, suppliers or competitors or who could contribute to exposing the
company to antitrust risks. Only through such continuous and widespread repetition can there be any
assurance that old habits will be modified and new ways of conducting the business assimilated. A key
tenet of any educational program is: "Tell them what you are going to tell them, then tell them what
you intend to tell them, then tell them what you told them. Tell them what you are going to tell
them, then tell them what you intend to tell them, then tell them what you told them. Tell them what
7

you are going to tell them, then tell them what you intend to tell them, then tell them what you told
them. Get it?

Step Three - Confidential Consultation

Consultation with antitrust counsel in advance of any actions or situation that could raise antitrust
questions should flow naturally from the successful implementation of step two's continuing antitrust
education. But for the program to be truly successful, antitrust counsel and the company must adopt, earnestly support and widely publicize an "open door" policy. Personnel must feel that it is not necessary to
"go through channels" in order to consult with antitrust counsel. Candid and confidential consultations
with antitrust counsel must be encouraged at all levels of the company.
Thus, there must be constant two-way confidential communications between antitrust counsel and
all levels of company personnel. Company personnel must consult with and be comfortable in consulting
with antitrust counsel whenever an antitrust problem materializes, whenever it appears that an antitrust
problem may materialize, and whenever action is contemplated that may raise antitrust questions. That is
why, the Microsoft Federal District Court Judge advised, I required in my Final Judgment that there
must be a means by which employees can report potential violations of the antitrust laws on a
confidential basis (emphasis added).

Step 4 - Aggressive Counseling

Antitrust counsel, on their part, must be available, responsive and ready to advise as to the risks
involved in continuing or initiating the actions or practices under consideration, and as to practical and
lawful alternatives for achieving all or most of the economic objectives of a doubtful program, practice
or actions. Antitrust counsel must know both the business of the company and the personnel of the
company well enough to give the necessary legal advice, even if such advice has not yet been sought. A
timid counselor may well be worse than no counselor at all. Antitrust counsel must take the lead and
aggressively counsel on how to be and remain in compliance with the antitrust laws. This is why in my
Final Judgment, the Microsoft Federal District Court Judge continued, I clearly placed the responsibility

on the shoulders of the Chief Compliance Officer for the development and supervision of Microsoft's
internal programs to ensure compliance with the antitrust laws (emphasis added).
Thus, responsive creative counseling of alternative approaches is the real key to a successful
compliance program. If someone consistently hears "no" for an answer whenever legal advice is sought,
he/she will only seek legal advice after he/she suspects they may be in trouble or, worse yet, they may
merely do nothing, hoping not to be discovered. Therefore, antitrust counsel must not be looked upon as
an obstacle, but as a creative thinker and a good source of feasible practical alternate solutions to difficult
problems, of lawful workable solutions that will minimize the legal risks involved, while achieving all or
most of the company's lawful objectives.
Moreover, human nature being what it is, to reiterate, it is not enough to wait for the client to come
through the door. Instead, antitrust counsel must become well acquainted with the prime movers and
"innovators" in each segment of the company. He must ask the hard questions. He must encourage early
submission to him of all sales, marketing, planning, promotional, advertising, industrial relations,
purchasing and credit and collection documents and programs, and minutes of policy and decision-making
bodies throughout the company. Furthermore, he must follow through, even without being asked,
whenever he suspects or has reason to believe that the company may be faced with an antitrust problem.

Step Five - Monitoring

Diligently monitoring compliance, of course, dovetails with the earlier steps and is crucial, because
it is essential to know, on a continuing basis, whether the program is accomplishing the objectives of
eradicating or, at least substantially lessening the company's antitrust risks. The older and more well
established an impermissible practice, the more monitoring and preventative steps there must be to remove
or neutralize it, and to forestall its reappearance.
Thus, in addition to the measures discussed earlier, and although this may make few friends,
unannounced reviews by antitrust counsel of files and computers located in all parts of the company are
advisable to confirm that the compliance efforts have been understood and have been effective, and to

confirm that the antitrust laws are not being inadvertently or knowingly violated. Moreover, formal
periodic antitrust audits also would be invaluable in assuring compliance.
Accordingly, there must be diligent, conscientious monitoring, supervision and administration of the
entire program by antitrust counsel, supported by top management, and the Board of Directors or other
governing body. Furthermore, when monitoring reveals a lack of compliance, corrective and/or punitive
internal action must be taken to promote compliance in the future, up to and including dismissal. To
accomplish this, further advises the Microsoft Federal District Court Judge, in the Final Judgment I sets
up a pervasive system of Compliance Inspection or monitoring by the Antitrust Enforcers, including the
ability to interview Microsoft employees and review Microsoft documents, and used the threat of the
possibility of conviction for criminal contempt of court. as a compliance tool.

Step Six - Trade Association Supervision

As trade associations quite often provide the illegal combination or conspiracy that may be required
for conviction under the antitrust laws, there must be diligent, conscientious monitoring, supervision and
administration of all trade association activities of the company and its personnel by antitrust counsel, to
assure compliance with the antitrust laws by company personnel and by the trade associations in which
they participate.
Indeed, the mere existence of a trade association supplies the element of combination, a necessary
element for most antitrust convictions. Thus, when investigating alleged industry antitrust violations or
alleged violations by member companies, such as price fixing, market divisions, and boycotts, the antitrust
enforcers invariably investigate the industry trade associations and/or the trade associations to which the
companies under investigation belong. The U.S. Supreme Court has made it clear that an association and
its members may be tarred by the "black deeds" of members of the association who were acting within the
scope of their apparent authority, even though they were actually acting in their own interests and against
the interests of the association and its other members. In light of this, it is important to both member
companies and their employee participants, that all who engage in trade association activities, or attend
trade association meetings or functions, are constantly mindful of the antitrust risks inherent in their
10

participation and/or membership. It must be made crystal clear to all employees that the lessons taught
and learned through the companys antitrust compliance program apply equally to all phases of trade
association activities. Indeed, for many companies, participation in trade association activities is
their greatest single antitrust risk. An in depth review of Trade Associations and the Antitrust
Laws is the subject of another Corplaw Commentaries column.
Please address your comments, questions and suggestions for future Corplaw Commentaries
Columns on marketing and business law, and other legal subjects to Barry J. Lipson, Esquire, at
bjlipson@gmail.com.
Copyright 2001-2011 by Barry J. Lipson.

11