One starting point for companies and their counsel is the division’s primer for federal law enforcement personnel. In this publicly available document, the division shares what it considers to be the hallmarks of criminal antitrust enforcement with law enforcement partners (e.g., agents of the Federal Bureau of Investigation) working with the division on investigations, including conspiracies to monopolize under section 2. According to the primer, the division has “prosecuted Section 2 violations where monopolization was carried out by means of other predicate crimes. Where there is an agreement to act in a per se anticompetitive manner under section 1—for example, a market allocation—there may also be evidence of a conspiracy to monopolize that is prohibited under Section 2.” In a footnote, the division clarifies that “the focus of th[e] primer is on criminal antitrust conspiracies”; thus, unilateral conduct “prohibited under Section 2, e.g., actual or attempted monopolization” is not covered in the primer. In other words, though not covered, unilateral conduct could still be the subject of a criminal investigation.
Thus, the types of behavior that could give rise to section 2 criminal liability, assuming the requisite intent to monopolize and market power are present (or could be), include (1) where per se violations—price fixing, bid rigging, and market allocation agreements—are the anticompetitive conduct; (2) the use of other, non-per se criminal acts, such as fraud or extortion, to exclude, eliminate, or reduce competition; (3) the use of multiple types of non–per se, anticompetitive acts as part of a clear course of conduct; and (4) recidivism to the extent that doubt about the illegality of the conduct is removed.
After thinking through the types of behavior that could give rise to a violation, the next step would be to review the division’s 2019 guidance to prosecutors for evaluating corporate compliance programs. The guidance outlines nine factors that prosecutors should consider “when evaluating the effectiveness of an antitrust compliance program.” Two of the factors implicated by the recent criminal monopolization enforcement announcements are “antitrust risk assessment techniques” and “monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program.”
Looking at the questions posed in the compliance guidance, recent changes to enforcement priorities should lead to an adjustment of antitrust risk assessment. This reassessment would be in line with other recent enforcement initiatives that bear on regular business conduct. For example, an antitrust compliance policy in 2009 may not have considered risk posed by human resource decisions and conduct. But after the Department of Justice and Federal Trade Commission issued antitrust guidance for human resource professionals in October 2016, companies should have updated their policies to reflect this risk.
As noted in the 2019 guidance, a compliance policy “tailored to the company’s various industries/business lines” should consider whether the company could be viewed as the dominant player in a relevant geographic and product market. If so, there could be a discussion of the type of business activity that is acceptable (e.g., increasing the dominant position through superior innovation and improving product quality or service, or both). However, a company with a dominant market position that seeks to maintain the status quo or further increase its market power through conduct that the government could view as “predatory” or “exclusionary” risks federal (or state) agencies inquiring into its behavior. If such an inquiry leads to evidence of the types of anticompetitive behavior described above, then the risk of a division investigation (and all of its attendant costs) greatly increases. Examples of non–per se, predatory behavior that could trigger scrutiny include efforts to eliminate competitors through illegal means, such as fraud or market manipulation, or egregious threats of economic harm to customers who transact with rivals. In addition, counsel should look for traditional red flags—which are discussed in the law enforcement primer—such as efforts to conceal communications about the exclusionary conduct (e.g., using third-party, end-to-end encrypted messaging applications). Finally, for conduct involving per se violations, existing compliance risk assessments could include an emphasis on intent to monopolize and market power, which are necessary for the section 1 violation to also raise a section 2 concern.
Moving forward, companies should continue to monitor division enforcement actions and public statements so that ongoing efforts to review, monitor, and audit compliance and training programs remain current with the risks and are helping achieve “antitrust compliance objectives.” Specifically, companies can look to the types of actions brought by the Department of Justice as an indication of what sorts of behavior trigger civil enforcements, as opposed to criminal enforcement, under section 2. Although both are violations of the law, the distinction will be helpful to understand the spectrum of risk associated with otherwise legitimate, aggressive business tactics.
Finally, if a company does discover a criminal antitrust issue, including a criminal monopolization, it should consider all of its options, up to and including whether to self-report. For a conspiracy to monopolize that involves a per se violation, the first corporate or individual conspirator to confess participation, fully cooperate with the division, and meet additional conditions as outlined by the policy, receives leniency for the crime. Note that leniency would be available only when the issue involves a conspiracy to monopolize and the conduct involved is a per se violation. For other section 2 issues, including unilateral conduct and attempt, leniency will not be available; however, qualifying voluntary self-disclosures could result in a resolution short of conviction. (The division maintains a set of frequently asked questions for more information on the leniency program.) Either way, how a company accounts for full spectrum antitrust risk and its response to potential misconduct will be critical factors in any division investigation.