Designing and Implementing Competition Law Policy and...

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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

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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.

prender@jonesday.com | 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..

tbanks@scharfbanks.com | 312-662-4897