US-Department of Justice reduces fines to reward post-investigation compliance efforts

The US Department of Justice (DoJ) has recommended to significantly reduce the fine to be imposed on KYB for its participation an auto parts cartel. KYB received this discount because it put a coherent compliance system into place directly after it became aware of DoJ’s investigation. According to the DoJ, “KYB’s compliance policy has the hallmarks of an effective compliance policy including direction from top management at the company, training, anonymous reporting, proactive monitoring and auditing, and provided for discipline of employees who violated the policy”.

The reduction is based on the application of 18 U.S. Code § 3572 (a)(8) which requires that “if the defendant is an organization, the size of the organization and any measure taken by the organization to discipline any officer, director, employee, or agent of the organization responsible for the offense and to prevent a recurrence of such an offense” shall be taken into consideration.

The DoJ highlighted the following aspects of KYB’s compliance program:

• training of senior management and all sales personnel;
• one-on-one training for personnel with jobs where there is a high risk of antitrust crimes;
• training effectiveness measured by testing antitrust awareness before and after;
• prior clearance for competitor contact and reporting thereof;
• auditing of competitor contacts by in-house counsel;
• certification that all prices have been set independently and that no information exchange has taken place; and
• the introduction of a whistleblower hotline.

KYB has also taken disciplinary action against those employees involved in the conduct.

The criteria assessed by the DoJ are thus comparable to those foreseen in Spain for preventive compliance measures.

Other European regulators, in particular, the European Commission and the German Bundeskartellamt (FCO) do not yet specifically reward post-investigation compliance efforts. Former Vice-President Almunia (2010) said: “To those who ask us to lower our fines where companies have a compliance programme, I say this: if we are discussing a fine, then you have been involved in a cartel; why should I reward a compliance programme that has failed?”.

The FCO merely considers compliance measures as an effective tool for the parties to uncover infringements and to use these discoveries in the race for leniency. Depending on their set-up, compliance systems may also prevent parental liability. In its 2011/2012 activity report the FCO has, however, expressed its opinion that a reduction of fines is not merited as it may lead to reward inefficient compliance systems.